There’s an inevitable problem confronting many of Pennsylvania’s 2,800 water systems: old age. Eventually, time takes its toll on the underground pipes installed decades ago and costly repairs need to be made.
Unfortunately, many small Keystone State water companies cannot afford to make the repairs without drastically raising their rates – a tactic few are willing to adopt. Fortunately, there’s Pennsylvania-American Water Company to step in and set things right.
“State regulators and local officials look to Pennsylvania-American in those situations because we have the resources and expertise needed to handle all water and wastewater needs,” says Robert M. Ross, president and chief executive officer. “By partnering with Pennsylvania-American, communities have learned that they can meet the needs of their communities and at the same time avoid costly rate increases or additional taxation.”
You don’t have to be a mathematician to understand the sound economies of scale at play. For example, if a small community has to make a $1 million capital improvement but has only 5,000 residents to shoulder the financial burden, the impact on individual households would be substantial. Pennsylvania-American, on the other hand, can spread the same costs among its huge, statewide population of customers. In this way, the company is a natural partner for these communities.
Dollars and Sense
“The water industry is the most capital intensive industry there is. On average, we invest $4 for every $1 of revenue,” says Ross. “As a result, we’re finding that municipal water and wastewater system owners are looking to outsource their services, in whole or in part, because it makes good business sense.”
Communities with troubled water systems often look to Pennsylvania-American for the solution – and the solution oftentimes involves selling their water and/or wastewater systems to Pennsylvania-American. The community benefits because Pennsylvania-American has the financial wherewithal to make the necessary repairs to the system or systems. Additionally, it frees up the resources that the municipality would have had to spend on capital improvements and allows the local government to put the dollars back into the community by, for example, cutting taxes or making improvements to facilities such as libraries, police stations and recreational centers.
Evidently, Ross makes a convincing argument. Pennsylvania-American is the largest regulated water utility in the state and the largest subsidiary within American Water Works Company, Inc. (NYSE:AWK), the largest investor-owned water service enterprise based in the United States.
Reservoir of Growth
With more than 100 years of water-service experience, Pennsylvania-American is a trusted leader in the industry. “We pride ourselves on training our associates to be the best they can be in the jobs they perform,” says Ross. The company employs close to 1,100 associates, who have expertise in all areas of the water and wastewater utility business, including customer service, water quality, engineering, plant operations and maintenance, distribution system operations and maintenance, risk management, human resources, legal, financial and accounting.
Headquartered in Hershey, Pa., Pennsylvania-American’s organization oversees four geographic operating areas, which serve an estimated population of 2 million people in 33 of the state’s 67 counties. The Eastern Area water-distribution systems serve approximately 350,000 in Central and Eastern Pennsylvania, including the recently acquired Coatesville water and wastewater systems. Some of the area’s largest customers include Hershey Foods, Bethlehem Steel and International Home Food Products. The Western Area distribution systems serve an estimated population of 575,000 in Western Pennsylvania. Some of its largest customers are U.S. Steel, Washington Steel and Koppel Steel.
The Pittsburgh Area operates a distribution system serving an estimated population of 550,000 in Allegheny County. In addition to supplying this region, its two large filtration plants provide a major portion of the water needs of the Western Area distribution systems in Allegheny and Washington Counties. The Northeast Area distribution systems serve an estimated population of 555,000. Some of this area’s customers are Fairchild Semiconductor, Thompson Consumer Electronics and Quaker Oats Company.
“Pennsylvania-American is always looking for new growth opportunities,” says Ross. Since 1989, the company has acquired 29 water systems and two wastewater systems. In addition to its acquisitions, the company can also attribute its growth to the extension of mains to homes and businesses that did not previously have water service and to areas of new construction.
The company is also expanding the services it offers to municipal and private entities – including billing, collecting and accounting services, and predictive and preventative condition-based maintenance services. In addition, in cooperation with American Water Resources, the company offers a customer Water Line Protection Program. Through this, homeowners can avoid unforeseen and expensive repair costs that result from breaks in a portion of the water line they own. For $36 per year, the program protects customers’ pocketbooks and provides peace of mind.
Although growth is critical, customer service and high-quality water are the top priorities at Pennsylvania-American. To ensure the water provided to its customers is of the highest quality, Pennsylvania-American monitors the water every step of the way beginning at the source and ending in the homes and businesses of its customers. The company conducts the monitoring at its 40 laboratories, of which 25 are certified by the Pennsylvania Department of Environmental Protection to perform microbiological analyses. The company recently celebrated the opening of a state-of-the-art laboratory in northeastern Pennsylvania, which is certified to perform more sophisticated analyses.
Staffed by 30 water quality specialists and more than 150 analyst/operators in the water filtration and distribution process, the laboratories use advanced equipment that enables the specialists to monitor the water quality at every phase of the process. In addition, more than 150 water-treatment facility operators perform day-to-day quality-control testing to ensure that each of the plants produces water of the highest possible quality.
Each filtration plant conducts approximately 100 water-quality tests daily, the equivalent of 1.2 million annual water tests. Additionally, Pennsylvania-American has access to the American Water System’s Quality Control and Research Laboratory in Belleville, Ill., which is certified by the U.S. Environmental Protection Agency and by 26 states. The laboratory routinely analyzes water samples for the company, performing more than 150 types of water-quality tests.
“Pennsylvania-American Water Company strives to be the water resource manager of choice in the Commonwealth,” says Ross. “We consider it a privilege to supply water and wastewater services to more Pennsylvanians than any other provider. One thing is certain, our team of professionals is ready and committed to meeting our customers needs today and in the future.”