Water Industry News

United Water seeks 51% hike in New Jersey town

Jan 20 2006

WEST NYACK Customers would see their bills increase more than 50 percent over a three-year period if the state approves a rate increase requested yesterday by United Water New York.

Claire Kennedy, a United Water customer who lives in New City, was shocked by the amount of the request.

"Good grief," Kennedy said. "That's a lot of money. That's a lot of percentage."

United Water provides drinking water to the majority of homes and businesses in Rockland and serves Tuxedo in Orange County.

Michael Pointing, United Water New York's vice president and general manager, said it was the first time in 10 years that the company had requested a "full rate case" before the state Public Service Commission, which oversees utilities in New York.

"The main reason for requesting this increase in rates is due to United Water's investment in a variety of water quality and water supply projects during the past decade," Pointing said.

The company has invested $80 million in infrastructure improvements since 1996, including $55 million in the past five years, he said. The projects included adding a dissolved air flotation system at the Lake DeForest reservoir in Clarkstown, bringing the Letchworth Water Treatment system on line in Haverstraw, and purchasing Potake Pond in Ramapo.

United Water now wants to recoup some of those investment costs and use revenue generated by a rate increase to help pay for new projects, Pointing said.

The company plans to spend an additional $60 million in the next three years on various improvements that would expand or update its infrastructure, he said.

The company has also faced increased energy costs, along with increases costs for health care, pensions, insurance and property taxes, Pointing said, and the rate increase is also being requested to help the company meet those expenses.

The full rate case requests increases over three years 33.8 percent the first year, 7.7 percent the second year and 5.1 percent the third year, United Water New York said. Compounded, the increases add up to 51.45 percent more than the original rate.

The company said that because of various billing structures based on water use, the percentage increase would not translate into an exact dollar increase. For example, according to United Water, residential customers using the average of 3,000 cubic feet 22,500 gallons of water per quarter would see their bills go up from $114.75 to $150.84 per quarter. That could mean an increase over the first year of almost $145.

County Executive C. Scott Vanderhoef said residents were going to have "sticker shock" when they learned about the request.

"There have not been enough capital investments in the past decade, and more money should have been spent on improvements to the infrastructure," Vanderhoef said. "That's why this increase comes as a much bigger surprise than it should."

The company said it waited a decade to undertake a full rate case because it was expensive, but United Water had provided good value for the money invested.

County Legislator Ellen Jaffee, D-Suffern, said additions to the system would not ultimately solve water issues confronting a county where development ran rampant and comprehensive planning was virtually nonexistent.

"Costs are going to continue to rise unless we control development and emphasize conservation," Jaffee said.

The company said it would step up conservation efforts, which it has outlined in its rate request.

State Assemblyman Ryan Karben, D-Monsey, noted that Orange and Rockland Utilities had also recently asked for an increase.

"Folks are strapped for cash," Karben said. "It will be extremely difficult for them to absorb increases in both of their major utility bills."

United Water spokesman Rich Henning said the company understood the situation.

"These are certainly difficult times for many people, but we have a responsibility to meet the needs of all of our customers," Henning said.

Kennedy said that as a customer, United Water had a lot to prove to her before she would consider supporting any increase.

She would want to know about intended improvements before she could stop feeling ripped off, Kennedy said. "It's just too much."

Ann Dalton, a spokeswoman for the PSC, said the rate review was an 11-month process that was overseen by an administrative law judge. The public will have the opportunity to offer written and spoken comment.