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Politics & Government

Several Speak Out Against Proposed Water Rate Hike

A hearing about New Jersey American Water's proposal was held in Westfield last week.

Calling New Jersey American Water Company out of touch with the current economy and its proposed rate hike unacceptable and unfair, local residents and officials asked that it be reconsidered during a public hearing last week at Westfield Memorial Library.

The 40-minute hearing was the fourth and final one during the last week or so. Evidentiary hearings are scheduled this fall before an administrative law judge and a decision by the state Board of Public Utilities could come as early as the new year.

Representatives from the water company, the BPU and the state Division of Rate Counsel also appeared at Wednesday night's hearing. The company provides water to Chatham Township but not to Chatham Borough.

Under the proposed rate case, filed in April, the average residential customer statewide consuming 7,000 gallons per month would pay about $56.63—a 14.3-percent increase over the current average $49.53. Some service areas would see higher increases, as much as 20 percent, while some towns face increases for fire protection and hydrant service but others do not. NJAW, through its parent company, serves 16 million customers in 35 states, including New Jersey.

The rate hike proposal would boost revenue by $84.7 million for New Jersey American, or approximately 13.6 percent over present rate revenues of $622.6 million. Richard Barnes, external affairs manager for NJAW, said the revenue raised by the rate hike will cover various capital projects completed in the past two and a half years since the last rate hike. That increase was 15.2 percent, presented in March 2008 and granted by the BPU in December 2008.

The company contends that the rate increase is driven by capital expenditures "to foster adequate, safe utility service." Barnes emphasized that even if the rate increase is approved, water will remain one of the cheapest utility bills, costing less than a penny per gallon.

The average residential home would see a 22-percent hike in their monthly, fixed service charge, from $9 to $11. Rates for private fire protection service customers would face a 15-percent increase. The range of increases is an effort to bring different areas in line after previous companies were acquired by New Jersey American over the years, he said.

Summit Councilman Tom Getzendanner said NJAW is proposing to charge per month what his town's former water company, Commonwealth, once charged quarterly. He suggested keeping the flat service charge at $9 per month. Not only would that bring the proposed 14.3-percent average increase closer to 10 percent but it would keep any increase based on metered volume rates, which consumers can control, he said. He also suggested holding the line on any increase in maintenance of fire hydrants, of which Summit has 518 and spends upward of $250,000 on annually.

Getzendanner pressed the company to share household consumption data with Summit so the city could determine sewer billing based on volume and not a fixed rate. If capital investments are driving the rate increase, Getzendanner suggested following Summit's lead: The city puts the onus on developers to pay any water main and fees associated with new construction.

Summit Fire Chief Joseph Houck said a 5-percent rate hike for fire hydrant maintenance would add $13,000 to the department's 2010 operating budget. That's on top of a 6.7-percent increase approved in March 2007 and a 7.1-percent hike in December 2008, he said, making for a nearly 19-percent jump in rates in the last three and a half years. "Costs continue to increase but service and repairs decline," Houck said. Meanwhile, non-union personnel in the department are dealing with a salary freeze while the union renegotiated its contract to avoid layoffs, he said.

While she had no complaints about service, community advocate Barbara Krause of Cranford implored the water company that consumers and property owners are being hit on all sides. In Cranford alone, municipal employees are being furloughed seven days to reduce budgets while sewer rates are now based on property assessments and could range from $200 to $500.

"The water company is out of touch, perhaps too greedy with the improvements planned," she said, suggesting that rates be phased in over time. "We need rate relief not rate raises."

Michael Lewis of Fanwood expressed his complaints of "corporate hubris," including water main insurance, which he described as "pure profit" for the company and requested data on the its payout ratio. He also chastised the firm for charging $1.80 whether a consumer pays their bill online or not. The company is "out for the marginal dollar. You should be ashamed but there is no shame," Lewis said.

Westfield Councilman Keith Loughlin described the proposed percentage increase in rates as "excessive given the current economic conditions" and asked that it be reconsidered. Westfield has instituted hiring freeze, among other initiatives, to get under the state-mandated four percent spending cap, which would be eaten up by the proposed rate hike.

New Jersey American is hitting taxpayers when they're already down, according to Scotch Plains Deputy Mayor Dominick Bratti, as the rates increase for residents, who then also will be responsible – through their property taxes – for increases in fire hydrant maintenance. "When we tell you we've already cut to bare bones, it's true," he said. "When we say we can't afford this, we're not talking about money, we're talking about services, police services and quality of life."

Garwood Mayor Dennis McCarthy suggested the water company hold off on a rate increase until the economy improves. To ask for a double-digit rate increase at any time is difficult, he said, but especially when residents have been laid off or if they're lucky to have a job likely haven't had a raise in some time.

Fanwood faces a 15-percent increase for fire suppression systems and a 19 to 22 percent hike for residential use but no increase in hydrant maintenance, according to Borough Administrator Eleanor McGovern. "It's difficult to understand how an increase can even be proposed given the economy," she said, suggesting the water company stay within a two percent cap as municipalities have done

Irvington Council President John Sowell said he was open to an increase but said "double digits doesn't work for us." He suggested phasing in a rate hike over five to eight years because an increase of 13 to 19 percent is "unacceptable."

Based in Voorhees, N.J., New Jersey American Water is a wholly owned subsidiary of American Water, a public company that trades on the New York Stock Exchange closing at $22.27 per share on Wednesday.

American Water also has filed rate cases in Pennsylvania, California and West Virginia that would boost revenues $168.7 million and is awaiting final orders for general rate cases in eight states that would increase revenues $223.9 million. The firm serves about 16 million people in 35 states and parts of Canada.

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