Here’s a real eye-opener: As the Post-Gazette reports it, People’s Natural Gas is among 20 companies “that have shown an unsolicited interest in fixing up the PWSA over the past 18 months.”
In fact, People’s was proposing a $1 billion-plus deal to not only rehabilitate the long-in-the-tooth Pittsburgh Water and Sewer Authority and manage it but to retire its massive debt as well.
But a not-so-transparent thing happened with People’s first feeler in December 2016: At least one PWSA board member, Deborah Gross, says she was not informed of the overture. Two other PWSA board members, however, are reported to have gathered and forwarded financial information to People’s.
As Gross, who also sits on Pittsburgh City Council, reminds, the People’s entreaty came three months before Mayor Bill Peduto announced a special panel to assess restructuring options for the water and sewer agency long troubled by operational and administrative failings.
People’s CEO Morgan O’Brien says the proposal never made it to the negotiations stage. Peduto has been adamant about keeping the PWSA a public entity. Among the others said to have made general inquiries are Pennsylvania American Water and Duquesne Light.
But why would a PWSA board member not be informed when other board members gathered financial information to share with People’s?
With much hoopla, the authority’s management structure is being recast – from oversight by the state Public Utility Commission to establishing a new board structure that, supposedly, will allow it to operate free and clear of political machinations.
But, as noted previously, it’s difficult to be encouraged when the former PWSA board chairman, a Peduto acolyte, has been installed as the authority’s chief corporate counsel and chief of administration.
All this said, if there has been private-sector interest in helping to fix the giant mess that the PWSA is, that should, in the least, have been shared with all of the board members.
That it was not smacks of an old pol network that suggests promises to eradicate politics from this authority are lip-service.
Peduto, in a radio interview, says that, indeed, the authority might seek private help should its borrowing power not be enough. But why borrow when, apparently, private-sector investors – a score of them, no less – stand ready to invest?
And, as per the P-G again, should that help be sought, Peduto says the authority will follow a “fair and open” process to request formal proposals and evaluate each one.
But this, along with selective disclosure to the board of the People’s offer, is indicative of puppet-mastering of a board that was supposed to be independent already and for which a new era of independence has been pledged.
Nineteenth- and 20th-century curmudgeon H.L. Mencken had the perfect word for this kind of governmental dog-and-pony show: Buncombe.
All this said, the P-G followed up its report on People’s interest in the PWSA with a story answering the timely question of “Why would anyone want to buy a troubled water utility with rotting pipes, angry customers and $1 billion in debt?”
Because, it turns out, there’s money to be made in fixing up troubled public utilities – about a 10 percent rate of return on investments, Heike Doerr of S&P Global Market Intelligence told the newspaper.
And customer rates don’t necessarily explode (though they indeed do rise) because of cost-efficiencies employed.
People’s is a prime example of the kind of turnaround that can take place, O’Brien reminded the P-G; he noted how People’s woes mirrored those of the PWSA before it was acquired by a private-equity fund a decade ago.
Now, indeed, there are those who, out of hand, pooh-pooh such deals under the misguided notion that “public utilities” must be kept “public.” But Bill Peduto should be among the first to admit that a “public” Pittsburgh Water and Sewer Authority has failed the very public it is charged with serving, and has done so for decades.
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
