CUMBERLAND — Price negotiation is set to begin in Allegany County’s attempt to take over a private water system.
Last month, the county’s three commissioners unanimously agreed to use eminent domain to take the Pinto Water and Wastewater and Highland Estates Water system that was recently purchased by Maryland American Water, a subsidiary of American Water Works Company.
The county aims to help many local customers who say their monthly water and sanitation bills are unusually high, with some that have reached $400 to $900.
Allegany County Administrator Jason Bennett at a recent public work session said he and Attorney T. Lee Beeman had a “ground rules” call with American Water officials.
“They understand what we’re doing,” Bennett said. “They from their end obviously are going to fight this.”
Fair market value
The takeover would require Allegany County to pay the water company fair market value for the system, although formal appraisal hasn’t been established.
The county plans to present the company a price to buy the local water system.
“We’ll get that offer together,” Bennett said. “(The water company will) essentially do the same on their end, although we feel it’s likely gonna be unchanged from what they did before.”
In March, Bennett said American Water informally told him the county’s cost to buy the water system would be $20 million.
At that time however, Beeman said the figure represented the net value of all the water company’s assets in Maryland.
Bel Air resident Grant van Wyngaarden in April said fair market value for the local water system would be roughly $10 million.
At that time, he spoke of “substantial publicly available financial data” to set a price for the water system.
“Allegany County already has demonstrated and carries out utility debt to cover such transactions,” van Wyngaarden said at that time and added that the privately-owned water system supports shareholders and corporate overhead indefinitely. “Public ownership typically brings operating efficiencies,” he said. “There are no shareholders, no incentive to maximize returns.”
‘Take some time’
While eminent domain gives government power to take private property for public use, the process will likely be time-consuming, expensive and arduous.
Bennett last week spoke of ongoing communication with the water company.
“They’re hoping to get some information to us that they use for their pricing model,” he said. “Unfortunately, this isn’t gonna be a quick process. It’s gonna take some time.”
Beeman said the company is willing to cooperate with the county to “turn information over to us at this point instead of (the county) having to go through litigation to get the information.”
The county will verify the information and plans to make the purchase offer in roughly 45 days, Beeman said.
Revenue
Many of the privately-owned company’s local customers fear costs will further increase under American Water, which recently received approval from states including Maryland and West Virginia for rate hikes.
Foodandwaterwatch.org states that investor–owned utilities typically charge 59% more for water and 63% more for sewer services than local government utilities.
According to technology and data provider website pitchbook.com, as of March 31, American Water Works Company had a trailing 12-month revenue of $5.21 billion.
“American Water is the largest regulated water and wastewater utility company in the United States,” the corporation’s website stated Thursday. “American Water’s approximately 7,000 talented professionals leverage their significant expertise and the company’s national size and scale to achieve excellent outcomes for the benefit of customers, employees, investors and other stakeholders.”