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Potential bidders eye American Water's Nassau turf

New York American Water in Merrick in 2018.

New York American Water in Merrick in 2018.  Credit: Danielle Silverman

Activity that could lead to a public takeover of parts of New York American Water’s Long Island service territory has begun to heat up, with Massapequa Water District proposing to carve off a $21.6 million section, State Senate passage of a bill proposing a new water authority to slice off another, and Hempstead Town studying a third.

In a filing last week, the Massapequa Water District valued the portion of New York American Water’s East Massapequa district of some 5,359 customers and infrastructure at $21.6 million, including three wells and one storage tank.

The district said it’s prepared to negotiate “immediately” over a purchase of the East Massapequa portion of the system and “begin operation by January 1, 2021,” including with a savings for customers derived from a lack of profit incentive and no tax payments. The district said it would use its eminent domain authority to take over the system if negotiations fail.

New York American Water already has an agreement to be sold to Liberty Utilities of Canada for $607 million in a deal that had been scheduled to close between July and December. The Public Service Commission threw cold water on that plan in June by requesting bids from public authorities or water districts to acquire all or part of the 120,000-customer system in Nassau County by Aug. 3. Earlier this month, the PSC extended the period for proposals until mid-October.

New York American Water spokeswoman Lee Muller said, “We are still reviewing the details of Massapequa Water District’s filing. However, it does not seem like their plan will help ease the tax burden for East Massapequa residents. Government takeovers don't save customers money."

Last week, the State Senate passed legislation that would provide a framework to establish the North Shore Water Authority, part of a plan that would allow some 4,500 Sea Cliff customers of New York American Water to municipalize if a feasibility study finds it's economical. A citizens group in that district, North Shore Concerned Citizens, has proposed joining the territory with the Jericho Water District.

State Sen. Jim Gaughran (D-Northport) said New York American Water, “for years has overcharged ratepayers and profited off the backs of Long Islanders.” Companion legislation would have to pass in the Assembly and then be signed by Gov. Andrew M. Cuomo. The district covers ratepayers in Sea Cliff, Old Brookville, Roslyn Harbor, Glenwood Landing, Glen Head, and Glen Cove. 

Meanwhile, Hempstead Town, whose previous studies found the prospect of a water takeover not feasible, last week announced a new procurement for “valuation services and a feasibility study” related to “potential acquisition” of New York American Water assets within the town.

One watchdog said all three moves bode well for a pivot away from private ownership of the water system. 

“Public water is within our grasp,” longtime public water advocate David Denenberg, of watchdog group Long Island Clean Air, Water & Soil, wrote of the news.

The Massapequa Water District, which had inquired about a takeover in 2018, said its consultants have assured the district acquiring the customer base and adding those customers to its own billing and mapping system “would not be an overly difficult undertaking.”

 “When the sale of NYAW to Liberty was announced, the Massapequa Water District board was inundated with requests to take over the Eastern Massapequa territory,” the district said in its filing. “Generally, Massapequa Water District rate increases are much more stable than NYAW." 

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