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Infusion of funding will replace hundreds of lead service lines in ten Pittsburgh neighborhoods

Today, Pittsburgh Water announced the receipt of $26 million in grants and low-interest loans from the Pennsylvania Infrastructure Investment Authority (PENNVEST) to continue the diligent removal of lead service lines throughout Pittsburgh’s drinking water system. This funding, provided by the Bipartisan Infrastructure Law (BIL), is split roughly half-and-half between a nearly $13 million 1% 30-year loan, and a $13 million grant.

“We are grateful for the support of PENNVEST, Governor Shapiro, and the federal government in bringing Pittsburgh Water ever closer to achieving a lead-free water system with this latest award,” said Pittsburgh Water CEO Will Pickering. “These sources of funding are enormously helpful in supporting our mission to protect public health through safe and reliable water services.”

Pittsburgh Water will use this award to fund the replacement of 580 public and 1,100 private lead service lines across 10 Pittsburgh neighborhoods, including Homewood, Oakland, Garfield, Friendship, Lincoln-Lemington-Belmar, South Side Slopes, Central Northside, Marshall Shadeland, Mount Washington, and Squirrel Hill. Proactively removing lead service lines is the most effective way to eliminate the presence of lead in drinking water, and PENNVEST funding such as this helps take a significant amount of financial burden off the shoulders of Pittsburgh Water’s ratepayers.

Since the inception of their Community Lead Response program in 2016, Pittsburgh Water has replaced over 12,000 lead service lines, and is on track to replace every residential lead line in their service area by 2027. This robust program has made Pittsburgh Water an industry leader in lead service line replacements, resulting in the organization being consulted by water utilities and municipalities across the country for strategic guidance on protecting public health and improving water quality.

Fueling Pittsburgh's Economy

The essential work Pittsburgh Water is doing throughout the community has a direct economic impact on the Pittsburgh region. This $26 million award will generate approximately $42 million in economic benefits to our region by stimulating the local economy, creating jobs, and keeping money in local communities.  

Pittsburgh Water’s lead service line replacement program creates contracting opportunities for construction firms local to Pittsburgh and Pennsylvania. Pittsburgh Water’s procurement policies and use of PENNVEST funding require a robust and thorough Disadvantaged Business Enterprise (DBE) solicitation process. Outreach to vendors through the Pennsylvania Department of General Services Supplier Search ensures DBE firms are aware of opportunities and the ability to compete for work funded by EPA financial assistance dollars. To learn more of these upcoming opportunities, DBE firms are encouraged to register through Pittsburgh Water’s Procurement Portal.

“Pittsburgh Water appreciates the level of recognition this latest PENNVEST award represents,” said Ed Barca Pittsburgh Water’s Director of Finance. “The progress we’ve made in recent years demonstrates our commitment to protecting the health and safety of the communities we serve, and this funding will help expedite our work even further.”

Since 2018, Pittsburgh Water has received a total of $809 million from PENNVEST through a combination of $714 million in low-interest loans and $95 million in grants that do not have to be repaid. Pursuing external funding from state and federal partners helps reduce the cost to ratepayers over time during an unprecedented level of investment in our essential water systems. Over time, this award will save Pittsburgh Water ratepayers $945 million as opposed to traditional municipal bond funding.

Upgrade to ‘A2 stable’ reflects strong leadership and sustained financial improvements

Pittsburgh, PA - Moody’s Ratings (Moody’s) recently upgraded Pittsburgh Water’s credit outlook from A3 positive to A2 stable, signifying financial stability during a period of necessary capital investments, and Pittsburgh Water’s progress as a modern, forward-looking utility with effective governance and leadership. 

The upgrade to A2 and the revision of the outlook recognizes Pittsburgh Water’s stability, which the organization has proven capable of maintaining. The upgrade comes as part of a growing trend for Pittsburgh Water; just over two years ago, S&P Global Ratings raised its rating of the utility’s first-lien revenue bonds to ‘A+’. In this week’s announcement, Moody’s noted that, over the past five years, Pittsburgh Water has significantly improved its coverage and liquidity, placing the organization in a relatively sound position. Given this, Moody’s rating action also assigns the A2 rating to Pittsburgh Water’s proposed $120.9 million First Lien Revenue Bonds, Series A of 2025. 

“This latest upgrade is further validation that our leadership team and Board of Directors are managing public finances responsibly,” said Pittsburgh Water CEO Will Pickering. “By managing our investments effectively, we will continue to improve our vital public infrastructure and keep rates as affordable as possible,” he continued.

Staying the Course in Financial Stewardship

In recent years, Pittsburgh Water has implemented extensive improvements to its financial practices and policies with support from its Board of Directors. These efforts have resulted in stronger financial stewardship. In addition, Pittsburgh Water has successfully secured low-interest loans and grants from state and federal agencies, built its reserve funding, and has improved debt management.  

As a publicly owned and operated water utility, every dollar received is reinvested back into the water system customers rely on. Funding from state and federal partners is critically important to keeping rates as low as possible and reducing the burden on ratepayers. Since 2018, Pittsburgh Water has been awarded a total of $852,432,928 in funding through these routes: $753,550,130 as loans and $98,882,798 as grants. 

