Pittsburgh, PWSA to end 25-year financial arrangement

Pittsburgh and its water authority are poised to end a relationship that provided millions of gallons of free water to city entities each year, supplied the city with an annual payment of more than $7 million and required the authority to subsidize water rates for thousands of residents.

The agreement, which is subject to City Council approval and required by the Pennsylvania Public Utility Commission, would maintain the Pittsburgh Water and Sewer Authority as a public agency and clearly define the relationship between the city and PWSA.

“There are two major issues that are being addressed,” Mayor Bill Peduto said. “The first is a formal agreement that will keep the water that is owned by the people of Pittsburgh public, so it takes off the table any of the ideas of privatization. The second is that PWSA will now be treated as a utility, the same way we work with Duquesne Light or Peoples Gas. They will be required to pay such things as permit fees, and they will charge the city for things such as the use of water.”

The agreement calls on Pittsburgh to pay water, sewer and fire hydrant charges on a five-year phased-in basis beginning in January 2020. Most city properties are not metered for water usage. Pittsburgh and PWSA would share the costs of installing water meters on city properties under the agreement.

Officials could not immediately estimate the cost of the city’s future water and sewer bill.

“The vast majority of city facilities don’t have water meters, so we can’t give a final number,” said Dan Gilman, Peduto’s chief of staff.

PWSA would also assume control of a water rate subsidy agreement dating to 1973 in which the authority subsidizes rates for residents in the city’s South Hills neighborhoods who receive their water at higher rates from the Pennsylvania American Water Co. City officials approved the agreement so all city residents pay the same water rates, according to Peduto.

The agreement permits PWSA to terminate the subsidy when its rates are equal to those of Pennsylvania American, which is likely to happen in the near future. City water rates increased by about 14 percent for customers in March.

“We have not requested another rate yet. but I do expect that we will at some point in the near future,” PWSA board Chairman Paul Leger said.

Gilman said the difference in rates now is about 45 cents per South Hills customer.

Other key elements of the agreement require:

• Abolishment of a $7.1 million payment PWSA provides the city each year.
• PWSA to reimburse the city for PWSA employees enrolled in the city pension plan and pay city permit fees.
• PWSA to pay for city services including as fuel for authority vehicles, fleet maintenance and street sweeping costs.

The current agreement between the city and PWSA ends on July 5. City Council is expected to introduce it for consideration Tuesday.