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Pressure builds for state action on water rates

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Advocates of a plan for a public takeover of New York American Water backed by Gov. Andrew Cuomo are on the move this week, hoping to forestall an impending May 1 rate increase and move the State Assembly to join the State Senate to act on their behalf.

New York American Water is a private water company that serves Sea Cliff, Glen Head, Glenwood Landing and parts of Nassau County’s South Shore.

On the strength of Cuomo’s proposal to create a Nassau County Water Authority to take over NYAW, State Sen. James Gaughran, a Democrat from Northport, announced at a town hall meeting on April 13 that he had amended his bill that would have created a North Shore Water Authority in January. His new bill supports the creation of a county water authority.

“Governor Cuomo’s study to have NYAW be taken over by a public authority shows that it would reduce rates, and that it is feasible to do so,” Gaughran said. “My original proposal, which had the support of the Senate, called for a North Shore Water Authority. But [Cuomo] recommended an authority called the Nassau County Water Authority. He said we can’t leave behind the other people in Nassau who need a public system.”

LI Clean Air Water and Soil filed a motion on April 15 before the New York State Public Service Commission to postpone the proposed May 1 rate increase. “The Public Service Commission granted a four-month postponement of New York American Water rate increases from Jan. 1, 2021, to May 1, 2021,” Claudia Borecky, co-director of LICAWS, said in a statement, “to help ratepayers struggling with Covid-19, with its financial impact on the state’s economy and in anticipation of the findings of the PSC’s feasibility study of the municipalization of NYAW’s Long Island operations. We’ve asked for a postponement to July 1 to give the Senate and Assembly time to work out legislation.”

Gaughran said that residents of Sea Cliff, Glen Head and Glenwood Landing are paying as much as five times more for water than those living in Jericho or other public water districts.

State Assemblyman Michael Montesano, a Republican from Glen Head, said he was aware of the problem, and supported the motion by LICAWS to delay the rate increase. “I have a constituent in my district with three houses,” Montesano said. “She pays $60 a month for two of them — they’re in the Jericho water district. The third, at the end of the block, is serviced by NYAW, and it costs her $600 a month for that one.”

But while legislative proposals have moved forward in the Senate, one of the sticking points, he said, in getting the legislation through the Assembly is how to handle the elimination of the franchise tax if the private water company were taken over by a public authority. That tax is estimated to add up to $25 million to $30 million per year, Montesano said.

“The issue for some people is, if this public authority is created and the franchise tax eliminated, the cost of that loss of revenue would get spread over all the ratepayers,” he explained. “It’s only $1 or $2 a month, and this was done a few years ago when they created the Great Neck Water Authority. But some Assembly members don’t want that. Maybe they want the state to pay for the franchise tax. But one way or another, we need to get this thing done.”

Democratic Assemblywoman Judy Griffin is among those who are hesitant about passing the cost of replacing the franchise tax on to ratepayers. “I support a path to a public takeover of New York American Water to provide rate relief to its customers providing that we ensure that the cost for fixing this problem isn’t paid for by the people who didn’t create it,” Griffin said. “Now that the study is complete and there is a legislative proposal, it is key to be discerning in our approach, since we do not want to shift a tax or cost burden to Nassau County residents.”

Independent Assemblyman Fred Thiele Jr., of Easthampton, also weighed in. “My perspective from 80 miles away is, I think there’s an understanding that the residents there have suffered unduly and there needs to be something done to help them,” Thiele said. “According to the study, it would only impact other ratepayers $25 a year. There was resistance, but I think it’ll get addressed.”

As the Senate and Assembly continue to debate a public takeover, advocates like Borecky warn that there is now an application before the Public Service Commission to allow NYAW to be purchased by another investor-owned utility, Liberty Utilities. Time, Borecky says, is therefore of the essence.

“Water should not be subject to any corporation making a profit, yet we know that NYAW has made tremendous profit for many years,” State Assemblyman Chuck Lavine, a Democrat from Glen Cove, said. “The rates are astronomical. Now the governor is a proponent of a public takeover, and that’s a good sign. I’m optimistic that we’re going to make some real progress.”