Officials oppose United Water proposal

From Hometown News:

The state’s Public Service Commission held two public hearings—one in New Rochelle and one in Rye—to discuss United Water Westchester and United Water New Rochelle’s proposed merger and rate increases, and it seemed every elected official and resident at the public hearings poked holes in the proposal.

“I’m not opposed to the concept of a proposed merger if it can be demonstrated that it is truly in the best interest of the rate payer, but given the current proposal, it appears the only interest being considered is that of United Water,” county Legislator Sheila Marcotte, an Eastchester Republican, said.

According to the joint proposal submitted by United Water, a private water company that provides water to much of lower Westchester, a merger between United Water New Rochelle and United Water Westchester would provide the utility company’s ratepayers with benefits that include “economies of scale, increased operation efficiencies and service improvements.” Additionally, the proposal states the merger will save ratepayers $182,783 in the first year.

As part of the merger, the resulting company—United Water Westchester—would be split into two rate districts, which have substantially different rates, to ensure the less expensive rate district isn’t subsidizing the more expensive district.

Rate district one, whose rates are higher, would include the approximately 144,000 customers from the current United Water New Rochelle, which encompasses New Rochelle, Eastchester, Bronxville, Tuckahoe, Pelham, Pelham Manor, Ardsley, Hastings-on-Hudson and Dobbs Ferry.

In rate district one, United Water is proposing a 14.06 percent increase in year one followed by a 1.61 percent increase in year two and a 2.69 percent increase in year three.

According to Deb Rizzie, spokesperson for United Water, the rate increases would raise the average monthly water bill for ratepayers in this rate district from $68.50 to $85.

Rate district two would include the approximately 54,000 customers from the current United Water Westchester, wh-
ich encompasses Rye City, Rye Brook and Port Chester.

In rate district two, United Water is proposing a 1.43 percent rate increase in year one followed by increases of 3.42 percent and 3.33 percent in years two and three, respectively.

Rizzie said the average ratepayer in district two can expect to see a much smaller uptick in their monthly bill from about $67 to $69.

Rizzie also said much of the difference between the two rate districts is attributed to the larger system infrastructure investments in the United Water New Rochelle area.

State Assemblyman Steve Otis, a Rye Democrat and former Rye City mayor, questioned whether the merger will actually provide savings to the customer.

“I ask the public service commissioner to further examine whether a merger is necessary,” Otis said. “The $182,783 projected savings in the first year do not seem significant when compared to the rate increases included in the joint proposal.”

Eastchester Town Supervisor Anthony Colavita, a Republican, criticized United Water for not having to adhere to the state-imposed tax levy cap.

“The 2015 tax levy cap is 1.56 percent. There is no reason whatsoever why that same 1.56 percent tax levy cap shouldn’t be imposed on United Water’s proposed annual rate increases,” Colavita said. “It’s time United Water is subjected to the same laws and regulations as the municipalities they serve.”

According to the joint proposal, the rate increases would provide United Water with a 9.2 percent return on its investment, a percentage that had elected officials slamming their fists at the podiums.

“I don’t believe that anyone would object to a reasonable return on their investment, but a benchmark of eight to 10 percent is ludicrous and, frankly, offensive in this current economic state,” Colavita said.

Daniel Duthie, an attorney representing a consortium compromised of municipalities in the United Water New Rochelle area, touched on the 9.2 percent return on investment figure in his written opposition to the joint proposal.

“A 9.2 percent return on equity for a poorly run utility is an insult to the ratepayers,” Duthie said.

During the public hearing in Rye City Hall on Aug. 6, Rye Mayor Joe Sack, a Republican who has been critical of United Water’s rate increases in the past, said he was OK with the moderately small increase in district two rates as compared to years past, but he was worried about the impacts of a possible merger on 2017’s rates, when the three-year rate plan expires.

“When this rate period ends in three years and the newly renamed company is back here asking for rate increases, we want to make sure the districts remain separate. If this is just keeping the lid on things for a couple years, that’s not going to cut it with us,” Sack said.