North, South Shore customers sue water company over higher rates

An advocacy group has filed a legal challenge against the state Public Service Commission, the state Department of Public Service and New York American Water Co. to oppose higher rates levied on the utility’s customers.

Long Island Clean Air Water and Soil joined the North and Central Merrick Civic Association and several residents in the utility’s service area in filing the Article 78 challenge Thursday in state Supreme Court in Albany.

New York American Water, a Merrick-based private company that services 120,000 households and businesses in Nassau County — including customers in Glen Head, Sea Cliff, East Rockaway, Roosevelt, Bellmore and parts of Merrick, among other communities — pays property taxes and passes those costs on to the ratepayer.

The Article 78 plaintiffs are challenging the PSC’s decision in May to allow the company to raise customers’ rates for four years beginning in 2017. The annual increases range from 1 percent to as high as 9.6 percent, bringing in a total of $46.6 million from 2017 to 2020, according to the commission.

“The PSC will not comment on the merits of the pending lawsuit it just received,” Jim Denn, a PSC spokesman, said in a statement. “The majority of the rate increase was due to local authorities approving tax levies on American Water, over which PSC has no control and is legally obligated to include in its rates.”

Claudia Borecky, co-director of the advocacy group and president of the North and Central Merrick Civic Association, said, “Our basic argument is that we are being charged a property tax. That’s something the other customers don’t have to pay.”

Teresa Butler of Levittown, an attorney representing the advocacy group, agreed. “Private water customers, their bills are astronomical compared to public water customers because of the taxes and because there’s profit built in,” she said.

New York American Water president Carmen Tierno said the higher water rates are indeed driven by property taxes and in a statement called for relief: “Regrettably, the extreme spike over recent years in real property taxes assessed to the company — particularly in our North Shore service district that includes the Village of Sea Cliff, Glen Cove, Glen Head, Glenwood Landing, Old Brookville and Roslyn Harbor — have led to high water bills. The fact is that currently 72 cents of every dollar paid by our North Shore service district customers goes towards property taxes,” he said. The statement added that the company does not consider the lawsuit a viable solution. “We believe the tax burden that is placed on our company and then directly passed on to customers should be relieved given that water is an essential of life.”