High water mark: L.I. Water seeks 19.5% rate increase

If you want clean, clear water, you’re going to have to pay for it. That’s the message Long Island American Water President William Varley delivered to area residents last week when he explained the company’s 19.5 percent rate hike proposal.

“I understand no one likes a rate increase,” Varley said, “but I’ve got to continue to invest in the system to meet the water quality standards and to meet the demands of the customer, and that’s what we’re doing.”

The company has continuously invested in upgrades of the area’s aging infrastructure in order to meet state and federal requirements, Varley said, and now it has to recoup some of its investment through a rate increase. The last time LIAW filed for an increase, which is granted for a three-year period, was 2007. The company was eligible to file for an increase last year but did not.

“We said, ‘We control our expenses, we’ll stay out another year,’” Varley said, adding that those rates have become unsustainable and an increase is necessary.

Over the past four years, the company has spent some $54 million on infrastructure improvements — among them the $7.5 million iron-filtration plant it opened last year on the Malverne-Lynbrook border. It has also laid 16 miles of new water mains and is designing a new iron-removal plant in Lynbrook. It has a number of other capital projects in the works.

“We’re taking a systematic approach,” Varley said, “and being proactive and investing in infrastructure — water mains, treatment plants — all to address water-quality issues and just to maintain the infrastructure. Things are getting old.”

But that reasoning isn’t good enough for Malverne Mayor Patricia McDonald, who said that the hike is too large and the company’s timing is poor. “With the way the economy is, I think them asking for such a high increase is not fair,” McDonald said. “Especially with everything that’s going on — the problems that we had with the water, and I think they should have been more sensitive.”

Earlier this year, Malverne residents held a rowdy question-and-answer session with Varley and LIAW representatives in which they demanded answers to one question: Why is our water brown? Varley explained that there were several reasons for the discoloration, and one of them was aging infrastructure. The iron-filtration plant has since come online, and water quality has improved. But residents and legislators alike have kept a close eye on LIAW and its plans.

State Assemblymen Ed Ra and Brian Curran, who represent the 21st and 14th Districts, respectively, have been working with the company and officials in Malverne and Lynbrook to ensure that LIAW is living up to its promises. At a May 26 Malverne town hall meeting, Ra and Curran told residents that they “pressed” Varley about upgrading the company’s infrastructure, and he committed to spending more than double last year’s $382,000 for upgrades: LIAW will spend $743,000 in 2011 and 2012 on the new iron-filtration plant and on 3,300 feet of new water lines in Malverne.

Varley said that profits generated by the rate increase, if it is approved, would fund those additional upgrades.

“The proposed rate increase … comes at a very difficult economic time, when families and small businesses are working hard to balance their own budgets,” Ra said in a statement. “Updating our water distribution system is vital to improve water quality and keep up with local demand. Long Island families and small businesses deserve what they pay for, and it is my hope that any additional revenue generated from the proposed rate increase will fund these upgrades.”

The proposed rate increase was submitted to the state Public Service Commission, which must authorize it. Because the PSC will take about a year to review LIAW’s books to determine whether an increase is warranted, it is unlikely that residents will see a rate increase this year. If the PSC approves it, it would go into effect on April 1, 2012.

The Village of Malverne would pay about $27,250 more, according to Village Clerk Teresa Emmel, who added that some $24,000 of that would cover the increase in the village’s rental fee for fire hydrants. In a public notice sent to area residents, LIAW explained that the increase translates to about $72 more per year for the average residential customer, who uses 72,000 gallons of water a year and is serviced by a 5/8-inch meter. For the average commercial customer, who uses 200,000 gallons of water a year and is serviced by a one-inch meter, the increase would be about $180 per year.