Troubled rural water company could be forced to sell pending Pa. utility commission investigation

This story was produced by the State College regional bureau of Spotlight PA, an independent, nonpartisan newsroom dedicated to investigative and public-service journalism for Pennsylvania. Sign up for our north-central Pa. newsletter, Talk of the Town, at spotlightpa.org/newsletters/talkofthetown.

HARRISBURG — State regulators are investigating a troubled Centre County water company to determine whether its owner should be forced to sell.

The review of Rock Spring Water Company was launched by the Bureau of Investigation and Enforcement, a division within Pennsylvania’s Public Utility Commission. In a recent filing, the bureau cited Rock Spring’s history of regulatory violations and an ongoing legal battle with the Department of Environmental Protection over excessive water loss.

The bureau also noted the company’s continued failure to fix issues and pay tens of thousands of dollars in civil penalties.

An investigation to determine whether the commission should order another utility to acquire Rock Spring “is in the public interest,” Carrie Wright, deputy chief prosecutor, wrote in the bureau’s petition.

Such action is reserved for situations where a small water or wastewater utility violates statutory or regulatory standards and cannot provide safe and reliable service. It’s a lengthy process with no guaranteed outcome.

Rock Spring’s owners did not respond to a request for comment for this story.

A Spotlight PA investigation published in early June found that Rock Spring Water Company, state regulators, and elected officials have failed the roughly 1,000 customers who rely on the 20-mile system, which has hemorrhaged water — averaging 63% water loss — for more than a decade. Levels above 20% are considered excessive, according to industry standards.

The commission and Pennsylvania’s Office of Consumer Advocate entered into a settlement with Rock Spring when it last increased rates in 2013. The agreement directed the owners to address water loss and make efforts to sell, but neither occurred.

The same family has owned the business since the company’s founding in 1947.

Neighboring State College Borough Water Authority has discussed buying Rock Spring, but a sale has never materialized. Meanwhile, years of neglect have resulted in crumbling infrastructure, low pressure, outages, and sometimes lengthy boil water advisories.

When asked about finding new owners, a Rock Spring representative — who wouldn’t provide their name or title — wrote in an email to Spotlight PA in July that addressing leaks “is more important at this time.”

In its filing, the bureau identified five possible buyers: the privately owned Aqua Pennsylvania, Pennsylvania American Water Company, and Veolia Water; and the municipal-run State College authority and Huntingdon Area Water and Sewage Authority.

The bureau’s petition has been referred to the commission’s Office of Administrative Law Judge for further review. A judge will be assigned to adjudicate and set a litigation schedule. It’s similar to a court proceeding with discovery, hearings, expert testimony, and legal briefs.

The judge will then recommend a decision, which will be considered by the utility commission — along with a full review of the case — before voting on a final action at a future public meeting, Nils Hagen-Frederiksen, an agency spokesperson, told Spotlight PA in an email.

A 2022 engineering report commissioned by Ferguson Township estimates that the current water system needs $13.5 million in repairs. The municipality does not oversee Rock Spring, but local officials have tried to find ways to solve the problem on behalf of residents.

The report — compiled by Altoona-based firm Gwin Dobson & Foreman Engineers and obtained by Spotlight PA — identified the State College authority as the “only logical entity capable” of acquiring Rock Spring. The assessment also identified grant and loan programs that would help fund improvements and avoid placing undue financial pressure on customers.

The water authority has absorbed local systems in the past, but it cannot force Rock Spring to sell.

It’s up to the bureau to investigate and argue that selling a small water or wastewater utility is in the public interest. The utility — in this case, Rock Spring — is responsible for proving its ability to operate safely and efficiently at a reasonable price. The commission decides whether to order an acquisition.

A utility also has the opportunity to consider alternatives — such as organizing under new management or merging with another provider — before the commission orders a sale. Sometimes, the commission will appoint another utility provider as a receiver to assure safe and reliable service.

If the commission decides an acquisition is necessary, the final sale price is determined between the seller and the acquiring utility and faces approval from the regulatory body.

The North Heidelberg Sewer Company in Berks County, Delaware Sewer Company in Pike County, Winola Water Company in Wyoming County, and Venango Water Company in Venango County have faced these proceedings in recent years.

The 2022 engineering report produced for Ferguson Township, which based its analysis on the State College authority as the likely buyer, estimated the Rock Spring system could be sold for $100,000 to $150,000.

Without expeditious fixes and funding, Rock Spring’s “chronic operational problems will only become more severe,” engineers predicted.

Charles Williams, who lives in Bloomsburg and inherited 12 shares in the company, has tried to participate in Rock Spring’s operations over the years. However, he told Spotlight PA that the Campbell family has been reluctant to share information or include him in business decisions.

Williams said he’s primarily learned about the goings-on of the company from Spotlight PA’s reporting.

In early August, Spotlight PA sent letters to the company’s remaining 11 shareholders — including President J. Roy Campbell, Treasurer Bonnie Campbell, and several other family members — with questions about their role in the company. Three were returned as undeliverable, but no one else responded.

Though a sale will likely mean Williams gets “little or nothing” for his shares, he said reliable and safe water service for the community is what matters.

“I think it’s been mismanaged for so long, and I’d rather not have my name associated with the company,” he told Spotlight PA.

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