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Massapequa Water starts effort to absorb 5,800 American Water customers

New York American Water's office in Merrick.

New York American Water's office in Merrick.   Credit: Danielle Silverman

The Massapequa Water District has begun an effort to acquire some 5,800 customers and infrastructure from New York American Water’s Long Island operating area in East Massapequa as the national water company prepares to sell its New York operations to a Canadian conglomerate.

Terms of any such Massapequa Water District deal including the potential costs weren’t released, and American Water on Friday signaled it opposes such a transaction. A Massapequa Water official said an eminent domain takeover ultimately could become the vehicle for acquiring the territory. 

Liberty Utilities of Oakville, Canada, agreed last year to pay $608 million to buy New York American Water, which has experienced ratepayer complaints and government investigations after spiking rates and financial irregularities tied to "intentionally" misleading regulators in past years. The acquisition is scheduled to be finalized later this year.

In a letter to New York American Water last month, a lawyer for the Massapequa Water District said commissioners had determined it was “in the best interest of the district to extend its boundaries eastward to the Nassau Suffolk line to serve the residents of East Massapequa.”

The Massapequa district “will seek to incorporate that portion of NY American Water which lies in the East Massapequa area," the letter states. In addition to water lines to 5,800 customers, the transaction would include three wells and one ground storage tank. 

New York American Water spokeswoman Lee Mueller noted the company has "entered into an agreement with Liberty Utilities for the sale of the entire New York American Water system. A single transaction [with Liberty] is in our customers’ best interests, including our customers in Massapequa."

New York American Water has 120,000 Nassau customers. 

An official with the Massapequa Water District said  its plan stemmed from years of complaints from ratepayers in East Massapequa.

The district plans to bid out a professional valuation of the East Massapequa territory as soon as next week, he said. Then, the district will approach New York American Water to "negotiate a fair price," while sending the plan to the state comptroller for review, the official said, adding that Oyster Bay's Town Board, which must approve it, supports the plan.

Oyster Bay Town Supervisor Joseph Saladino in a statement said, "The cost of water is so much more expensive in areas where New York American Water is the supplier and we'll always be in favor of saving our residents money." 

The purchase price probably would be bonded, and covered solely by East Massapequa ratepayers, according to Massapequa Water. 

American Water has blamed rate hikes on property taxes it pays to various taxing districts, but the Massapequa Water District, as a municipal entity, would not pay property taxes. 

Other local municipalities are seeking to break off parts of New York American Water.

The Sea Cliff American Water district of around 4,500 customers is seeking to join with the Jericho Water District, while some state lawmakers and watchdog groups are  pushing for the Suffolk County Water Authority to purchase  some, or all, of American Water's customer base.

A Liberty spokeswoman didn't return a call for comment. 

State Sen. John Brooks (D-Seaford), whose district includes East Massapequa, said he strongly supports the takeover by Massapequa Water and is also talking to Suffolk County about a similar plan. 

"I think it's a very good idea," he said. "We are going to assist them in that process." 

Brooks said he believes the Massapequa district "can provide a better level of service and be a financial advantage to East Massapequa customers." 

With David M. Schwartz

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