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 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 parts of the county. She was joined by ratepayers from Merrick and Lynbrook, as well as officials from Long Island Clean Air Water and Soil, a Merrick-based environmental advocacy group.
“My constituents alerted me to the unfairness of this situation last year,” Pellegrino said. “Their bills a1re exorbitant, and it’s unfair for them to be paying 500 percent more for water than their neighbors.”
Last month, legislation that would have required a feasibility study of replacing 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 Pellegrino 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 proposal.
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 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 he believes that separate feasibility studies for each district would be a more viable option, though he added that he is not opposed to Pellegrino’s bill.
“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 more customers in the Lynbrook and Merrick districts. Sea Cliff accounts for only 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.
Montesano added that while he was pleased to see the order issued, he believed that all of NYAW’s operations in Nassau 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,’” he 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 that it has 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.”