Illinois American Water may further expansion by buying Granite City wastewater system
Illinois American Water is set to purchase another municipal wastewater system in the metro-east.
Granite City is the latest to agree to sell its wastewater system to IAW, which will put about 12,500 customers on the company’s rolls at a selling price of $18 million.
Should the sale go through, Illinois American will have spent nearly $140 million on its expansion in the metro-east alone.
IAW most recently bought Jerseyville’s water service and wastewater system for a combined $43.25 million, which added 8,200 customers to its services.
The company also completed the purchase of Alton’s wastewater system in early 2019 for $65.8 million and officially bought Godrey’s system for $13.55 million in October. Granite City’s city council currently is pondering an offer from the water provider for the purchase of its system as well.
Wastewater systems are often owned by local municipalities and usually include treatment plants, pump stations and other mechanisms that work to remove contaminants from wastewater or sewage.
Karen Cotton, an external affairs coordinator with IAW, said the purchases of the wastewater systems usually results in lower costs to customers.
“We have the benefit of economies of scale; for instance, our company purchases pipe by the miles, rather than feet. This provides a cost savings passed on to our customers,” she said. “In addition, costs of needed investments are spread across a larger customer base, helping to prevent rates shock, especially in communities where significant investment is needed to become compliant with EPA requirements.”
She said the purchases have several perks for cities and customers.
From a city’s perspective, a wastewater system’s upkeep can be expensive, and necessary upgrades also can be costly. When those upgrades are needed, customers feel the pain through rate spikes.
Granite City Mayor Ed Hagnauer, when the deal was in its early stages, said the city was interested in the purchase because IAW is better equipped to maintain it along with the related costs, which would come off the city’s budget.
While in advanced stages, the purchase of Granite City’s system still needs approval from the Illinois Commerce Commission. The deal is expected to be completed by late 2020, pending regulatory approval.
In total, IAW now estimates it serves almost 1.3 million people in Illinois.
“Approval for the pending transaction will be sought under the Illinois Systems Viability Act, which allows municipalities in Illinois to sell water and wastewater systems for a price based on fair market value,” a statement from IAW states.