The Altoona Mirror reported that it would be difficult for the Altoona Water Authority to meet the criteria on the lease for rate cap controls.
In Allentown's lease, as with any lease, the lessor had general rate increase caps. The lessor had no caps on concessionaire's rate increases. Concession rate fees are to pay off debts, capital improvements and other fees and taxes. Private companies hide these charges on your bill with terms like debt/finance fee (used to pay off debt including financing on the lease), capital improvement fee, extended service fee (fees for municipalities outside the city), overage charges, taxes and other charges.
The authority does not have hidden fees; they are included in the water/sewer rates. It would be impossible for a public or private company to take on debt without increasing rates. Concession rates are not regulated by the Public Utility Commission for any water supplier, even a private company.
In Allentown, water privatization would save the average household about $209 a year in property taxes, but increase the average customer's water bill $822 a year. In total, the average household would have to pay an extra $613 a year.
Water privatization will cost the average household about twice as much as simply raising taxes. The concession agreement may defer rate hikes for a couple of years. However, that just means that the concessionaires will have to increase rates substantially in later years to recover rates.
The consultant for City Council, Griffin Financial Group, modeled the proposed lease along the lines of Allentown's. The concessionaire will have to increase rates or put them in hidden fees to pay off the lease and improvements to the system.
When City Council says you have double protection from the PUC, they are misinformed or misled. Alan Krier, the authority's solicitor, stated: "I don't see how you can generate all this money to do all these things without raising rates, especially given the debt the company would probably incur to make an upfront payment." Krier is correct. The consultant for City Council modeled the proposed lease off Allentown's. Is it a coincidence or a convenience that this was not mentioned to Allentown's or Altoona's City Councils?