Press Release

PUC Approves Settlement for Change in Corporate Control of Pennsylvania American Water Company

Published on 7/25/2007

Filed under: Water and Wastewater

HARRISBURG – The Public Utility Commission (PUC) today approved a settlement which establishes new corporate control of Pennsylvania American Water Company (PAWC) through a public offering of the stock of American Water Works Company Inc., PAWC’s parent company. 

Upon the sale of the stock, American Water Works will no longer be owned by RWE Aktiengesellschaft, a German multi-national holding company, and will become an independent, publicly traded company focused on the water and wastewater business in the United States.

The Commission voted 3-2 to approve a joint motion by Chairman Wendell F. Holland and Vice Chairman James A. Cawley that grants the exceptions filed by PAWC and the Office of Consumer Advocate in this case. Commissioners Fitzpatrick and Pizzingrilli issued a concurring and dissenting statement. The settlement was accepted with the provisions set forth in the motion.

Conditions of the settlement include:

• Commitment to Pennsylvania by maintaining PAWC’s corporate offices in the Commonwealth;
• Community involvement levels will be maintained, including funding for PAWC’s low-income program to assist low-income residential customers with their water bills;
• Capital improvement commitments in order to adequately fund and maintain PAWC’s treatment, transmission and distribution systems;
• Customer service commitments to assure the that the transaction will not affect service reliability;
• Exclusion of transaction costs from rates;
• Limitations on Sarbanes-Oxley related cost recovery;
• Debt financing cost limitations are set on $80 million of debt financing, regardless of whether rates increased;
• Efficiency pass-throughs will be made to customers to reflect any savings resulting from the transaction; and
• Employment notifications will be made to the PUC of a planned reduction of 5 percent or more in PAWC’s workforce.

Today’s motion modifies the Initial Decision of the Administrative Law Judge by approving PAWC’s request to install without customer contributions, the facilities necessary to provide service to about 800 customers in portions of Mount Pleasant and Hanover townships in Washington County, Collier Township, Allegheny County who are in need of a safe and dependable supply of water. 

In addition, the motion modifies the Settlement by requiring the company to keep the pension, health care, welfare or life insurance benefits of PAWC’s retired employees or their dependents.

Parties in the case have 20 days to file comments or the Tentative Order becomes final.     

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner.

For recent new releases, audio of select Commission proceedings or more information about the PUC, visit our Web site at www.puc.state.pa.us.

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Docket No. A-212285F0136

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