Sagamore Estates’ water company wants out of an antiquated system

Shohola. Residents worry about being left high and dry by their utility, which has jacked up rates three times but did little to fix their water system.

14 Oct 2020 | 06:57

Sagamore Estates once had its own water company, back when it was an adult summer camp in the 1940s and 1950s. In the late 1990s, the water company’s ownership broke off from Sagamore’s management.

The utility’s owner wanted the company to provide a constant stream of income. But the individuals and small companies that operated the utility over the next decade all confronted the same reality: the antiquated water system needs several million dollars worth of upgrades.

About 10 or 15 years ago, the Middlesex Water Company took over the utility. It’s the only foray into Pennsylvania for Middlesex, a company that provides water services in New Jersey and Delaware.

All public utilities in Pennsylvania are monitored and regulated by the Public Utilities Commission, a state agency. Fairly quickly, Middlesex created a separate wholly owned subsidiary – a corporation known as Twin Lakes Utilities (TLU), which became the owners and operators of the Sagamore utility. Both of these transactions – the transfer to Middlesex and the transfer to TLU – were approved by the commission.

“For reasons known only to TLU and Middlesex, they simply did not learn the lesson of the prior owners in realizing how much money would be needed to upgrade the system to make it viable,” said Sagamore Estates resident Sean Kemether, who provided the background.

The water rates paid by the approximately 110 Sagamore Estates customers will not cover the cost of the upgrades. Soon after getting involved, Middlesex/Twin Lakes Utilities started their efforts to get out, but they’ve been unable to find any buyers.

The estimated cost of the upgrades is between $4 and $5 million, a sum so large, Kemether said, “that there is really no value to the utility in terms of a corporate purchase and sale, yet Middlesex/TLU has and continues to find ways to generate as much money as possible, mostly at the expense of its customer base.”

Twin Lakes Utilities’ appeals to the Public Utilities Commission resulted in three rate increases in the last ten years, so that customers now pay 400 to 500 percent more than the average water customer in Pennsylvania, Kemether said. Twin Lakes Utilities told the commission it would use the rate increases to make upgrades but has actually done very little, he said.

Going for broke

Twin Lakes Utilities has so many leaks, it pumps daily nearly 10 times as much water as customers pay for. Much of the pumped water simply returns to the ground. And new leaks sprout every few weeks. “Middlesex/TLU perform band aid repairs rather than fulfilling their stated mission to completely overhaul the system,” Kemether said.

In addition, Sagamore Estates needs a new well. Twin Lakes Utilities has located a site for the well but is failing to develop it. Kemether said the utility is hoping to make money off the transfer of rights to whatever entity ultimately takes over in the coming months.

In 2020, Twin Lakes Utilities renewed its efforts to abandon the system by initiating, for the second time, a 529 proceeding under the Public Utilities Commission. Under this proceeding, Twin Lakes Utilities says it’s out of money and that its main funding source – Middlesex – has cut off resources. Twin Lakes Utilities is “now saying to the PUC and the customers that it is broke and will stop operating the utility,” Kemether said.

In 2019, Pennsylvania approved $4.6 million dollars, almost all in the form of a grant, for use by Twin Lakes Utilities to completely upgrade Sagamore’s water system. But the utility is rejecting the money and simply wants out.

In August, Twin Lakes Utilities told its customers it would stop operations and shut off the water to its 110 customers effective Sept. 1. Through extensive efforts by at least three state agencies, the shut-off was pushed back to Oct. 1. On Sept. 17, the Public Utilities Commission said it will allow the 529 proceeding to continue, which requires the commission to find a viable company to take over the utility. The transfer negotiations are expected to take several months, Kemether said, “during which time customers are left to guess if they will have water each morning when they wake up.”

“It remains unclear what will happen to the water rates paid by TLU customers once this 529 process is over,” he said. “What is clear is that customers are paying $3,000, $4,000 or $5,000 a year for water services that are at best unreliable.”

Rates double

Virginia Pfeiffer drew up a chart to show how the third rate increase, which went into effect on April 19, almost doubled rates.

“I am a seasonal resident, using my house on a part-time basis from April to October, not at all from November to March,” she said. “I don’t have any water-using appliances. My yearly cost will be $1,440.36, and this is for using hardly any water!”

For full-time residents the quarterly bills are much higher, especially large families with a washing machine and dishwasher.

“Their argument is that they would have to pay a significant amount of income tax on the grant,” Pfeiffer said of Twin Lakes Utilities. Without the grant, she said, there isn’t enough money to fix the problem.

She showed a photo of the damaged road in front of her house, caused by a water main leak that was allowed to run for over a month.

The person picking up the phone at Twin Lakes Utilities asks callers to leave a message. They do not identify themselves or say the company name. The address is listed 101 Sagamore Road, Shohola. Several messages left over a week’s time were not returned.

The person picking up the phone at the Middlesex Water Company said Twin Lakes Utilities and their company are actually one and the same, and offered to contact the company’s media relations.

On Oct. 6, Bernadette M. Sohler, vice president of corporate affairs for Middlesex Water, sent the following email to the Courier: “I understand you called yesterday requesting information related to the Twin Lakes rate filing. As this subject is currently an active matter before the Pennsylvania Public Utility Commission, we cannot make any public comments at this time.”

No one responded after the Courier filled out a Public Utility Commission form with the customers’ concerns.

Sagamore Estates residents remain in the dark, not knowing what they will find, or not find, when they turn on their taps.

Related story

Please see related story, “Wild Acres residents say they’re being bilked by their water company.”

CUSTOMER CHARGE
Approved effective April 19:
Per month: 114.84
Per quarter: 344.52
Previous:
Per month: 60.41
Per quarter: 181.23
Percent increase: 90.10%
USAGE
Approved effective April 19:
Per 1,000 gallon: 27.75
Per CCF: 20.76
Previous:
Per 1,000 gallon: 14.60
Per CCF: 10.92
Percent increase: 90.07%
“For reasons known only to TLU and Middlesex, they simply did not learn the lesson of the prior owners in realizing how much money would be needed to upgrade the system to make it viable.” --Sean Kemether