Pittsburgh Water’s renewed focus on modernizing the city’s aging water infrastructure is perhaps the primary driver behind the organization’s need to secure such funding. In recent years, the organization has made significant progress to remove lead service lines across its service area and is constructing the generational projects making up its Water Reliability Plan. These crucial projects fulfill the organization’s mission to protect public health and will secure reliable water services for customers now and in the future. 

“Maintaining a stable financial outlook while simultaneously making a series of once-in-a-generation investments in critical water infrastructure projects is no small feat,” said Ed Barca, Pittsburgh Water’s Finance Director. “Our financial performance and fiscal responsibility are such critical factors in our operations, now more than ever. The financial strategies we employ today have the potential to impact our ratepayers for years to come, and we see this upgrade from Moody’s as another sign that we have been — and will continue — making strong decisions.”

Stable Leadership Plays an Important Role

Among many factors in this week’s upgrade, Moody’s cites Pittsburgh Water’s stable leadership as a major driver of this rating action. With a commitment to financial stewardship and sustainability, its current leadership has instituted sound fiscal policies to support necessary capital investment essential to modernizing its infrastructure and providing reliable water services. To meet these obligations, funding through low-interest loans and capital borrowing is necessary. Moody’s cites the organization’s current and projected coverage and liquidity as a substantial improvement from its history.  

This notable progress, and the demonstrated aptitude of its current leadership to maintain financial health, played an important role in Moody’s decision to upgrade Pittsburgh Water’s rating. Moody’s specifically noted that its stable outlook reflects the likelihood that Pittsburgh Water’s strong management team will prevent its overall credit profile from declining moving forward. 

“An important area of Pittsburgh Water’s mission, vision, and core values is our focus on the delivery of safe and reliable water services, which requires a strict commitment to our core values of stewardship, ethics & integrity, accountability, safety and equity,” said Frank Sidari, Pittsburgh Water’s Chief Environmental Compliance and Ethics Officer. “These core values have played a huge part in shaping how our management team guides our entire operation, with a constant emphasis on taking every action in the best interest of our current customers and future generations. This level of leadership and our demonstrated responsible stewardship of capital seems to be exactly what Moody’s is referencing in this rate upgrade.”

Pittsburgh, PA - Earlier this week, Pittsburgh Water reached a significant milestone in its Community Lead Response with the replacement of its 12,000th lead service line. The work came at no direct cost to customers, reflecting the organization’s commitment to protect public health and deliver equitable water service.

There is no “safe” level of lead in drinking water. Therefore, Pittsburgh Water is committed to replacing all residential lead lines in the system, both publicly and privately-owned, to improve water quality for their customers now and into the future. While the organization works to replace all these lead lines, they have implemented a highly effective corrosion control treatment that keeps lead levels at record lows and protects customers while continuing their multimillion-dollar replacement efforts.

“Completing another thousand lead service line replacements puts us one step closer to removing all residential lead service lines in our system,” said Pittsburgh Water CEO Will Pickering. “Providing this service for free in in the areas most at-risk for lead exposure means customers will not have to bear the financial impact of removing this legacy infrastructure,” he said.

This achievement comes weeks after a special visit from the U.S. Environmental Protection Agency’s Head of Water, Bruno Pigott, who was in town to tout millions in funding to replace lead lines and upgrade water infrastructure in the region. He was joined by U.S. Congresswoman Summer Lee and State Representative Lindsay Powell, who shared remarks on how this program has positively impacted the utility’s customers. Pigott and his team acknowledged the great progress Pittsburgh Water has made, stating they are leading the way in their efforts to remove lead. This visit came on the heels of the Lead and Copper Rule Improvements, a more robust national standard for removing lead service lines across the country.

Leading the Nation in Lead Line Replacement

Pittsburgh Water has been heavily focused on removing lead service lines and improving water quality since 2016, when their Community Lead Response program first began. They tout this Community Lead Response as a carefully tailored program, strategically and thoughtfully designed to best serve their customers. Some of its features include:

• Residential lead service line replacements – at no direct cost to the customer - with an average of 1,500 replaced every year since 2016.
• Free lead test kits for residential customers.
• Mapped service line material data.
• Stringent lead testing parameters to comply with state and federal regulations and provide customers with the best available data on water quality.
• A Lead Line Reimbursement Program, for those who want to proactively replace the private side of their lead line before a Pittsburgh Water project reaches them.
• A dedicated Lead Help Desk, which addresses all lead-related questions and concerns for customers.
• State and federal funding sources that keep the cost of the program as low as possible.

This customer-first approach has drawn the attention of water utilities, regulators, and industry professionals from across the country. Pittsburgh Water’s Community Lead Response team has consulted with 32 organizations since 2021, sharing best practices and lessons learned with those just starting their lead line replacement journey.

Replacing All Lead Lines

Pittsburgh Water aims to replace all residential lead lines in their system by 2027, a little over 10 years since the program began. This schedule for completion will allow the utility to maximize federal funding, which comes with increased grant money, while it is available through the Bipartisan Infrastructure Law. This approach will maintain a steady, aggressive pace toward removing the remaining lead lines while putting the least financial impact on Pittsburgh Water’s ratepayers.