Valley Stream officials, others oppose water rate hike

The one member of the state Public Service Commission who attended a hearing on a proposed water rate hike last week got an earful from unhappy customers of Long Island American Water.

James Larocca, one of five PSC commissioners who regulate the state’s utilities, listened for several hours on Dec. 13 as people lashed out at the private water company and its proposed 7.3 percent increase, which, if approved, would be implemented over a three-year period. To increase LIAW’s annual net revenues by $1.4 million, rates for residential customers would increase by 2.5 percent in 2012, 2.6 percent in 2013 and 2.2 percent in 2014. There would also be a 6 percent increase in the cost of fire hydrant rentals.

Incensed that the PSC, in a press release about the proposal, called the increases small, County Legislator Dave Denenberg (D-Merrick) gave impassioned testimony opposing the increase and criticizing the commission.

“I don’t know how an 8 percent rate increase is small in a time where … real income in Nassau County has gone down,” Denenberg said. “People can’t afford any increase, much less one that I would call a very significant increase. … No increase is justified because the people being charged don’t have the ability to pay.”

According to LIAW, the proposed rate hike is necessary “to invest in essential infrastructure improvements, while keeping pace with rising property taxes and increasing operational costs.” Over the past four years, LIAW has spent some $54 million on infrastructure improvements — including the $7.5 million iron-filtration plant it opened last year on the Malverne-Lynbrook border. The company has also laid 16 miles of new water mains, and is in the early design phase of constructing a new iron-removal plant in Lynbrook. It says there are a number of other capital projects in the works as well.

The company is also in the process of acquiring Aqua Utilities Inc., a private water company that serves Bellmore, Merrick and several other communities, and Denenberg expressed concern that it would use profits from the rate hike to bolster the acquisition.

An LIAW spokeswoman said that President Bill Varley did not want to comment further on the proposal.

Valley Stream Treasurer Michael Fox spoke on behalf of Mayor Ed Fare and village officials against the rate increase. Except for a few blocks in the northwest corner, the entire village is served by LIAW.

“We are aware of LIAW’s significant investment of infrastructure in recent years,” Fox said. “This remediation of an aging water-delivery system is both necessary and costly. We understand the complexities that require large expenditures of money. However, we ask that the cost of such repairs be spread out in a more measured way, commensurate with the cost of living in these distressed economic times.”

Fox said that village officials appreciate that LIAW leaders have backed off their initial proposal of a 19.5 percent increase, but the current proposal is still too high. Village government, he said, would be faced with a $38,000 increase on fire hydrant service, “a burden that will have to be absorbed by the taxpayers in addition to the increase they will already see in their own bills,” Fox said.

“We urge that Long Island American Water sharpen its pencils and come back with a more reasonable attempt to maintain services,” he added, “while keeping rates at a level that is tolerable to our taxpayers.”

Malverne Mayor Patricia McDonald and village board trustees attended the hearing in order to express their opposition to the rate hike. “This is the worst time for the water company to be raising their rates, especially with the profits that they’ve been getting … on the backs of the people that are paying,” McDonald said. “Our board is going to have a difficult time trying to keep the 2 percent property tax cap that has been put in place … and this is just a terrible time for them to bring in this rate hike.”

Malverne resident Tom Grech suggested that before the PSC considers approving the joint proposal — between LIAW, the staff of the state Department of Public Service and the Utility Intervention Unit of the Department of State’s Division of Consumer Protection — that reduced LIAW’s rate hike proposal from 19.5 percent to 7.3 percent, it review the company’s recently turbulent track record. Grech outlined for Larocca the problems several local communities have had with brown water, and with LIAW. In February, when residents of Malverne, West Hempstead and Lynbrook began complaining about the rust pouring from their faucets, they found out that LIAW had failed to notify them that it had not brought its iron-filtration plant online — something it said it had done in October 2010. Varley promised to get the plant up and running, and said it would correct the brown-water problem.

But Grech asserted that before residents discovered LIAW’s failure to make the plant operational, its employees told those who called to complain about rusty water that their water heaters were causing the problem. “People in the three communities … spent untold thousands and thousands of dollars on fixes, which were never really fixes,” Grech said, adding that LIAW knew that the problem was that the plant was not in service. “That was disingenuous at the least, and there ought to be remuneration for those people.”

The joint proposal to raise LIAW’s rates did, however, receive support from the Utility Intervention Unit. The PSC will continue to research and investigate the rate hike proposal, and make a decision on it in March. If it approves the proposal, the increases would go into effect April 1.