As The Waters Churn

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Another day, another woe for the New York American Water Company (NYAW).

On July 12, the state Public Service Commission, on the heels of a staff report from its Department of Public Services (DPS), initiated a special proceeding in the New York State Supreme Court “to stop and prevent future violations by [NYAW] of commission regulations and orders.”

This was after a DPS investigation revealed that “company employees intentionally withheld information from the commission that caused customer water rates to be set artificially high.”

In a statement, PSC Chairman John B. Rhodes said that the investigation into NYAW’s property tax assessment errors found that this information, if it had been correctly reported, “would have resulted in substantially lower water rates for customers in the Sea Cliff area.”

The PSC, in May 2017, granted rate increases to NYAW through 2021. The company serves about 120,000 customers in Nassau County.

As a result of the wrong assessment, NYAW overpaid property taxes by $2.3 million in its Sea Cliff district taxing areas. Its customers there were charged $281,000 extra because of the errors, and the NYAW, according to a press release, “has already reduced its rates to account for the error and staff has recommend a further reduction to make customers whole. The company has also implemented changes designed to address its shortcomings and prevent future mistakes. Now, with the investigation into the cause of errors complete, the commission is identifying further enforcement actions, including whether an independent monitor will be hired and whether costs associated with the company’s failures should be paid for by shareholders rather than ratepayers.”

The sharp rise in rates sparked complaints to the PSC, and a civic group, North Shore Concerned Citizens, is seeking to have the Sea Cliff service area be transferred to an adjacent municipal water utility. The Town of Oyster Bay Town Board sent an official letter to the PSC calling on the agency to rescind the rate hike and also undertake an examination of why its rates were as much as four times higher as those of adjacent municipal water companies. NYAW, as a private firm, is not tax-exempt and must pass on its property tax costs to its customers.

Town of Oyster Bay Supervisor Joseph Saladino was not impressed by the PSC’s legal response.

“This is a weak response by the Public Service Commission,” he said in a Facebook post. “We need real action, and that starts with a state takeover of the utility.”

In a statement, NYAW President Carmen Tierno said that his company “takes responsibility for what occurred and apologizes to customers for this error. We will continue to transparently cooperate and rebuild confidence with the PSC and our customers.

Management immediately self-reported to the PSC, there was no financial gain and any over-payments were paid to the community in taxes. We believe this matter will be resolved constructively….We are committed to rebuilding our relationship with our customers, the Public Service Commission leaders and staff as well as other appropriate stakeholders. We want to continue doing what we do best—proudly delivering clean, safe and reliable water services to our valued customers.”

In its June 29 report, the DPS noted that “the original error by the utility plant accounting department could have potentially been avoided with better written procedures, and controls to verify that the data is transferred properly. The information related to these acquired assets are critically important to the utilities’ records and government filings, and should be afforded proper care.”

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Frank Rizzo is a journalist at Anton Media Group. With decades of experience in the industry, he is exceptionally equipped to cover local politics, business and other topics that matter to readers.

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