The head of Pittsburgh Water and Sewer Authority resigned from his position on Friday, in advance of a report by lawyers hired by the city to look into suspicions of self-dealing with the agency. At issue is executive director Michael Kenney’s ties to a company which provides water and sewer line insurance to the district’s 250,000 customers.
The controversial insurance program covers repairs to customers’ water and sewer lines in the event of failure. Last year the PWSA board sent out a request for proposals to companies interested in providing the insurance. Only two companies responded: Linebackers of Wexford, Pa. and Utility Line Security of Forest Hills. The PWSA board gave Utility Line the contract.
Initially, the program was offered to customers on an “opt-in” basis costing $5 per month. Earlier this year, after only a couple of thousand of customers signed up, the PWSA abruptly changed the program to an “opt-out” program, meaning that customers had to notify the agency to remove the monthly $5 charge from their bill, which was automatically added to all customers’ bills.
In February, a PWSA customer sued the agency and Utility line on a class action basis, claiming “unreasonable and unfair billing practices” violating the state Municipal authorities act and the Unfair Trade Practices and Consumer Protection Law.
After the lawsuit was filed, charges of conflict of interest surfaced. Kenney previously worked under Christopher Kerr, a Vice President of Resource Development and Management, which oversees PWSA. Kerr is the founder and an owner of Utility Line. Kenney’s daughter once worked at Utility Line, and his niece currently is employed there. Records also show that Kenney once had an ownership interest with Kerr in a company called Utilishield, which provided services similar to Utility Line.
In March, city councilman Patrick Dowd called for Kenney’s resignation, citing the undisclosed personal relationship between Kenney and Kerr, and the likelihood that the “opt-out” program violated consumer protection laws.