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Scranton Sewer Authority threatens to end American Water contract to escape financial obligation to company

4/22/2004
By Michael Sadowski TRIBUNE STAFF WRITER

American Water division of Thames USA currently operates the South Scranton wastewater treatment plant. In a complex scheme American "loaned" money to Scranton to be repaid through the course of a twenty year contract. Now the city and the company disagree if the money must be paid back to American.  

Scranton is pressuring American Water by entertaining interest from two other companies to operate the wastewater facility.

United Water and Severn Trent Services, two national water-management companies, have expressed interest in taking over operations of the plant in the last few weeks. Severn Trent expressed this interest in a letter sent to the authority, while a United Water official called authority engineer Albert Magnotta to express interest.

Scranton Sewage Authority chairman Eugene Barrett said the addition of new companies into the mix takes a bit of pressure off the authority. Last month, the authority had no companies interested and the possibility of the authority having to take over the treatment plant -- as it had done until 1999 -- seemed very real.

While that still can happen, the authority now has options.

"This fosters competition," Mr. Barrett said. "It does give us something else to look at. If someone can give us the service better than what we have dealt with, then it is incumbent on us to look at that."

American Water still wants to negotiate with the city to devise a successor contract and continue to operate the plant.

"We are serious about negotiating," AWS Regional Director Stephen Siegfried said. "American Water wants to be in Scranton."

But if American Water and the authority end their relationship, there already is debate over how much -- if any -- the city and Dunmore owes the company.

Scranton and Dunmore received an up-front, lump-sum $8 million payment from American Water in 1999. As the arrangement progresses each year, the amount the company can reclaim is gradually reduced and reaches zero after 20 years.

The schedule indicates a hanging balance of $6.63 million through Jan. 31.

Mr. Barrett reiterated Wednesday he believes there is "legal standing" for the city and borough not to owe any money.

Mr. Siegfried disagreed: "It's in the contract. It's in black and white. It's very clear."

The last option -- the authority take over the plant -- is still viable.