PWSA’s planned 70% rate increases are subject of PUC hearing | The Homepage

By Ann Belser

For the last five months, more than 5,000 pages of testimony and exhibits have been flowing into the Pennsylvania Public Utility Commission (PUC) regarding the Pittsburgh Water and Sewer Authority’s (PWSA) plan to raise its rates by 70% over the next three years.

None of that testimony is from the City of Pittsburgh, which was granted the right to intervene in the case by the PUC, but has not officially taken a stand for or against the increase.

Office of the Consumer Advocate opposes rate hike

Thousands of pages of testimony were submitted with organizations providing statements in opposition to the increases and the PWSA responding to those objections.

The state Office of the Consumer Advocate (OCA) objected both to the amount of the increase and the authority’s proposal to raise rates over a three-year period.

In testimony to the PUC, an OCA consultant, Jerome Mierzwa, the managing director of economic and management consulting firm PCMG and Associates, said, “PWSA failed to propose even the basic performance metrics for an MYRP (Multi-Year Rate Plan) that one would expect, including a process, timeline and adequate processes for reconciliation of PWSA’s actual expenses, actual revenues, actual capital costs and measures of system reliability and quality of service.”

He pointed to the authority’s capital budget that is included in the proposed increases.

“PWSA has fallen short of spending its projected capital improvements budget every year from FY 2019-FY 2022,” he testified. “As a recent example, for 2022, PWSA projected a spend of $158,934,290 but it only spent $111,140,185, meaning that PWSA over projected the budget by almost $48 million (30%).”

Mr. Mierzwa said capital spending makes up 55% of the costs the authority says it will need over the next three years.

“The practical reality of these facts is that while PWSA has significantly underspent its capital budget since it became a public utility in 2018, over half of the revenue PWSA now requests is built upon the assumption that PWSA will now not only meet its spending projections, but that it will actually double its spending.”

Edward Barca, the authority’s director of finance, countered in his testimony that the budget is designed to pay back the debt on capital spending, saying that if the authority accomplishes fewer projects, it doesn’t eliminate the need for the work, it just means the projects will be done later and the money still needs to be there.

Employee pay and CEO bonus

The Office of the Consumer Advocate also submitted testimony from Dante Mugrace, a consultant for PCMG and Associates, who pointed out that rate increases assume all of the positions at the authority are filled, though there is generally a 12.61% vacancy rate.

Mr. Barca disputed those numbers, saying there are more employees now than Mugrace counted. He also opposed bonuses for PWSA chief executive Will Pickering, who received a $44,550 bonus in 2023, according to the PWSA’s filing, and is expecting a proposed bonus of $47,223 for fiscal year 2024. Before becoming a consultant, Mr. Mugrace was the bureau chief of rates in the water division for the New Jersey Board of Public Utilities.

Mr. Mugrace said the problem with the proposed bonus for Pickering is that there are no metrics attached.

“PWSA did not provide any performance goals or metrics related to the receipt of money attributable to the chief executive officer,” he testified.

Barca rebutted that the PWSA board sets annual goals it wants the CEO to achieve. “This incentivizes the chief executive officer to continue to improve all aspects of the PWSA.”

PWSA’s spokesperson Rebecca Zito did not provide Pickering’s salary by deadline, but according to the website govsalaries.com, Pickering’s total compensation for 2022 was $249,309.

Hurting low-income customers

Pittsburgh United, which describes itself as a coalition of community, labor, faith, and environmental organizations, has also objected to the rate increases. In testimony from Harry Geller, an attorney for the Pennsylvania Public Utility Law Project, the organization pointed out that the authority has already raised rates by 97% for a typical household since 2016 and the proposed increase will bring that to 142% since 2016.

Further, Geller said that while the PWSA’s program to help low-income residents is estimated to serve 20,000 customers, the authority only has 4,751 customers enrolled as of June 2023.

To be eligible, a family has to be below 150% of the federal poverty line, which is $56,250 for a family of four.

This condensed version of a Print community newspaper article is published with permission through the Pittsburgh Community Newspaper Network.