Why Is Pennsylvania’s Water Expensive?

Feb 27, 2016

Water drips from a faucet.
Credit nekidtroll / flickr

A recent ranking of the nation's 500 largest water systems found the highest rates charged by private companies in Pennsylvania.

Aging infrastructure and an investor-friendly regulatory climate contribute to costs, experts say.

This caught our attention because multiple commonwealth cities are considering privatizing water treatment and delivery, or have done it recently.

Why do cities consider privatizing? To finance system improvement, generate cash for a relatively unrelated obligation, or both.

 


Findings

The chart above gives a detailed look at rates charged by 15 of Pennsylvania largest water systems serving about half of the 10 million or so residents (between 2.5  and 3.5 million state residents use well water, based on a survey and Penn State estimates, respectively).

Food & Water Watch compiled the list of rates. The DC-based nonprofit advocates for, among other things, public ownership of water utilities.

Private water costs an average 55 percent more than water from systems run by municipalities and other public entities, the report notes.

Private operators pay taxes. They also have shareholders, whereas there's not the same profit motive for a municipal authority or municipality. In that respect, it's not surprising that private companies would charge higher rates.

"We're public, they're private. They make more, we know that," says Pennsylvania Municipal Authorities Association Deputy Director John Brosious.

But in Pennsylvania, it is more pronounced:

Of the 19 Pennsylvania water systems included in the survey, the average private rate in Pennsylvania is 84 percent more than the public rate average. The national markup is 55 percent, according to an analysis of the data.

The average cost for water provided by private companies is 43 percent higher in Pennsylvania than nationally; on the public side, it's 21 percent higher, an analysis shows.

Find more of this report on the site of our partner, Keystone Crossroads