Down the drain: The PWSA insurance plan was wrong from the start

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As if the Utility Line Security saga at the Pittsburgh Water and Sewer Authority wasn't already bizarre enough.

Last week it took a lawsuit in Allegheny County Common Pleas Court, with the PWSA on the losing end, for the authority to pull the plug on a line repair warranty program that was widely reviled beginning a year ago. On Friday, ULS, which has a contract with the PWSA, filed for Chapter 11 bankruptcy protection.

Although the firm asked U.S. District Court to order that the insurance be kept in operation for now and that the PWSA stop telling customers the program has been killed, a federal judge declined on Tuesday.

That's a good thing. From a public standpoint, the program was wrong from the start.

Last year the system's customers were hit with a new $5 monthly charge on their bills for water and sewer line protection. The only way to decline it was to fill out a special form.

Also bothersome was how ULS of Forest Hills got the business. In June 2009, the contract of the previous company that offered insurance was coming to an end. Back then, customers were not forced to take the coverage.

The authority sought bids for a new agreement and the only bidders were the expiring contract holder and ULS, which had been formed only weeks earlier, largely by executives with a politically connected firm, Resource and Development Management Inc. At least two RDM leaders had been active in county government or politics.

ULS got the work, but only 5 percent of PWSA customers opted for the service. That's when the authority and ULS decided to force it on customers, triggering criticism. Then, in December, PWSA executive director Michael Kenney resigned during an investigation by the authority into previous personal and business ties to ULS.

What finally scuttled the program was a March 14 ruling by Judge R. Stanton Wettick Jr. Two firms that offer similar insurance had sued, claiming state law bars authorities from interfering with private businesses. The judge ruled that even though ULS had a contract to provide the service, it "was created and operated by PWSA."

While some PWSA customers who've had repairs done under the program have been satisfied with the work, the way the coverage came about was a raw deal. Consumers are willing to consider add-ons and special protections, but they should have a choice -- not be force-fed. Failing to recognize that basic business principle, the PWSA and ULS are now paying for it.



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