NYAW sues county, town, school district for overpayments to customers

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New York American Water, the private company that services approximately 4,500 customers in Sea Cliff and Glen Head, is suing the county, the Town of Oyster Bay, and the North Shore School District. The suit, which defendants learned about last Friday, was filed “on behalf of North Shore customers” who pay a disproportionate amount of property taxes via their water bills.

“This approach was necessary to protect our customers from excessive property taxes,” said NYAW President Carmen Tierno.

In an effort to reduce the cost of its services, the company underwent a property tax review last year. During the review, it was determined that a number of NYAW’s utilities in the Sea Cliff district were over-assessed, which impacted customer bills over a two-month period, and prompted an internal investigation into the overcharges.

“Once we discovered the error, we cut our rates immediately,” Tierno said. On Jan. 1, the company terminated the RAC/PTR Surcharge, and reduced the Incremental Property Tax Surcharge (IPTS) on customers’ bills.

“As we were investigating ourselves and trying to figure out why property taxes were so high,” he said, “We realized there were other potential sources of the high taxes.”

The company charges that defendants had made “illegal property tax” assessments in relation to the decommissioning of the Glenwood Landing LIPA Plant in 2013. “There are a lot of intricacies around assessments made to the Glenwood power plant,” Tierno said.

“When the LIPA plant was decommissioned, a huge disproportionate tax burden was also passed on to ratepayers,” said Agatha Nadel, a community activist from Glen Head who has been fighting the company’s rate increases since last year.

“This lawsuit does bring awareness to the gross injustice that 4,500 customers in the North Shore School District pay American Water’s property taxes through their water bills, and [the other] 90 percent of Nassau County residents who receive public municipal water do not pay,” she said.

Dr. Peter Giarrizzo, the superintendent of the North Shore School District, said he could not comment on matters of litigation. The town’s Receiver of Taxes James Stefanich, who was also named in the suit, said he was also not at liberty to comment on the ongoing suit.

In the most recent report from the state Public Service Commission, issued on April 30, investigators found that NYAW’s “erroneous tax calculations have caused an overpayment of $2.3 million over the past four years.”

Other outlets have reported that the overpayment was passed wholly onto customers in the Sea Cliff district; however, ratepayers were actually overcharged by only $282,000, or $65.50 per customer, according to the report.

“We estimate the customers were over-billed by approximately $282,000,” the report states.

The report also includes a recommendation to refund customer overpayments as a credit on future bills. The credit would account for the $65 and change per average customer spread out over the course of one year.

“We’re not looking to pick a war with the county, but we do want them to take a serious look at what we’re bringing up here,” Tierno said. “We look forward to continuing a dialogue, and cooperating with the commission to rebuild the confidence of our customers.”

But Nadel is unconvinced. “What New York American Water does not elaborate on is that it has a very sweet deal granted by our Public Service Commission: It is allowed to retain up to 20 percent of the over collection of property taxes,” she said.