A bill was passed in the Senate overwhelmingly 62-0, which, if passed in the Assembly, would require an independent audit of private water companies before and after rate changes are approved by the state Public Service Commission. The bill, which was passed on May 7, is currently being reviewed in the Assembly. It was crafted by Senator Carl Marcellino, a Republican from Syosset.
The legislation was first introduced last September to help local New York American Water customers, whose bills skyrocketed last May after the PSC approved a four-year phase-in of rate increases, resulting in a year-long pushback from residents demanding equitable access to water.
“This is an important first step in protecting ratepayers and fixing a problem that has gotten out of control,” Marcellino said in a statement. “The combination of draconian rate increases and passing the company’s taxes on to the backs of ratepayers has created a dramatic financial burden.”
NYAW services about 4,500 homeowners in the Sea Cliff district. Unlike public water utilities, the company pays property taxes, which are then passed on to its customers through their water bills.
“If [NYAW’s] rates are based upon an entire return on equity, ratepayers have the right to know what that equity is,” said Bruce Kennedy, Sea Cliff’s village administrator. “The only way to know is to have an independent body review those numbers.”
Marcellino amended the bill earlier this year to ensure that the auditor would be independent of any entity connected to the PSC. Additionally, the law would require the commission to publish the audit online for the public to review.
Carmen Tierno, the president of NYAW, believes the legislation is frivolous. “The staff of the New York Department of Public Service capably protects the customers of public utilities in their audit roll,” he said in a statement to the Herald Gazette. “While New York American Water will comply with whatever standards are in place, this legislation — which singles out water companies and no other utilities for independent audits — is unnecessary and will ultimately be costly to the customers it strives to protect.”
The company is currently under investigation by the Dept. of Public Service after it failed to disclose accurate property-value assessments that would have lowered rates for Sea Cliff’s customers. The first findings of the investigation were released on April 30 and the second report is slated for release at the end of June.
“What [NYAW] failed to report was that they imposed the property assessments upon themselves, and they’re entitled to a profit on it,” Kennedy said of the investigation. “They are by no means victims here.”
Kennedy is a member of North Shore Concerned Citizens, which was formed with the intention of removing NYAW as the community’s water provider and replacing it with a public water supplier. “We will not give up this fight until we’re part of a municipally owned water district,” he said.