Pennsylvania American Water to purchase Scranton Sewer Authority for $195m

Pennsylvania American Water has signed an agreement to buy the wastewater assets of Scranton Sewer Authority (SSA) for $195m.

A subsidiary of American Water, Pennsylvania American Water is an investor-owned water utility.

The acquisition can be completed only after receiving approval from the US Environmental Protection Agency (EPA), Pennsylvania Public Utility Commission and Pennsylvania Department of Environmental Protection.

Pennsylvania American Water president Kathy L Pape said: "Our company and our employees have been the water service provider for this community for decades, and we are excited for the opportunity to be the future provider of wastewater service to our Scranton and Dunmore customers.

"Once the transaction is closed, we can ensure long-term rate stabilisation for customers while providing the expertise and financial resources needed to address the significant environmental compliance challenges facing the sewer system."

Serving nearly 31,000 customers, SSA is under an EPA Consent Decree that mandates approximately $140m upgrades to the sewer system.

Closing the deal, Pennsylvania American Water will build on SSA’s progress and will manage the Consent Decree process to complete all system improvements by the timelines.

Pape added: "The rates under this agreement are considerably lower than those projected under the status quo, according to the independent rates study prepared for the SSA.

"In fact, the cumulative savings in customers’ sewer bills would total more than $350m over the next 30 years, which translates to approximately $7,600 per residential customer."

With the acquisition, which is expected to be completed by 30 September 2016, American Water will create 100 new jobs in the Pennsylvanian city by 2020.

American Water CEO Walter Lynch said: "These will be important jobs as American Water continues to grow in Scranton, throughout Pennsylvania, and across our national footprint.

"We believe these new jobs will have a very positive economic impact not only through the payroll generated, but they will also stimulate additional business activity in Scranton."

The acquisition of the sewer system will allow SSA to repay its existing debt, estimated to be around $70m.