Residents react to LIAW rate-hike proposal and water quality issues

While many Malverne and area residents are now satisfied that their water quality has improved, others still have complaints about brown water, even though Malverne’s new iron-treatment plant is now functioning. Adding to their concerns, water supplier Long Island American Water recently filed for a 19.5 percent rate hike.

Since 2007, LIAW President William Varley said, the company has put in 16 miles of new water main and invested $54 million in new plants and other improvements. The company has also not filed for a rate increase since that time.

“The last time we filed for a rate increase was 2007,” he said. “We were eligible to file for another rate increase last year but we said we’d tighten up our bootstraps, we said we understand the economy. We also cut back as much as we could, but it’s not sustainable. …We’ve spent $54 million; now we have to recoup the $54 million — we’ve fronted the money.”

The proposed rate increase will also cover projected cost increases in property taxes LIAW must pay, electrical costs and the costs of chemicals and fuel. The proposed rate increase was submitted to the state Public Service Commission, which must authorize a rate hike before it can be implemented. Because the PSC will take about a year to closely review LIAW’s books to determine whether an increase is warranted, it is unlikely that residents will see a rate increase this year. If the PSC approves the rate hike, it will go into effect on April 1, 2012.

Varley explained that of the $9.5 million an increase could generate for LIAW, more than $3.5 million is for anticipated property tax increases. “About 27 percent of our bill is property taxes,” he said, “…that’s why it’s really unfair when they compare us to municipal suppliers. These suppliers don’t have the tax built in, which we do.”

In the past, Varley said, he has appealed the property taxes, 45 percent of which go to the local school district, and been able to reimburse approximately $12 million to customers.

But water quality is an issue residents can’t separate from any proposed rate hike.