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Bill to aid New York American Water customers stalls in Assembly

The Long Island headquarters of New York American

The Long Island headquarters of New York American Water in Merrick Credit: Danielle Silverman

A bill that would exempt New York American Water from paying the state franchise tax to provide rate relief to Nassau customers has stalled in the Assembly after unanimous passage last week in the Senate. 

Under the proposed law, American Water would be relieved from paying the franchise tax — which is paid to local municipalities — in a way that would shift the burden to other utilities' bill payers — chiefly to natural gas supplier National Grid. Excluded from the pool are PSEG Long Island ratepayers, according to Sen. Todd Kaminsky (D-Long Beach).

Average gas bills for Nassau customers would see an increase of around 37 cents a month, said Kaminsky, the bill's sponsor, while American Water customers in Sea Cliff, for instance, would see savings of from $10 a month in the first year (over a five-year phase-in) for 8,000 gallon-a-month customers. Those who use more than 15,000 gallons a month would see savings of over $90 a month by the end of the five years.

But Assemb. Charles Lavine (D-Glen Cove) said there are three main issues with the Senate bill that would likely forestall any action on it in the Assembly until next year, if at all. "It's not ready to be passed this year," he said.

His issues: First, any time a tax is no longer paid by one party, he said, "someone else ends up making up the difference." Second, he said, state government has "never had a policy of giving a tax advantage" to utility customers. "This would set a precedent," Lavine said. 

Third, he added, the $25 million in savings for water company customers "is a lot of money," Lavine said, and would have to be accounted for in the state budget. 

National Grid spokeswoman Wendy Ladd said the company is "always concerned about any proposal that would increase property tax costs to our customers. We are looking into the impact on our customers if proposal is phased in over five years.”

Kaminsky, during the floor vote on the Senate measure, noted a series of state-approved rate hikes and new charges that have led bills for American Water customers to spike in the past two years. The franchise tax is paid to local municipalities, and the loss of American Water's share would be made up by larger pools of other utility bill payers.

New York American Water president Lynda DiMenna said Kaminsky's bill "would save an average customer in Sea Cliff almost $600 per year and correct an inequity in the tax system." 

Lavine said that in the end, "The only way to solve the New York American Water dilemma is municipalization." And, he added, "That is going to cost money."

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