Community Corner
Residents, Officials Call Proposed Water Rate Hike Unfair
Union County officials and residents criticized price increase at recent meeting.
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 urged the New Jersey Board of Public Utilities (BPU) to reevaluate the company's application to raise fees by 15-22 percent, at a public hearing last night at Westfield Memorial Library. The 40-minute meeting was the fourth and final public hearing on the proposed rate hike. Evidentiary hearings are scheduled to take place this fall before an administrative law judge. A decision by the BPU could come as early as January.
Under the proposed rate case, filed in April, the average residential customer statewide consuming 7,000 gallons per month would pay about $56.6 on his or her water bill – a 14.3 percent increase over the current average of $49.53. Certain service areas would see even higher increases, some by as much as 20 percent. 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.
Also appearing at Wednesday night's hearing before an administrative law judge were representatives from the water company, the BPU and the state Division of Rate Counsel.
The rate hike proposal would boost revenue by $84.7 million for NJAW, or about 13.6 percent over present rate revenues of $622.6 million, Richard Barnes, NJAW's external affairs manager, 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, he said. That rate increase, which was proposed in March 2008 and granted by the BPU nine months later, was 15.2 percent.
NJAW 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 its monthly, fixed service charge, from $9 to $11. Rates for private fire protection service customers would face a 15-percent increase. The rate increases vary, Barnes said, so that NJAW can align the different budgets of its operations.
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The rate hike, however, comes just as taxpayers and municipalities are struggling to cope with budget deficits and state-mandated tax caps. "When we tell you we've already cut to bare bones, it's true," Scotch Plains Councilman Dominick Bratti 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."
Fanwood resident Michael Lewis agreed. He said that the rate hike demonstrated "corporate hubris" on the part of NJAW. The company is "out for the marginal dollar," he said. "You should be ashamed, but there is no shame."
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Summit Councilman Tom Getzendanner said NJAW has proposed 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, he said, but it would base increases on metered volume rates, which consumers can control. He also argued against any increase in the price that NJAW charges for fire hydrant maintenance. Summit is charged more than $250,000 annually for the repair and upkeep of its 518 hydrants, he said.
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 would be in addition to a 6.7 percent increase approved in March 2007 and a 7.1 percent hike in December 2009, 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, Barbara Krause, of Cranford, s 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."
Westfield Councilman Keith Loughlin called the rate increase "excessive, given the current economic conditions." Westfield has instituted hiring freeze, among other initiatives, to stay within the state-mandated four percent spending cap, but those savings would be erased by the rate hike, Loughlin said.
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.
Irvington Council President John Sowell said he was open to an increase but "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.