Gov. Andrew Cuomo announced Feb. 3 that the state Department of Public Service will look into the feasibility of municipalizing New York American Water, the privately owned utility whose service and water bills have long been decried by Nassau County customers.
The study will assess different avenues by which to reduce customer costs — which in some cases are nearly five times more than the price of municipally owned water — including a public takeover. The announcement comes after two independent feasibility studies conducted by Walden Environmental Engineering determined that local ratepayers in NYAW’s Hempstead territory and Sea Cliff district would see a reduction in their water bills through a public acquisition of the company.
“For far too long, the 120,000 customers of New York American Water on Long Island have been plagued by exorbitantly high rates for water — this simply cannot continue,” Cuomo said in a news release. “New Yorkers deserve access to clean, safe and affordable water, and we are going to pursue every avenue to make that happen.”
The possibility of municipalizing NYAW was met with mixed reactions from many Lynbrook and East Rockaway residents.
Responding to a Herald reporter’s inquiry in a Lynbrook Facebook group, Ralph Vallarella called water costs “astronomical” under NYAW compared with municipal water districts.
“On top of that, the service and quality we receive for those high rates is poor at best,” he wrote.
Angela D’Amico Felden said she wanted clean, safe water and didn’t believe she was getting it. “I have a whole-house water filter and another filter under the sink, and I keep having to change them often,” she wrote. “The cost of dirty water and filters is a hardship. This has to be corrected.”
For her part, Krystie Javier said she did not favor government involvement in water. “I don’t agree with Cuomo sticking his head in anywhere,” she wrote. “Cuomo should focus his efforts on opening schools five days a week with no insidious restrictions.”
Alan Pawelsky shared a similar sentiment, calling it “an absolute joke and disgrace” when the government gets involved in utilities.
Ivy Reilly said she thought there was a lack of competence among private utilities that has affected ratepayers’ wallets, and that while she usually opposed adding more governmental control, she favored exploring whether municipalizing NYAW would help.
“We go to buy filtering systems to use with the other filtering system, and we still don’t feel safe drinking out of the faucet, so we buy bottled water instead,” she wrote. “It’s time for a change.”
Cindy Springstein called the water rates “insane,” while Ralph Vallarella noted that he moved from West Hempstead, where his water was supplied by the town’s water district, to Lynbrook, where water operations are controlled by NYAW, and he noticed a significant increase in price and a decrease in the quality of service.
Dan Caracciolo, of East Rockaway, offered a different take in response to an inquiry in an East Rockaway community Facebook group, posting that he believed fresh water is taken for granted in the U.S., especially in the Northeast, where, he said, it is “abundant.”
“We are drilling in our aquifers and future generations will be barren,” he wrote. “I think if you want to water your lawn with our fresh water, you should pay for it.”
Rory Lancman, the Department of Public Service’s special counsel for ratepayer protection, will oversee the study, which is to be completed by April 1. It will include a series of virtual public hearings at which residents and elected officials can offer comment.
Lancman told the Herald that the state’s study would consider whether municipalization of all or part of NYAW’s system would be feasible and more beneficial for ratepayers. This comes after advocates called on the DPS to reconsider a proposed sale of American Water Works’ New York operation to Liberty Utilities, another private entity, which was announced in November 2019.
The department is currently reviewing the details of the $608 million deal.
“Our examination of the feasibility of converting American Water to municipal control is going to factor in the value of the assets that exist and, realistically, be cognizant of the role that ratepayers have played in making American Water a company that [Liberty] is willing to pay hundreds of millions of dollars for,” Lancman said.
After Walden concluded that Hempstead ratepayers would see savings of between $70 and $383 a year if the town acquired a portion of NYAW’s Nassau operation, Water Department Commissioner John Reinhardt claimed that such savings would be “diminutive” compared with the almost $500 million cost to acquire the system. He also demanded “state involvement” regarding a takeover.
Lancman criticized Hempstead officials for “ignoring” the results of Walden’s study. “If Hempstead or any other locality is going to oppose municipal control despite our analysis and analysis of their own experts,” he said, “they’re going to have to explain to the public why they’re not doing anything to lower rates.”
In a statement, NYAW President Lynda DiMenna said the issue of affordability depends on a special franchise tax — which accounts for a significant portion of customers’ bills, she said — not who manages the system. A public takeover, she said, is not “financially prudent.”
“A public takeover would lead to an increase in the debt service obligations of Long Island residents by hundreds of millions of dollars,” DiMenna said. “The best path forward for our customers is the elimination of that special franchise tax combined with completing the sale to Liberty Utilities.”
Legislation to eliminate the franchise tax was introduced in the State Senate last year by Sen. Todd Kaminsky, a Democrat from Long Beach, and co-sponsored by Sen. John Brooks, a Democrat from Seaford (see box).
On the North Shore, Sea Cliff’s elected representatives, including State Sen. Jim Gaughran and Assemblymen Charles Lavine and Michael Montesano, have been vocal supporters of public water. Last July, a bill establishing the public North Shore Water District, authored by Gaughran, passed the State Senate.
A companion bill was presented to the Assembly by Lavine around the same time but did not pass by the end of the year. New bills will be presented to the Senate and Assembly this year, and if they were to pass and then be signed by Gov. Andrew Cuomo, an authority could be established by April.