HARRISBURG — There’s still time for Rock Spring Water Company to voluntarily reach a sales agreement with a nearby municipal water authority, but a Pennsylvania utilities judge this week warned that the window is closing.
The troubled private water company in rural Centre County is in the middle of a state regulatory proceeding that could result in its forced sale.
An evidentiary hearing on Monday in Harrisburg featured testimony and cross-examination from six witnesses, whose statements will help Administrative Law Judge John Coogan make a recommendation as part of the state Public Utility Commission’s process.
Attorneys for those involved in the case met during a recess to discuss a possible deal, but no new progress was reported.
Rodney Beard, Rock Spring’s lawyer, told Spotlight PA his client is interested in “trying to work something out.” The company is open to a settlement — preferably with the State College Borough Water Authority rather than an investor-owned utility, he said.
The State College water authority made a $65,000 offer to buy Rock Spring, but the company rejected the bid in June. The municipal entity still hopes to acquire the system. Executive Director Brian Heiser said in testimony that the water authority thinks a public takeover would help regionalize service within the community and offer relief to current Rock Spring customers.
However, the PUC says it can’t mandate such a sale because the State College authority falls outside its reach as a municipal entity. Additionally, the water authority “has no interest” in subjecting itself to the regulatory body’s oversight, Heiser said during the hearing.
Legal briefs are due next month. The judge then has 90 days to make a recommendation for the five-member PUC, which makes the final decision.
“Once I issue my recommended decision, it’s out of my hands at that point,” Coogan said.
Spotlight PA previously published a four-month investigation that outlined how Rock Spring failed to comply with state directives to fix crumbling infrastructure. Owner J. Roy Campbell racked up dozens of regulatory violations and tens of thousands of dollars in fines during a yearslong legal battle with the state Department of Environmental Protection over water loss.
From 2010 to 2023, Rock Spring hemorrhaged water at an annual average of 63%, according to a Spotlight PA review of reports filed with the PUC. Industry standards consider levels over 20% to be excessive.
In May 2024, the PUC’s investigative arm launched a review of the company. To offer customers some relief, regulators in March ordered Pennsylvania American Water, one of the state’s largest investor-owned utilities, to temporarily manage operations as an emergency receiver.
Longtime customers Gene and Sharon Byers spoke favorably of Rock Spring during Monday’s hearing. They shared neighbor-like experiences, such as not being charged for a repair.
“It’s just a great company,” Sharon Byers testified by phone. “Sure, they have issues, but so does every other water company.” Byers disclosed that she has helped Rock Spring with business tasks, such as helping mail bills and some bookkeeping, over the past year.
When questioning a PUC financial analyst and former DEP sanitarian, Beard illustrated Rock Spring’s limited financial resources and staffing capacity. The company’s rates haven’t increased since 2013.
Public input collected throughout this process has illustrated a complicated picture of how Rock Spring’s service — and its failures — have divided customers. Some are torn between wanting better management and worrying about what new ownership might mean for their bills.
For customer Daniel Lee, who spoke during a public input hearing in September, paying more for better service is worth it.
“While I understand the concerns of rate increases, I do not feel that water safety and availability is a luxury item to pinch my pennies over,” Lee said. “Access to clean water is a necessity I’m happy to prioritize in my budgeting efforts.”
Estimates to bring Rock Spring’s system into compliance range from $13.5 million to $16 million, and who is responsible for that financial burden has become central to talks about a sale.
If the State College water authority acquires the system, Rock Spring customers would pay the authority’s existing rates, possibly with a temporary surcharge. Heiser said on Monday that Ferguson Township — which has no oversight of Rock Spring but offered to support local efforts to acquire the system — has applied for one grant on behalf of the authority.
For an investor-owned utility, the PUC approves rates, so the cost of improvements would likely be spread out across the entire customer base.