Westmoreland water authority, CNX reach $600K settlement

The Municipal Authority of Westmoreland County is set to receive more than $600,000 to settle a federal lawsuit it filed in 2016 against the energy company that operates dozens of gas wells at the Beaver Run Reservoir.

Board members this week approved the settlement with CNX Resources. The lawsuit involved royalties paid from about 10 wells over a three-year period that ended in September 2014.

CNX inked a deal in 2002 with MAWC that allowed the company to drill wells and extract natural gas from the ground at the 43-square mile resevoir in Washington, Bell and Salem townships, which serves as one of the authority’s two primary sources of drinking water.

Authority Solicitor Scott Avolio said the full scope of the settlement will be released as part of a court filing after a federal judge signs off on the deal.

CNX spokesman Brian Aiello confirmed the settlement terms.

“While CNX denies any liability, to avoid the time and expense of further litigation, we have agreed to the terms of a proposed class settlement with MAWC. We look forward to continuing our productive working relationship with MAWC and local communities,” Aiello said in an emailed statement.

The cash infusion comes at a time of need for the authority. Officials said the water and sewer provider is nearly 11% over budget the first 10 months of the 2022-23 fiscal year. Authority Manager Michael Kukura said expenses so far this year are more than $6.2 million in excess of the projected $111 million budget.

“Revenues from royalties, and this settlement, are lessening the burden on our ratepayers and helps us reduce the deficit,” Kukura said.

Inflation concerns, including rising costs for chemicals required to treat the water and for energy to power distribution and treatment systems, have been primarily responsible for the cost overruns, Kukura said.

The authority sells water to more than 122,000 customers in Westmoreland, Allegheny, Armstrong, Fayette and Indiana counties. It provides sewer service to nearly 30,000 customers.

This week, authority board members approved more than a dozen new contracts for chemicals and equipment needed for the next 12 months that included average price hikes of between 15% and 20%. Higher costs for supplies and equipment is expected to affect the agency’s budget over the next year, Kukura said.

The authority has long relied on revenue generated through royalty payments from gas companies that drill on the agency’s property. Officials said there are 52 wells on-site at the Beaver Run Reservoir that are expected to account for about $4.1 million, about $1 million more than projected, in revenue to the authority this year.

Water rates remain unchanged for the 2023-24 fiscal year that begin next month. The authority last raised rates in 2017.

Authority officials said budgetary deficits are being offset by $20 million in reserves.