Water Industry News

28% hike in United Water rates filed

Saturday, February 24, 2007

North Jersey residents face a 28 percent surge in their water bills if United Water New Jersey, the region's largest water company, is granted a rate hike by regulators. The company is seeking the rate increase, its first request in 12 years, to help offset higher energy expenses and the cost of nearly $250 million in capital improvements.

United Water filed an application with the state Board of Public Utilities on Friday to raise rates and lift annual revenue by $36 million. If approved, quarterly water bills for a typical residential customer would increase $23.73, to $108.48. The yearly hike would be $94.92.

The company is seeking to recoup investment in capital improvements for water-quality and water-supply projects during the last decade, as well as sharply higher costs for energy, chemicals and health benefits, said Bob Iacullo, the utility's president. United Water serves more than 750,000 residents in Bergen and Hudson counties in New Jersey.

What it means

Here's the impact on a typical residential customer, one using 250 gallons of water a day, if the rate increase is approved:

Old: $84.75 a quarter/$339 a year

New: $108.48 a quarter/$433.92 a year

Increase: $23.73 a quarter/$94.92 a year

Source: United Water New Jersey

"We've continued to make major improvements to our water system in an effort to stay ahead of state and federal water-quality standards," Iacullo said in a statement. "We've also upgraded our customer-information systems to improve the level of service to our customers."

The BPU has nine months to act on United Water's request.

Public Advocate Ronald K. Chen and Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, said they would withhold judgment for now.

"This is a very large proposed rate increase that will trigger a thorough review by the Public Advocate's Division of Rate Counsel to ensure that any increases are completely justified," Chen said.

By itself, the request for a rate increase isn't too bad, Salowe-Kaye said, but it comes at a time when consumers are paying more to heat their homes and two weeks after the BPU approved an increase in electricity rates.

"How much more can families bear?" she said.

United Water says the increase is needed to pay for higher costs. For example, the utility says that since 1996, it has spent $40 million on water treatment and security at the Haworth Water Treatment Plant, reinforcing the Oradell Dam after Tropical Storm Floyd and installing aeration towers in the Oradell Reservoir to reduce taste and odor complaints raised by customers during the summer.

The company also spent $140 million improving its water transmission and distribution mains, including $10 million for the six-mile pipeline to bring water to communities in northwest Bergen County, and nearly $50 million to automate controls on its entire water system.

United Water also will invest more than $100 million during the next three years to upgrade the Haworth water plant, Iacullo said. The facility was one of the first in the nation to use ozone as a primary disinfectant for treating water.

Other factors in the rate filing include an 80 percent increase in the cost of power and chemicals and a tripling in employee health expenses since the last filing in 1995, he said.

The BPU at that time approved a 4.5 percent increase, slightly more than half the 8.8 percent hike the company requested.

"We're not immune from the pressures that every business is dealing with these days," Iacullo said. "These cost-of-living increases have overshadowed the cost efficiencies we've achieved during the past 10 years."

Founded in 1869 as Hackensack Water Co., United Water is a subsidiary of the Suez Environment division of the Paris-based Suez Group.