Peoples Says It Will Partner With PWSA, But That's News To The Authority

Jul 3, 2018

At an O’Hara Township council meeting Tuesday night, Peoples Natural Gas CEO Morgan O’Brien presented a conceptual plan to build a new water treatment plant on a stretch of local riverfront property.

“It’s something that we think people will be proud of,” he said, describing the plant and his company’s plan to become a water provider in the region.

It was O’Brien’s third presentation of the day. He wrote an open letter to area residents on the company's website, published this morning, and the company took out a full-page ad in the Pittsburgh Post-Gazette to present its new subsidiary, Peoples Water.

In front of a full house in O’Hara, O’Brien said Peoples intends to partner with the Pittsburgh Water and Sewer Authority and any other water provider that wants to join, adding that the company has had conversations with five or six providers already.

O’Brien said the plant would be built even if PWSA didn’t agree to partner. “It clearly works with them. Without them, there’s enough municipalities with a large enough group that it would still make economic sense to start,” he said. “There’s 80,000 customers at PWSA, so that’s sort of the goal we’re looking at.”

Peoples intends to build a $350 million water treatment plant on 17.4 acres of the Riverfront 47 site in O’Hara, which is owned by the Mosites Company. The company would also pump $1 billion into infrastructure improvements. By replacing gas and water lines at the same time, O’Brien said the company can create significant cost savings. Exactly who would own those updated assets, however, is yet to be determined.

Aly Shaw of the Our Water Campaign said she doesn’t understand how Peoples’ proposal isn’t a privatization scheme.

“This seems like a hostile takeover of the Pittsburgh Water and Sewer Authority to me,” she said. “We would love to have a new water treatment plant, but not if it comes at the expense of us owning our own water system and our region’s most valuable asset.”

Aspinwall councilwoman Lara Voytko said she is open to new ideas, but is skeptical about a gas company going into the water business.

“PWSA has been a good partner, as far as I’m concerned,” she said. Aspinwall gets its water from PWSA and the Fox Chapel Water Authority. “There’s always room for improvement, and I need to hear what other people have to offer.”

Under the envisioned partnership—which does not yet have a name—PWSA employees would become partnership employees. Representatives from Peoples would comprise half of the partnership’s board, and public representatives would form the other half, said O’Brien. Peoples would guarantee a cash flow to the authority to pay off its debt as well as to cover capital costs, according to information shared Tuesday.

“One of the biggest fears everybody has is [if] something bad happens with our water,” O’Brien said earlier in the day. “We’re sitting here saying, ‘We have the ability to help [Pittsburgh Water and Sewer Authority] be successful.’ So why wouldn’t we offer to partner with them?”

This morning, news of the partnership surprised PWSA’s executive director Bob Weimar.

“Specifically their contacting our customers to indicate that they were a competitor,” said Weimar. “As of today, it’s my understanding they’re going to be sending a letter that was published in the paper to every one of our customers.”

Weimar said PWSA is working to implement a new water treatment plan that will prevent lead from leaching into water and to replace its oldest service lines, which are more likely to contain lead. The authority’s energies are wholly directed at providing safe water, said Weimar.

“Unlike what’s been proposed by Peoples Gas, we’re not going to be looking where the gas lines need to be replaced, but in fact in places where the water lines need to be replaced,” he said. “That doesn’t necessarily overlap.”

While O’Brien was very clear in an interview about partnering with PWSA, Pittsburgh’s leading water authority was not explicitly mentioned in the company’s open letter. O’Brien does reference “decades of past disinvestment” and wrote that “public property not needed under the partnership” could be turned into affordable housing, green space and economic development projects. The letter adds that Peoples' new subsidiary will create jobs, training programs and foster workforce development, all while offering “the highest-quality water at the lowest cost.”

O’Brien clarified that Peoples will function as a connection point for customers to a broad web of services; he said they will partner with the United Way and city and county entities to do so.

What Peoples Water won’t provide is stormwater or sewage conveyance.

Weimar said sewage, stormwater and drinking water are all intertwined, and each are critical to the city’s success. Without the revenues provided by selling drinking water, he said it will likely be much more expensive for PWSA to meet its responsibilities, and increase the costs of sewage and stormwater conveyance for customers.

“The assumption has been made that we’re not qualified to run the utility, and that’s just not the case,” said Weimar. “We, as a public agency, have every expectation of delivering the highest quality water to our customers at the lowest possible price.”

PWSA has been plagued by problems in recent years, including flush and boil orders, frequent water main breaks, elevated lead levels and more than $750 million in debt to its $163 million operating budget for 2018.

Peoples is expected to share more details in a series of community meetings and invite feedback over the next few weeks.

This is a developing story. 90.5 WESA will add updates as more information becomes available.