Senator pushes for audit of NYAW


After holding discussions with counsel at the state comptroller’s office, State Sen. Carl Marcellino has amended a bill that he proposed to help customers whose New York American Water rates have skyrocketed in recent months.

Marcellino, along with Assemblymen Michael Montesano and Edward Ra, proposed a bill in September that would require the state comptroller to audit private water companies before and after the Public Service Commission approved rate changes.

State Comptroller Thomas DiNapoli said, however, that the state could not assume auditing authority over NYAW, a private company. “We don’t have any authority to audit a private enterprise,” he said.

“After having some discussion with Comptroller DiNapoli’s office, we felt the best way to address the issue would be to make sure there is an independent audit,” Marcellino said. The bill was amended on Jan. 5.

The new bill, if passed by the Legislature and signed by the governor, would require the PSC to hire a third-party auditor to examine NYAW’s finances, and would ensure that the auditor was independent of any entity connected to the PSC, according to Kirk Ives, Marcellino’s chief of staff. He added that the amended bill would also require the PSC to publish the audit online so the public could review it.

The amendment followed a recent investigation into NYAW conducted by the Department of Public Service — the PSC’s staff arm. Last month, the department announced that it was investigating the company after it failed to disclose accurate property-value assessments that would have lowered water bills for more than 4,000 customers in the Sea Cliff water district.

“While performing a comprehensive property tax review in an effort to identify opportunities to reduce the cost of its service, New York American Water identified an issue that impacted property taxes paid by the company on the North Shore of Nassau County,” NYAW President Carmen Tierno said in a statement.

Currently, up to 70 percent of the water bills paid by NYAW ratepayers on Long Island go toward property taxes.

In response, LI Clean Air, Water and Soil, a Merrick-based advocacy group that has fought rate increases by NYAW for more than a year, wrote to the state, requesting a full audit of the private utility company’s finances.

“It’s apparent that the Department of Public Service is incapable of overseeing the assessment and valuation of water utility properties,” said LICAWS Co-Director Dave Denenberg. “It’s time for an independent audit of NYAW’s finances and an end to taxing NYAW ratepayers for water — a tax that those on municipal water do not have to pay.”

DiNapoli said he was unaware of the letter addressed to him.

“I think they had a plan that would phase [the deductions] in over a number of years,” he said, referring to NYAW’s proposal to reduce ratepayers’ property-tax payments in light of the investigation. “But I think a faster, more speedy reconciliation with those who were overcharged would be in order.”

DiNapoli said he believed the investigation was merited. “Obviously the constituents’ concerns were valid,” he said. “People knew something was wrong. It didn’t make sense.”

“Their operation is out of control,” Marcellino said of NYAW. “They’re abusing their status and my constituents, and we’re not going to tolerate that.”

LICAWS has also demanded that the PSC hold public hearings in the Sea Cliff district on the group’s petition to reconcile the property-tax expenses NYAW overcharged its customers. The group is also asking legislators to amend state law to allow municipalities to make water utility properties tax-exempt in counties as well as cities with populations over a million.