Long Island utility in troubled waters

After a report by the state Department of Public Service revealed that New York American Water, a private water utility that services more than 120,000 residents in Nassau County, had intentionally deceived the Public Service Commission by knowingly filing falsified information, legislation was proposed to replace the company with a public water entity.

On July 12, State Assemblywoman Christine Pellegrino, a Democrat from West Islip, held a news conference outside NYAW’s offices in Merrick to announce that she was drafting legislation that could eventually force NYAW out of certain parts of Nassau. She was joined by ratepayers from the Merrick and Lynbrook districts of NYAW, as well as officials from Long Island Clean Air Water and Soil, a Merrick-based environmental advocacy group.

The Lynbrook district of NYAW services Baldwin and Baldwin Harbor.

“My constituents alerted me to the unfairness of this situation last year,” Pellegrino said. “Their bills are exorbitant, and it’s unfair for them to be paying 500 percent more for water than their neighbors.”

Baldwin activist Jack McCloy said in an interview after the rally that he would be “absolutely in favor of a public takeover of New York American Water.” McCloy said that his mother, who lives in Melville, paid $8.03 on a water bill, while he paid $106.58 for roughly the same amount of water used during a three-month period.

“South Huntington Water District is able to do it on a reasonable basis, while we’re paying out the nose,” McCloy said. “I’m glad there is some public outcry about this issue, which I have been asking our elected leaders to look into for two years now.”

Legislative action

Last month, legislation that would have required a feasibility study to replace NYAW with a public provider in the Sea Cliff district died in committee in the Assembly. Pellegrino said the bill was unsuccessful because it was “very narrow in its scope.” The new bills that she is proposing, she said, are more “encompassing.”

The first would direct state Comptroller Thomas DiNapoli’s office to fund a feasibility study to determine the most efficient, cost-effective and comprehensive means for a public entity to supply water to all 46 Nassau County communities under NYAW’s purview.

A similar situation occurred in Great Neck in 1985, when then Assemblyman DiNapoli introduced legislation to create the Water Authority of Great Neck North, which was signed into law by Gov. Mario Cuomo. The comptroller’s office declined to comment on Pellegrino’s legislation.

State Sen. Todd Kaminsky, a Democrat from Long Beach, said in an emailed statement, “We have to ensure that American Water is accountable to ratepayers, and I am interested in reviewing any proposals that accomplish that objective.”

The second bill would amend a portion of state property tax law that exempts private water companies regulated by the PSC, and that operate within cities of more than a million people, from paying property taxes. The statute, however, does not apply to counties.

State Sen. Carl Marcellino and Assemblyman Michael Montesano, Republicans from the North Shore, had proposed similar legislation to obtain both a feasibility study and the tax exemption. Montesano said that though he is not opposed to Pellegrino’s bill, he believes that separate feasibility studies for each district would be a better option.

“What may be feasible in one area may not be feasible in another,” he said, calling Sea Cliff’s water assets “distinct” from those on the South Shore, adding that there are a greater number of customers in the Lynbrook and Merrick districts. Sea Cliff only accounts for 4,500 of the 120,000 customers served by NYAW.

PSC orders legal action

Shortly after the news conference, the PSC ordered a special court proceeding against NYAW in response to the investigation’s findings.

“Regulated utilities in New York are expected to conduct themselves with honesty and integrity,” PSC Chairman John Rhodes said in a prepared statement. “However, our staff’s investigation into New York American Water’s property tax errors revealed that this most basic standard was not met.”

According to the release, the PSC is identifying “enforcement actions,” including the hiring of an independent monitor, and requiring NYAW’s shareholders to pay the costs of the company’s “failures.”

Montesano agreed that shareholders should pay the bill. “Any corrective action taken against New York American Water should come out of the pockets of the stakeholders, not the ratepayers,” he said.

The assemblyman added that while he was pleased to see the order issued, he believes that NYAW’s total Nassau operations should be “gone over with a fine-tooth comb.” “American Water is taking a position, saying, ‘We admitted our errors in Sea Cliff, but there are no errors on the South Shore,’” Montesano said. “I don’t believe that.”

Judy Pique, of Lawrence, who attended the news conference, said she believed the legislation and the PSC order were steps toward removing NYAW from the county. As a ratepayer, she has had experiences with brown, undrinkable water, and said it even stained her laundry.

“I’m so excited for the legislation,” Pique said. “I think everyone’s going to take a hard look at what New York American Water has been doing and perhaps redress the problem.”