Liberty Utilities, the Canadian company that has proposed buying New York American Water for $608 million, is promising to hold the line on any new rate hike requests through 2023 while it seeks a “viable solution” to the heavy impact of property taxes on rates, the company said in a document filed with the state Friday.
The offer was contained in a voluminous series of documents filed Friday as Liberty makes its case for approval of the transaction by the state Public Service Commission, which will review and vote whether or not to approve it.
The “rate-freeze” commitment says the company “will not file a new base-rate-increase application for rates to go into effect before April 1, 2023.” The commitment doesn’t mention increases that are already scheduled to take effect this year and next following American Water’s 2016 rate-hike case. The filing says the “rate-freeze period will afford customers and other stakeholders a pause period during which stakeholders can work together to try to find a solution to the current challenges impacting customer rates.”
New York American Water customers in the Lynbrook service area face an April 1 rate hike of 6%, or $2.01 a month, after the PSC in January agreed to defer a potential 27% increase to future years. It’s unclear as yet how next year’s rates are expected to be increased.
Other service areas this April will also see previously approved increases. Merrick-region customers using 4,000 gallons will see bills increase by 8.3%, or $2.10 a month. In the Sea Cliff area, bills will go up 6.2%, or $2.39 a month.
Agatha Nadel, who heads the North Shore Concerned Citizens, which seeks a public takeover of the Sea Cliff service area, called Liberty's rate freeze claim a "marketing ploy" to make it look like they are trying to be a better company than American Water."
"It is just a game to make the next rate [hike] that much higher," she said "If they don’t get what they want through a rate [request], they will come up with a surcharge to make up for the 'freeze.' "
Liberty spokeswoman Alison Holditch confirmed the company's rate freeze pledge refers to future rate filings, not those currently in effect.
"Since we currently do not own New York American Water, the current and pending increases are not within our control," she said. "Given that we will not own the system this April, those currently pending increases will go in to effect if and as approved by the PSC."
The filing says Liberty has pledged to retain all New York American Water employees for two years after the sale closes under substantially the same pay and benefits. The company said it will create 14 new customer service positions in the “Long Island area,” as well as three to four for accounting and computer services. The company promises “enhanced customer service,” as a result.
The new company would be renamed Liberty Utilities (New York Water).
The filing states that the company expects to save around $500,000 in annual interest expense on the transaction over New York American Water’s existing capital structure for debt of $196 million, or $11.5 million over 23 years, calling the change “a significant savings to customers.”
State Sen. Todd Kaminsky (D-Long Beach), who recently met with a top executive of Liberty in advance of the filing, said he expected “rate relief” as part of the transaction.
“I think this merger is an opportunity for Long Islanders to get treated decently and get some relief,” he said. “I think we need to push for as much as we can get,” including even rate rollbacks. “We have to push the PSC to get as much as possible.”
The filing comes as New York American Water customers — including around 120,000 in three Nassau districts, from East Rockaway to Sea Cliff — express wariness about the transaction, and some are seeking to carve off portions of the territory to take public. Sea Cliff is commissioning a study to see if the 4,500 customers there can be merged into the Jericho Water District, and Oyster Bay Town is supporting a plan by the Massapequa Water District to take another 4,000 or so American Water customers in East Massapequa into its district.
State Sen. John Brooks (D-Seaford) has been exploring the prospect of the Suffolk County Water Authority taking on all or part of the Nassau water territories.
Kaminsky, who has talked with Liberty’s chief executive, said the company probably wouldn’t be receptive to a municipal takeover. “I don’t think they want that,” he said. “If pieces are carved off, the costs shift to other ratepayers of New York American Water.”