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PSC seeks proposals to take New York American Water public

New York American Water in Merrick, which is

New York American Water in Merrick, which is set to be sold in July to a privately held utility. Credit: Danielle Silverman

The state Public Service Commission has issued a notice seeking “plans or proposals” from local governments, districts and authorities to acquire “all or part” of New York American Water.

The move last week comes as New York American Water nears the July target date for its $607 million acquisition by Liberty Utilities of Canada in a deal local watchdogs and ratepayers say will only prolong or worsen their complaints about the shareholder-owned water utility. The company has about 120,000 Long Island customers, all in Nassau County, and others upstate.

New York American Water has been the subject of blistering public criticism and scrutiny for years over eye-popping rate hikes and a state probe that found irregularities during state proceedings for a rate hike five years ago. The company has changed top leadership, was required to have an outside monitor for its operations and offered some rate relief to customers.

But even after those moves, it announced an unexpected sale to Liberty on Feb. 28. The sale is being scrutinized by the PSC, which must approve it.

PSC spokesman James Denn said while issuing a notice seeking public comment is "standard practice," the PSC "wanted to hear from municipalities" and other government entities because "several parties have expressed an interest in a municipal takeover. He said the PSC "has not taken a position on municipal ownership." 

The notice says the commission “must determine if the transfer to Liberty would be in the public interest,” and “could include considering viable potential alternatives.”

The PSC wants any interested municipalities or authorities to delineate “what portion of the system” they’re interested in acquiring, how they’d provide water service in the territory, how much they’d be willing to pay, and whether they’d make any payments in lieu of taxes, presumably to make up for the potential shortfall local governments would see if the private utility became a nontaxable public entity. It asks potential acquirers why their proposals would be “in the best interests of ratepayers.”

Proposals must be submitted by Aug. 3.

Elected officials and local customers have been pushing municipal utilities to acquire the New York American Water service territory for months. Customers in the Sea Cliff region want to see their 4,500 accounts and infrastructure taken over by the Jericho Water District. State Sen. John Brooks (D-Seaford) has broached the idea of Suffolk County Water Authority extending its reach into Nassau to take over all or part of the assets. The Massapequa Water District in January began proceedings to acquire some 5,800 New York American Water customers in East Massapequa.

Stan Carey, superintendent of the Massapequa Water District, said the district will submit comments to the PSC about its plan to take over the East Massapequa district. He said the authority has hired an outside firm to put a value on the worth of the eastern portion of the system and consider bond repayments and tax implications and "it looks favorable to move forward." He expects his board to make a decision about moving forward "in a couple of weeks." 

Suffolk County Water Authority chief executive Jeffrey Szabo noted Brooks' efforts to interest the authority to take over New York American Water but said: "At this point we haven’t been provided enough information to comment further.”

David Denenberg, co-executive director of the activist group, Long Island Clean Air, Water, Soil, sent a letter Monday to the Hempstead Town board and Supervisor Don Clavin to submit a proposal to acquire the assets.

"The time to act is now," the group wrote. 

Hempstead Town spokesman Greg Blower said the town is reviewing previous studies it commissioned to examine the prospect of public water. 

“While two separate studies did not indicate meaningful rate cost savings could be achieved, the town is taking another look at the most recent study, which was conducted in 2016, with an open mind,” he said, adding that the "overriding consideration remains whether a public takeover of this water company can provide genuine ratepayer relief.”

Lee Mueller, a spokeswoman for New York American Water, in a written statement, said: "A single transaction with Liberty Utilities is in our customers’ best interests, as our systems fit effectively within Liberty Utilities’ core competencies and existing operations." 

Without providing documentation to back it up, she said a "full or a piecemeal sale of our systems to public entities would take several years, cost taxpayers millions of dollars and lead to gaps in service."

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