Bill to provide relief to New York American Water ratepayers stalls in Assembly

Mike Smollins and Mike Conn for Long Island Herald

Originally published in Long Island Herald

Legislation in the state budget that would have made a public takeover of New York American Water possible while bringing rate relief to customers stalled in the Assembly after being approved by the Senate.

“It was very disappointing,” said State Sen. Todd Kaminsky, a Democrat from Long Beach. “The number one complaint I’ve received from constituents is their high water bills. In the summer they become astronomical, and I want to address this badly, especially because there’s a looming rate increase, so solving this before the rate increase is imperative.”

NYAW has unsuccessfully sought an exemption from a special franchise property tax, which makes up anywhere from 31 to 55 percent of customer’s bills. The Senate has pushed for the creation of a Nassau County Water Authority to oversee a potential public takeover of the utility. But the Assembly didn’t want to rush a non-budget item into the spending plan, and there are issues to settle over who would bear the cost of a public takeover of the company.

A request for comment from NYAW representatives was not returned at press time.

While rate relief is still being sought, the utility plans to increase them by an average of 26 percent on May 1. NYAW has agreed to sell the company to the Canada-based Liberty Utilities for $607 million, pending approval by the Public Service Commission. The utility has been the subject of several state investigations after rate increase irregularities and has also faced criticism over rates from community members and elected officials. NYAW has opposed a public takeover due to the length and cost of the endeavor.

A study ordered in February by Gov. Andrew Cuomo and conducted by the state’s Department of Public Service found that municipalization of NYAW’s Long Island infrastructure is possible.

“The study determined that such municipalization is both feasible and, under a variety of scenarios, in the public interest,” the DPS report reads, “even with an upfront investment of nearly $800 million for the purchase of NYAW’s assets (or a pro rata amount for parts of the system), ongoing and near-term infrastructure improvements, and transaction costs.”

The DPS had until April 1 to declare its results and the study was overseen by Rory Lancman, the department’s special counsel for ratepayer protection.

The DPS recommended that the State Legislature act now to remove the “onerous property tax burden” on NYAW’s ratepayers, and to establish a new public authority, likely called the Nassau County Water Authority, with the power to purchase all or parts of NYAW’s assets in the county, or to obtain them through eminent domain proceedings. If the authority is established, it could choose to operate the infrastructure itself, contract operations to established public-water providers or merge all or parts of NYAW’s assets into existing water providers.

The report advised that time is of the essence in establishing a public water authority

“This is a comprehensive report,” said NYAW President Lynda DiMenna. “As always, our number one priority is our customers, and we will be reviewing the details of the report to understand the impact on them. We are gratified to see that the governor’s press release and the report acknowledges what we have been saying for years: that the special franchise tax is overly burdensome for New York American Water customers, and tax reform is key to providing affordability for our customers.”

Kaminsky said after the NYAW measure stalled in the Assembly that the Senate would continue to create legislation in the hope of paving a path toward a public takeover and to decrease customers’ rates.

“We’re going to keep pushing,” he said. “Doing nothing is not an option.”