Troubled Centre County Water Company Pitches Last-Minute Idea to Keep System in Local Hands

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FERGUSON TOWNSHIP — Despite an order to sell, Rock Spring Water Company is pitching customers a last-minute idea to keep the troubled system in local hands.

In mailed letters, the privately owned company asked customers whether they would be interested in forming a cooperative to take over the system rather than transferring it to Pennsylvania American Water.

Joe Baker, a Rock Spring customer, said he was “flabbergasted” by the letter. He wasn’t opposed to the effort but remained skeptical of the company’s tactics.

“I’d be 100% for it, if it were a real thing,” he told Spotlight PA. “I just don’t think it is.”

A Spotlight PA investigation published in June 2024 found that customers served by Rock Spring were failed by the private utility, state regulators, and elected officials.

Since then, the community has watched a yearslong regulatory process unfold, marked by shifting positions from Rock Spring over whether it’s willing to sell the system. The company even signaled a preference for a local takeover, only to later reject an offer from the State College Borough Water Authority.

“They’ve been dragging their feet, doing dumb things, complaining the whole time,” Baker said. “That’s why I don’t believe it.”

Pennsylvania American has served as the system’s emergency operator since March 2025, after the state Office of Consumer Advocate requested the takeover to prevent “irreparable” injury to Rock Spring’s 1,000 customers.

Prior to the takeover, Rock Spring had racked up dozens of regulatory violations — including failing to protect its water source, shutting off service without proper notice, and leaving a leak unfixed for six months. It also owed tens of thousands of dollars in fines as part of a yearslong legal battle with the state Department of Environmental Protection over excessive water loss.

The company resisted state directives to make repairs and find a new owner. Additionally, Rock Spring hasn’t increased rates since 2013, and outside estimates to update the system range from $13.5 million to $16 million.

Customers interviewed in 2024 for Spotlight PA’s investigation showed how the company’s service — and its failures — have divided those who rely on the system. While some were torn between wanting better management and worrying about what new ownership might mean for their bills, others stayed loyal to owner J. Roy Campbell, whose family founded the business in 1947.

As the result of a lengthy and rarely used regulatory process — also called a Section 529 proceeding — state regulators approved a forced acquisition in June and ordered Pennsylvania American to buy Rock Spring.

In a filing submitted to the state Public Utility Commission earlier this month, a lawyer for Pennsylvania American said the parties are in “active negotiations” on a purchase price and an asset purchase agreement but asked for a 90-day extension to those talks.

If approved, the companies would have until December to reach a deal.

The utility commission declined to comment on Rock Spring’s proposed cooperative, saying it wouldn’t be appropriate to “speculate about any possible future actions.”

“The Rock Spring Water proceeding remains active before the Commission,” Nils Hagen-Frederiksen, a spokesperson for the regulatory body, told Spotlight PA in an email.

The regulatory process requires that alternatives be considered before forcing a sale.

Over the course of this proceeding, Rock Spring argued that regulators didn’t do enough to explore other options, but the company didn’t formally propose a cooperative until recently.

Rock Spring’s attorney Rodney Beard didn’t answer a list of questions about the proposed cooperative, including when the company first started pursuing the idea. He told Spotlight PA that the company “intends to comply with the PUC’s orders but wants to explore the possibility of a co-operative structure for the benefit of customers of the water system.”

“The co-operative structure is one of the options specifically listed in the statute that should have been discussed before or during the Section 529 process, and may be beneficial for the customers of the water system,” he said in an email. “Although it may be late at this point, Rock Spring felt it would be a worthwhile endeavor to attempt to explore it and see if customers are interested.”

Gary Lobaugh, director of government and external affairs for Pennsylvania American, didn’t address the proposed cooperative but told Spotlight PA in an email that the company “remains committed to complying with the directives established by the Pennsylvania Public Utility Commission and will continue to negotiate in good faith” with Rock Spring.

“We remain focused on working constructively through the regulatory process and pursuing a path forward that serves customers and meets the Commission’s requirements,” Lobaugh said.

Rock Spring acknowledged the utility commission’s order in the letter, telling customers that if Pennsylvania American ultimately acquires the system, their water rates would fall under its current tariff rates. In July, the PUC approved a rate increase that boosts Pennsylvania American’s annual revenue by $74.9 million. The new charges took effect in August.

Rock Spring instead urged customers to consider the cooperative as an alternative, proposing a $1,500 one-time membership fee in exchange for a vote on company operations. The company said the idea could keep the system connected to the customers it serves while keeping their rates “more reasonable.”

“As a cooperative, the organization would be owned and guided by its members, ensuring that the people who support and benefit from our services have a direct voice in its future,” the business wrote.

It’s unclear how a new structure would impact Rock Spring’s current shareholders, whether customer rates would increase, or if the company would have enough revenue to make repairs.

Under the proposed structure, all customers receiving water service from Rock Spring “must be members of the co-operative,” the letter says. Rock Spring currently serves roughly 500 properties. Recipients were asked to provide their account name and number and indicate whether they were interested by circling “yes” or “no.”

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