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.
Sea Cliff and Glen Head are 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 a 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 monies, to pay for water main replacements, upgraded distribution systems and new water treatment facilities.
Lynda DiMenna, president of NYAW, said the company will 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 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. William Varley, deputy chief operating officer for NYAW, admitted that customers in the highest tier could use less water than in previous years and still pay more under the new system.
Anger over the rate hikes has led to a push for a public takeover of the company, specifically from a group of residents in the Sea Cliff service area, who earlier this year formed North Shore Concerned Citizens. Its mission is to remove NYAW as the community’s water provider and replace it with a public water supplier.
Glen Head resident Lawrence Ruisi, a member of the group, 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,” he said.
Ruisi 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. On Aug. 20 — two days after the state reached an agreement with NYAW to reduce rates for financially strained customers on Long Island — the village accepted an $80,000 grant, obtained by former State Senator Carl Marcellino, to conduct a feasibility study.
“The group has worked very hard in the quest to obtain public water, and to expose New York American Water for their improper and unlawful practices,” said Village Administrator Bruce Kennedy, who will also serve as co-chair for the committee. “It’s constantly reported in the papers that our allegations have been accurate from the beginning, and now that we have [money to conduct] the feasibility study we can move forward.”
Kennedy explained that the committee would provide “expertise and knowledge” to the board. The group is planning to meet with nearby public water districts — specifically Jericho and Roslyn — to ensure those entities also have input in the RFP.
In June the PSC found NYAW intentionally deceived the agency by filing falsified information. The deal between PSC and NYAW promised a $1 million refund for its 4,500 Sea Cliff customers as well as an independent monitor to review the company’s controls and processes. On Oct. 18, the PSC selected PA Consulting Group, an international consulting company, as the independent monitor.
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.”
He said he believes a public takeover is still warranted.