Former Pittsburgh councilor Doug Shields decries Aqua America-Peoples Gas proposed merger | Pittsburgh City Paper

Former Pittsburgh councilor Doug Shields decries Aqua America-Peoples Gas proposed merger

“I don’t think anybody should be approving this merger at all."

Former Pittsburgh councilor Doug Shields decries Aqua America-Peoples Gas proposed merger
CP photo: Rebecca Addison
Doug Shields
On Tuesday, the Bryn Mawr-based water utility, Aqua America, announced plans to acquire Pittsburgh-based Peoples Gas for $4.275 billion. The all-cash deal encompasses the gas utility’s subsidiaries – including Peoples Natural Gas Company LLC, Peoples Gas Company LLC, and Delta Natural Gas Company Inc. – and the assumption of approximately $1.3 billion of Peoples' debt.

Peoples is the state’s largest natural gas provider, and the deal took many by surprise.

The announcement comes just months after Peoples made an unsolicited proposal to partner with the Pittsburgh Water and Sewer Authority, the public utility that provides drinking water for Pittsburgh residents. That proposal outlined a private-public partnership that foresaw Peoples footing the bill for the city’s lead line replacement and building a brand new water treatment plant, among other things.

An Aqua America press release says the combined company will oversee utilities in 10 states. The largest concentration will be in Pennsylvania, which will account for more than 77 percent of the company’s total rate base.

Former Pittsburgh councilor and Food & Water Watch Western Pennsylvania Outreach Liaison, Doug Shields, believes the acquisition is an orchestrated move by Peoples and Aqua to privatize the PWSA.

“This deal has been in the works for some time,” says Shields. “You’re going to tell me that just fell out of the sky last week.”

Peoples CEO, Morgan O’Brien, will continue to lead Peoples, and officially stated that the planned combination with Aqua “creates a larger strategic utility committed to growing our region’s economic future using the most responsible and innovative tools in our long-term infrastructure replacement programs in Pennsylvania, West Virginia and Kentucky.”

In July, Aqua America stated it would be interested in working with PWSA. The company’s CEO, Christopher Franklin, emphasized that interest in a Pittsburgh Post-Gazette story, saying “we and Peoples together can be a solution or part of a solution” for the city’s water issues.

However, Shields believes that proposal could lead to issues, like rate hikes. For example, Coatesville, Pa. saw multiple rate hikes after selling off their public-water utility to Pennsylvania-American Water Company in 2001. However, a 2015 paper in the American Journal of Political Science states that publicly owned utilities typically have problems with performing necessary infrastructure upgrades.

Shields is also worried that companies like Aqua will not be as transparent as publicly-owned utilities, and cannot be held accountable by the public.

“You can say what you want about the PWSA and all its warts,” he says. “But, guess what? We know it has warts because it’s public and what goes on is a matter of public record. You’ll never find out what’s going on at Aqua America or Peoples.”

City officials, as well as PWSA representatives, responded to Peoples’ original offer with skepticism and emphasized that the PWSA remain a public entity. Shields points out that some mismanagement of the PWSA can actually be attributed to another private company, Veolia, which the city back in 2012.

Mother Jones magazine chronicled several of the consequences of Veolia’s decision making in a 2016 feature.

Mayor Bill Peduto has also expressed support for keeping PWSA public. Last August, he dismissed comments by Pennsylvania House Speaker Mike Turzai (R-Marshall) about privatizing the PWSA in order to deal with the city’s continued lead-water problems.

“I’ve been crystal clear that this asset remain the property of the people of Pittsburgh,” Peduto stated in an August press release.

Shields believes Peduto should take a more assertive position by making it known that any deal to privatize the PWSA, through Peoples/Aqua or otherwise, is “completely off the table.” Shields also thinks the Pennsylvania Public Utility Commission should shut down the merger.

“I don’t think anybody should be approving this merger at all,” he says.