Buchanan Secures Significant PA Supreme Court Result for Client Aqua

HARRISBURG - Buchanan Ingersoll & Rooney PC is pleased to announce its role in assisting it client, Aqua Pennsylvania Wastewater, Inc. (Aqua) to obtain a favorable major landmark decision from the Pennsylvania Supreme Court that adds clarity and much needed certainty on the legal standards for obtaining Public Utility Commission (PaPUC) approval of water/wastewater transactions involving a utility’s use of a market value rate base established under Section 1329 of the Public Utility Code. Aqua was represented in the case by Buchanan shareholders, John Povilaitis and Alan Seltzer. “We are thrilled that the first Pennsylvania Supreme Court decision addressing Public Utility Code Sections 1102 and 1329 together reaffirmed the view that historic Code Section 1102’s legal standards were unchanged and Section 1329’s increase in the utility’s rate base was not a known harm that warranted PaPUC disapproval” said Povilaitis.

The case involved Aqua’s proposed acquisition of the assets of East Whiteland Township’s wastewater collection system. Aqua and East Whiteland employed Section 1329 of the Public Utility Code to determine the fair market value of the wastewater system’s assets and sought approval of the transaction on that basis. After the PaPUC granted Aqua’s application for a certificate of public convenience to purchase East Whiteland Township’s utility assets, the Commonwealth Court reversed that decision, finding in part that Aqua failed to show that substantial affirmative public benefits from the transaction outweighed the “known harm” of potential rate increases. However, the Pennsylvania Supreme Court determined that, among other things, the Commonwealth Court (i) improperly removed from the analysis certain benefits of large water/wastewater utilities the PaPUC considered and (ii) improperly found that the potential rate impacts resulting from the fair market value rate base determination under Section 1329 were “known harms”.

By finding that Pennsylvania’s appellate courts must defer to the PaPUC’s determination of the substantial affirmative public benefits and review the PaPUC’s decision based on whether it is supported by substantial evidence, and finding that potential rate increases resulting from the application of Code Section 1329 should not be characterized as a “known harm,” the Pennsylvania Supreme Court has clarified existing Pennsylvania law, and provided the predictability needed by all the stakeholders impacted by and involved in these types of utility acquisitions.