Water rate hike draws objections
New Jersey American plan draws the wrath of residents & officials
BY TOYNETT HALL Staff Writer

HOWELL - With nowhere else to turn for water service, Howell residents urged representatives of the New Jersey Board of Public Utilities (BPU) to deny the New JerseyAmericanWater Company the 23.35 percent rate increase it is seeking.

The company's proposed rate hike was the subject of a public hearing on April 23 at the Howell Memorial Middle School, Route 524.

Howell residents who live in the area that is serviced by New Jersey American cannot choose to get their water from any other source and are compelled to pay whatever rates the company charges. The proposed increase would also apply to New Jersey American customers in other parts of the state.

The water company has asked for a rate increase because of "increased expenses, capital improvements they have made to their infrastructure, and the opportunity to earn a reasonable return on investment in utility plant," according to the BPU.

If granted the full increase by the BPU, New Jersey American would realize an overall increase of about $124.7 million in annual revenues, according to information provided at the meeting.

According to the company's attorney Ira G. Megdal, of the firm Cozen O'Connor, of Cherry Hill, Howell residents are essentially paying less than or close to the same amount they paid for water service 12 years ago.

In a written statement, Megdal said, "You should be aware that the Howell (municipal) water system was purchased by New Jersey American on Dec. 23, 1996 and at the date of purchase the typical residential customer using 7,000 gallons per month was paying a monthly water bill of $44.87; the same monthly bill today is $44.39, or 48 cents less.

"As to that portion of Howell previously served by the (privately owned) Adelphia water system, that system was purchased by New Jersey American on Aug. 26, 1998 and at the date of purchase the typical residential customer using 7,000 gallons per month was paying a monthly water bill of $53.16; the same monthly bill today is $44.39, or $8.77 less," Megdal said.

That information did not satisfy Howell Mayor Joseph DiBella, who asked the BPU to deny the current proposed increase in water rates.

Calling the measure unconscionable and untimely, DiBella said, "Between the economy, the housing market … between families in our community working two jobs to put meals on the table, and to protect their children and pay their mortgage, a 25 percent increase in my judgment in this particular economy, in any economy, is outrageous. The people who live in our community cannot pay more for anything else. It's simply not even fathomable to think about another increase in services."

Figures provided by the Department of the Public Advocate and based on a 21.42 percent increase show that the average residential customer with a five-eighths inch meter consuming 7,000 gallons of water per month and currently paying $44.39 per month, would pay $53.90 per month (an increase of $9.51 per month or $114.12 per year) if the increase is granted.

In addition, the cost of sewer service would also rise and the average residential customer consuming 12,000 gallons of water per quarter and currently paying $44.47 per month, would pay $47.78 per month under proposed rates, which is a 7.4 percent increase (an increase of $3.31 per month or $39.72 per year), according to information provided by the Department of the Public Advocate.

Another cost that residents would have to watch is a surcharge known as the Purchase Water Adjustment Clause Charge.

According to information found on the New Jersey American Internet Web site under the search criteria ElizabethWater Company-Tariff for Water, the Purchase Water Adjustment Clause Charge is "in addition to all other charges for metered service, the following charges per 100 gallons, per 1,000 gallons, per 10 cubic feet and per 100 cubic feet for all sales will be made to recover increases in the purchased water costs not included in the consumption or any other charge."

In addition to water rate and sewer rate increases, New Jersey American is also proposing to raise public and private fire protection service.

According to Megdal, "For those customers located in the townships of Howell and Freehold, the proposed rate per hydrant per month is $36.40, a 6.4 percent increase from the current rate of $34.21."

"The company is also proposing to increase the rates for private fire protection service in the New Jersey American Water Company service territory located throughoutAtlantic, Burlington, Camden, Cape May, Essex, Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Warren and Union counties, with some exceptions," according to Megdal.

On behalf of their constituents in the 30th Legislative District, state Sen. Robert Singer and state assemblymen Joseph Malone and Ron Dancer addressed the BPU representatives and asked them to look into several issues.

One issue is New Jersey American's reason for the rate, which is to cover the cost of infrastructure improvements. The second issue is the efficiency and effectiveness of municipal utilities authorities. The third issue is the impact such an increase would have on the residents of Howell.

According to Singer, who is the chairman of the Lakewood TownshipMunicipal Utilities Authority, "our rates are 50 percent cheaper than New Jersey American. We are a nonprofit with the incentive of keeping the rates lower to our customers."

Singer asked the BPU to look at municipal utilities authorities.

"I ask the BPU to take an entire look at how MUAs operate more efficiently, more effectively, and really are there as an advocate to the consumer, as opposed to private companies for profit that turn around and really take advantage of the system. I think it is time for the system to change," Singer said.

Singer, Malone and Dancer said they have sent written correspondence to the state Attorney General's Office on behalf of Howell to ask that office to take a look into the issue.

Resident Abraham Magid asked the BPU to make a reasonable decision. He cautioned the BPU representatives on setting a precedent in which a utility can come back year after year and burden customers with more rate increases.

"Water in the United States is our own natural resource. We are being bled dry [from the] cost. Giant corporations are calling the shots. Our natural resource is controlled by giants who want to make big bucks,"Magid said.

"A precedent has already been set when you gave them 13.4 percent in 2007. It's unthinkable that they have come back to ask for more money for repairs. Should you give them a nickel, you're telling them they can come back year after year," Magid said.

Gus Rubinacci, the president of the Surrey Downs CondominiumAssociation, spoke on behalf of the residents who live in his adult community.

"Our senior citizens are living off of Social Security and small pensions. They seem to appear to be on the bottom of the ladder. All we are seeking is fairness, compassion and respect. New Jersey American is only concerned about protecting their bottom line." Rubinacci said.

Barbara Dixel, a resident of The Villages adult community, said, "The 1,000 seniors of The Villages are hard pressed to just have the money for the basic necessities to live, eat, pay for medical insurance, property taxes, electric, water, etc. We cannot take any further financial burden."

The BPU will eventually determine how much, if any, of the proposed increase New Jersey American will receive. Evidentiary hearings regarding this matter are scheduled for September and October before Administrative Law Judge Mumtaz Bari-Brown in Newark.