The long-awaited legislation to create a pathway for the public takeover of New York American Water — a private water supplier serving ratepayers in Sea Cliff, Glen Head and other Town of Oyster Bay communities — has been signed by Gov. Kathy Hochul.
The bill clears the way for NYAW to be replaced by a North Shore Water Authority for Oyster Bay customers, and a South Shore Water Authority for those in the Town of Hempstead. The bill passed unanimously in the State Legislature in June, by counts of 63-0 in the Senate and 149-0 in the Assembly.
“I commend Governor Hochul on signing this bill, which will provide much-needed relief for people having to pay exorbitant water rates while experiencing constant disruptions in service,” Assemblyman Charles Lavine, a Democrat from Glen Cove, said. “Water is something that is essential to life — never something that should be a vehicle for realization of corporate profit.”
A special team was tasked in 2010 with investigating whether the town of Oyster Bay could, or should, assume control of NYAW. The body was impaneled by both Oyster Bay and Hempstead, after a number of residents complained that the private company was charging significantly higher rates for the same water the towns provide to residents of communities such as East Meadow and Jericho.
Rate relief for thousands of customers paying high fees for water service is now possible, but there is still much work to be done. The value of NYAW’s assets will have to be determined, an amount that may be up for debate. The company’s infrastructure has been improved through the years, and many of those improvements were funded — and are now owned by — ratepayers, which will affect the company’s overall value. Funding to offset the disparity in NYAW’s value may be worked into the state budget by Hochul.
“Water is a necessity that every New Yorker should have easy, affordable access to,” Hochul said in a statement. “The historically high rates charged by New York American Water could be reduced through a public takeover of the system, and these new public water authorities give the local governments the legal vehicle they need to pursue the public option.”
NYAW’s operations are in the process of being transferred to an existing municipal entity, Liberty Utilities, which, with its expertise and equipment, could complete an efficient, and possibly faster, takeover. A similar situation may happen on the South Shore, where the Suffolk County Water Authority may take over NYAW’s operations.
“Advancing the transaction between New York American Water and Liberty Utilities is in the best interest of our customers,” Lynda DiMenna, NYAW’s president, said in a statement. “New York American Water is confident that Liberty will continue to invest in and care for the system and provide excellent water service and value to our customers.”
The acquisition of NYAW’s assets by Liberty could take some time, with negotiations and eminent domain proceedings. According to a study by George E. Sansoucy, an engineering consultant who studies the feasibility of public acquisitions, a takeover of American Water’s assets in local communities by eminent domain could cost as much as $80 million.
The legislation will provide some immediate relief to ratepayers: Along with establishing a public water authority on the North Shore, the bill eliminates the special franchise tax that NYAW ratepayers now pay, which accounts for 30 to 50 percent of their water bills. This could take effect immediately, during the process of shifting NYAW’s assets.
A study conducted by the state Department of Public Service, ordered by former Gov. Andrew Cuomo in February, concluded that “such municipalization is both feasible and, under a variety of scenarios, in the public interest.”
In a statement after the report was released in March, Cuomo said, “Customers of New York American Water have been unduly burdened with exorbitant rates for the water they use on a daily basis, driven largely by costs having nothing to do with the provision of water.”
In addition to dramatically decreasing ratepayers’ water bills each month, the municipalization of water systems has been proven to benefit affected communities by improving water quality and infrastructure, and decreasing service interruptions. “Nearly every water district on Long Island is well respected in their community and helpful in resolving issues,” said Agatha Nadel, director of the public water advocacy group North Shore Concerned Citizens. “Public water fosters local control, local ownership and local accountability for the water systems, leading to better service for communities overall.”
As for who would serve on the board of the new public water authority, supporters of the legislation suggest that it be led by civic-minded leaders with backgrounds in finance, environmental work or water management.
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