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State orders $293,000 in refunds for Sea Cliff water customers

Alan Dorman of Hewlett Harbor reacts during a

Alan Dorman of Hewlett Harbor reacts during a presentation made by American Water in East Rockaway, Thursday evening, August 9, 2018. The hearing was organized by local officials to give south shore residents a platform to air concerns to American Water executives and state regulators and demand answers as to why south shore residents' water bills have skyrocketed. Credit: Danielle Silverman

A state agency on Thursday ordered New York American Water to refund nearly $293,000 to Sea Cliff customers, as a Nassau County probe revealed that water bills issued by the company had spiked at two county parks.

The developments come as American Water customers on Nassau’s North and South shores call for public takeover of their water supply after complaints of high bills and the Department of Public Service probe.

There also are separate reviews of customer complaints by the Nassau district attorney’s office and state Comptroller Thomas DiNapoli.

The state Public Service Commission said it ordered the company to refund $292,804 to Sea Cliff district customers as a result of the company’s “gross mishandling” of its property tax filings.

A state probe earlier this year found a $2.3 million tax overpayment by New York American Water resulted in $281,421 in overpayments by customers in the Sea Cliff district. According to the PSC, although the company paid the $2.3 million, the vast majority was never billed to customers.

A second stage of the investigation found that certain company employees intentionally deceived state regulators during rate-hike proceedings in 2016.

The refunds ordered Thursday will amount to $68.14 for each of the 4,500 Sea Cliff district customers.

Also, Nassau County Comptroller Jack Schnirman confirmed his office is investigating county water charges from New York American Water after finding bills spiked for at least two county parks this summer.

The water bill for Peace Garden Park on Woodfield Road in West Hempstead saw its water bill jump to $4,307 for one month this summer, compared with $46 for the same period last year.

North Woodmere County Park also saw an increase in its bill to $5,146 for one month this summer, compared with $1,451 for the same period in 2017, Schnirman said.

“Our claims division, as part of a routine review, noticed a variety of accounts aren’t making any sense,” Schnirman said. The county met with New York American Water officials Thursday morning to “get to the bottom of it,“ Schnirman said.

The one-time refund of $68.14 for individual Sea Cliff customers is slightly higher than a previously calculated refund of $65.37. The PSC said that as a result of the refunds, customer bills will be “lowered by $1.7 million over previous projections for the next two years.”

Joe Lopes, a member of North Shore Concerned Citizens, which seeks to take the Sea Cliff water district public, said the PSC refund was slightly larger than expected, though not a surprise.

“One of our concerns was that it seems like a drop in the bucket compared to what many of us pay,” Lopes said. Nonetheless, “at least it holds down the increases that were to be imposed over the remainder of the rate period,” he said.

Watchdog group Long Island Clean Air, Water and Soil has led the charge for a public takeover after its efforts during rate hike proceedings first raised questions about property tax overpayments and other issues. The group also has accused the PSC and Department of Public Service of failing to find the property tax errors in the first place.

In a statement, PSC chairman John Rhodes said the agency was preparing to file an enforcement action in state Supreme Court against American Water to “seek additional sanctions and injunctive relief to ensure customers are protected going forward.”

The PSC said its anticipated suit against the company will include a demand for injunctive relief, including mandating an independent monitor to review company operations in the state. It could also include “other remedies to provide rate relief as well as further enforcement actions,” the PSC said.

The PSC said the new calculations will reset the incremental property tax surcharge for Sea Cliff to around 33 to 34 cents per 100 gallons for the 2019 and 2020 rate years.

The agency said that would lower annual water bills for the average residential customer by 16 percent, or $170.88, in the 2019 rate year and by 15.6 percent, or $176.52, in the 2020 rate year, compared with previous projections.

The changes mean the average Sea Cliff customer next year will have an average monthly bill of around $75.44, which the PSC said was “comparable” to other metro-area water suppliers.

Speaking about the probe of county park bills in Nassau County, Deputy Comptroller Jeffrey Schoen said the higher bills “would not be explained simply by usage looking at a year over year and month over month” comparison.

Bill Varley, deputy chief operating officer of the New York company’s parent, American Water, said the company had contacted Nassau County in advance of Newsday’s questions to the company Wednesday to review each of its 67 accounts. He said the company identified seven county water bills that “warrant field visits.”

“This is part of our standard review that we are executing on behalf of all customers that have submitted an inquiry,” he said. The statement didn’t identify the accounts or the amounts.

Varley earlier this week said a preliminary review found most spiking water bills this summer were tied to a new “conservation rate” approved last year by the state PSC that raises the cost of water as customers use more.

But complaints to the office of State Sen. Todd Kaminsky (D-Long Beach) and others reported by Newsday indicated that some bills have risen far beyond amounts the company said were related to the conservation rate increase.

The PSC said more than 800 complaints have been lodged against the company from South Shore residents who received “unexpectedly high” water bills.

Tom Congdon, executive deputy at the Department of Public Service, said that New York American Water customers in the Lynbrook and Sea Cliff districts can expect further rate relief this fall when a PSC ruling on federal tax cut savings will further lower bills — by 4 percent for Lynbrook customers and 2.5 percent for Sea Cliff.

As for taking the privately run water system public, he noted it was not the PSC’s decision to make but added, “Local taxing jurisdictions are free to pursue that.”

“There are benefits to municipalization that should be considered,” he said.

Kaminsky said such a move can be considered but that the focus now was on getting to the bottom of complaints.

“Right now people are really in shock at the bills they’re getting,” he said.

Kaminsky and other lawmakers held a public meeting with New York American Water officials and residents at East Rockaway High School Thursday night.

Several hundred sometimes-raucous residents packed the school, repeatedly shouting down American Water officials who tried to offer tips on conservation and why rates are increasing.

Pearl Bluth of Woodmere said her bill has jumped to $245 from $177 two years ago for usage that has dropped by around 5,000 gallons.

“It is really obscene,” she said.

The audience roared in protest when Varley offered to put her on a payment plan. “It’s un-American,” one man shouted.

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