The New York State Public Service Commission Thursday approved the purchase of Aqua New York Inc. by American Water Works Co., but insisted water rates be frozen for the next two years.
American Water of Voorhees, N.J., will pay Aqua $42.2 million for the company's capital stocks. American Water will assume $28.8 million of Aqua's long-term debt and liabilities. As part of the transaction, American Water will sell its subsidiary, Ohio American Water Company, to Aqua Ohio Inc. for $88.6 million, according to a commission news release.
The approval of American Water's purchase "not only entails no rate increase to Long Island ratepayers, but ensures rates to its other customers would be locked in at current levels for an additional two years," commission chairman Garry Brown said in a statement.
Last month, the commission approved a 7.28 percent rate hike over three years for Long Island American Water, the parent company's local subsidiary. The acquisition approval will result in savings of about $900,000 for American Water ratepayers, the release said.
The deal was approved despite interest by the Water Authority of Southeastern Nassau County in taking over Aqua, which serves about 50,000 customers in parts of Hempstead and Oyster Bay towns, as well as three upstate counties. American Water provides water service to about 75,000 customers in southern Hempstead Town.
The rate freeze "gives us some flexibility to possibly take over [Aqua] and not rush the plan," said authority chairman Richard Ronan.
The authority will review two bids to conduct a feasibility study weighing the costs and benefits of taking over Aqua, Ronan said. The authority has the power to take over Aqua's service area on Long Island even with American Water's purchase of Aqua, he said.
Claudia Borecky, president of the North and Central Merrick Civic Association, said, "I am confident that a public acquisition of our water company will turn out to be not only feasible, but within a couple years, a reality."