A controversial $5-a-month line warranty program launched by the Pittsburgh Water and Sewer Authority this year now faces a second lawsuit and a civil investigation that a spokesman for the state Office of the Attorney General on Tuesday called "a serious concern."
Nils Frederiksen, spokesman for Attorney General Tom Corbett, confirmed that the office's Bureau of Consumer Protection is reviewing the authority's arrangement with Utility Line Security LLC.
"We're obviously closely reviewing the facts of the case, and the manner in which this has been handled by the water and sewer authority," Mr. Frederiksen said, calling it "an ongoing investigation."
The authority's solicitor, Mark Nowak, declined comment on the investigation, other than to confirm that he and representatives of the attorney general have "had letters back and forth, and we have provided them with lots of information" on the program.
The authority in January began adding the $5 charge to all residential customers' bills, for which they receive a warranty against water and sewer line failures, and free removal of storm drains from sanitary sewers where required. Customers have to opt out if they don't want the warranty, and the authority's solicitor said that 13,496 ratepayers have done that, with approximately 100,000 remaining in the program.
"I think the program is a bargain," said Mayor Luke Ravenstahl, who appoints the authority board. "I know there are many cases where people that had the insurance were saved tens of thousands of dollars."
The opt-out billing system is believed to be one subject of the attorney general's review. It is also the focus of an Allegheny County Common Pleas Court lawsuit filed by resident Nancy W. Farber in February.
On Monday, Dominion Products and Services, two other firms with which it partners to offer line warranties, and resident Pamela Post filed another civil lawsuit.
Their complaint charges that the contract linking the water authority and ULS violated state competitive bidding laws, because it was not awarded to a lowest responsible bidder. It notes that ULS originally was permitted to market its warranty to ratepayers on an opt-in basis, and then months later the protection program was assigned to all households without any new bidding process.
The complaint terms as "deceptive and confusing" the opt-out billing system that gave all ratepayers the warranty, allowing them to opt out at any time, and to get a full refund if they do so by June. It also says that the arrangement violates a state ban on public agencies entering into competition with private enterprises.
A Dominion spokesman declined to elaborate on the lawsuit.
"We believe that we are on strong legal grounds," said Mr. Ravenstahl. "However, if the court rules otherwise, we will of course comply with the law."
The complaint also alleges that authority Executive Director Michael Kenney's past business relationship with ULS President Christopher Kerr constituted a conflict of interest. Mr. Kenney and Mr. Kerr used to be coworkers and partners in a business similar to ULS, the lawsuit notes, and Mr. Kenney's daughter briefly worked for ULS.
Mr. Nowak said ULS has repaired 263 sewer lines and 62 water lines under the program. He said it has separated 67 storm drains from sanitary sewers, and is in the process of performing 43 more separations.
Rich Lord: email@example.com or 412-263-1542