Federal government to investigate New York American Water

Probe was requested by Chuck Schumer


The federal Government Accountability Office will investigate how New York American Water uses federal funds, as requested by U.S. Sen. Charles Schumer in August. Specifically, investigators will look into federal funding that the senator contends NYAW and its parent company, American Water Co., are seeking from the Environmental Protection Agency.

Baldwin is among the communities that NYAW services.

“I said it before and I will say it again: The steady drip-drip-drip of dubious charges, rate hikes and bad billing demanded the federal government step in and do a deep dive into New York American Water,” Schumer said in a statement.

NYAW could apply for up to $20 million through the Drinking Water State Revolving Fund, which is sustained through federal funds, to pay for water main replacements, upgraded distribution systems and new water-treatment facilities.

NYAW President Lynda DiMenna said the company would cooperate with any investigation, but denied that it is seeking federal money. “Private water providers do have access to state revolving funds, as both the providers and their customers pay federal taxes, and their customers should and do benefit from projects financed by such loans,” DiMenna said in an email. “Oftentimes these loans lower overall project costs. These savings go directly to customers.”

Residents and officials have criticized NYAW in recent weeks and months after hundreds of ratepayers saw their monthly bills skyrocket. Under a billing system approved by the state Public Service Commission in 2016, customers are divided among four billing tiers. The Lynbrook service area, which includes Baldwin, is in the highest one.

William Varley, NYAW’s deputy chief operating officer, acknowledged that customers in that tier could use less water than in previous years and still pay more under the new system. Utility officials said that base rates (excluding taxes and surcharges) were only supposed to increase by 5 percent, but elected officials said they have heard from constituents who have seen rates jump by as much as 135 percent. State Sen. Todd Kaminsky, a Democrat from Long Beach, received dozens of complaints.

“With the way American Water has treated its customers, the more oversight the better, as far as I am concerned,” Kaminsky said in an email.

“Long Island taxpayers are suffering, and the debacle with American Water rate increases has added to these problems,” State Sen. John Brooks, a Seaford Democrat, said in a statement. “I am pleased that the federal Government Accountability Office will be looking into these matters.”

Anger over the rate hikes has led to a push for a public takeover of the company.

The PSC in June also found NYAW intentionally deceived the agency by filing falsified information when seeking approval for the tiered-rate system. A deal between PSC and NYAW, announced in August, called for ratepayers in the Lynbrook service area to receive credits on future bills and an independent monitor to review the company’s controls and processes.

Customers have not yet received the credits because required approval by the courts has not been granted. The state Public Service Commission on Oct. 18 selected PA Consulting Group, an international consulting company, as the independent monitor.

Glen Head resident Lawrence Ruisi said he welcomed the GAO probe. “Having a federal watch over what American Water is going to strengthen our position in getting a condemnation and switching to public water,” Ruisi said. He was recently named co-chairman of the Sea Cliff Water Service Area Advisory Committee, which was formed to make recommendations to the village to identify an entity to conduct a feasibility study for public water.

Baldwinite Jack McCloy said that while the investigation wouldn’t hurt, he would like to see other issues related to NYAW examined. “It’s a situation where residents and service recipients need to continue to focus on the main problem, and not ancillary issues,” McCloy said, “New York American Water is charging 10 times what other utilities charge on Long Island.” McCloy said he pays $106 for 11,000 gallons of water, while his mother pays $8.03 in South Huntington for the same amount. He said he believes a public takeover is still warranted.