The Long Island headquaters of New York American Water in...

The Long Island headquaters of New York American Water in Merrick is seen July 3. Credit: Danielle Silverman

The New York State Public Service Commission on Thursday asked its chief lawyer to get a court order directing New York American Water to follow all its regulations, including providing accurate information during rate-hike proceedings.

The commission, which regulates the state’s utilities, called for judicial intervention to "help restore consumer confidence" after its report last month revealed that the water company’s employees intended to deceive state regulators in 2016 when the company requested — and regulators approved — its increase to customers’ water rates.

The report said company employees were aware of “material errors” in tax calculations starting in 2013, but failed to disclose those errors to state regulators at the time the company was seeking approval for rate hikes. The errors led to customers in the Sea Cliff water district being overcharged, state officials found.

"The commission does not take this step lightly, but only after careful analysis of the information presented by staff,” according to the PSC's order, which directed its chief counsel to file the lawsuit as soon as possible. “Based on that information, it is the commission’s sense that the underlying actions pose a risk to customers — as well as to the regulatory system, which depends on regulated entities being forthright in their submissions and communications with the commission and staff. A judicially enforceable order will help restore customer confidence and prevent further violations.”

In an April report, the state found that New York American Water, a private utility, overpaid its property taxes in the Sea Cliff water district by $2.3 million, which led to customers there being overcharged by about $281,000. Sea Cliff district customers will receive $65 credits pending state approval.

In December 2017, after state regulators had approved the company’s request to hike rates, the company’s senior management and legal counsel admitted the errors to the Department of Public Service, the investigative arm of the PSC.

New York American Water, which serves about 124,000 customers in New York, most of them in Nassau County, did not make money when it paid more property taxes than it owed, said Carmen Tierno, the utility's president.

The company, he said, took responsibility for what happened and apologized to its customers.

“We are committed to rebuilding our relationship with our customers, the Public Service Commission leaders and staff as well as other appropriate stakeholders,” Tierno said in a statement. “We want to continue doing what we do best — proudly delivering clean, safe and reliable water services to our valued customers.”

Assemb. Michael Montesano (R-Glen Head), who has called for criminal investigations into the water company, said that with a court order, New York American would face harsher penalties if it violated state regulations in the future. “The PSC feel they were taken over the barrel by New York American Water and this put them in a bad light,” Montesano said.

Latest videos