Water Authority

Requesting Thorough Investigation into the Feasibility of a Public Takeover of Aqua Water's Long Island Operations

 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 Click HERE to see the Letter that the NCMCA wrote to the Water Authority

As you know, the North and Central Merrick Civic Association actively sought the public acquisition of Aqua Water. We, as Aqua customers, pay at least three times more for our water than our neighbors who have pubic water.

In January 2010, as a result of our uniting with neighboring civics and concerned citizens and upon rallying, letter and email writing campaigns, successfully urged the Towns of Hempstead and Oyster Bay to reconstitute the Water Authority.

 And in January 2012, again as a result of communities uniting, successfuly urged the Towns of Hempstead and Oyster Bay to fund the study, granting $75,000 to conduct a feasbility study of a public takeover of Aqua New York's Long Island operations. The Public Service Commission finally took us seriously and they recognized the Water Authority as a party to the negotiations.

 

Now, the Water Authority is reviewing two applications from companies that propose to conduct the feasibility study. The NCMCA believes it is important that a thorough investigation be conducted. The scenario, as proposed by the Water Authority, in its capacity as the possible operator of our public water autority, would result with the Water Authority sending us a water bill for the water we use in a similar manner in which we pay our water bills to Aqua right now. However, Aqua charges us three times more than it costs them to operate the water system. A not-for-profit public water authority could only charge us for the cost of operations.

 My letter asks the study to consider another scenario. The NCMCA is asking for a cost analysis of a public takeover by the Towns of Hempstead and Oyster Bay as new water districts of the Towns of Hempstead and Oyster Bay. This would mean that a small water tax would be levied as part of our property taxes and a small water usage bill would be sent to our homes on a quarterly basis. This is how our neighboring communities pay for public water in the Towns of Hempstead and Oyster Bay. It is our contention that even with the water tax and even with having to pay the taxes to our schools that Aqua would have otherwise paid, it will still save us money. For instance, Aqua pays only $64,000 to the North Merrick School District. If we had to absorb that amont among the 6,000 homes in North Merrick, it would mean a little more than $10 a year. Aqua already passes the school taxes it pays onto the customer by including it in our rates. However, Aqua also pays school taxes to 27 school districts that it doesn't even serve, which is also included in our rates. That is one reason why we believe a public takeover will save us a substantial amount of money.

 

The Public Service Commission just approved American Water's acquisition of Aqua Water New York, Inc. Aqua Water operates in four counties, but we are only looking to take over its Long Island operations. Once the sale is complete, American Water will serve almost the entire south shore from Valley Stream to Massapequa. However, current American Water customers will be paying different rates from current Aqua Water customers, as pre-determined by the Public Service Commission in their recent rate hikes.

  

A public takeover will only affect Long Island customers currently served by Aqua. Now that the sale price is known, the feasibility study should be a little easier. It would have been a lot quicker and less expensive if we could have used the analysis used by American Water to determine the market price of Aqua. However, American Water went to court to block the public from seeing that information - claiming that it gives the public an unfair advantage in acquiring Aqua. Private companies cannot be FOILed (Freedom of Information Act) so that information is not available to us at this time.

 

Attached and posted below is the Letter that the NCMCA sent to the Water Authority regarding the feasibility study.

April 21, 2012

 

Mr. Richard Ronan, Chairman

 The Water Authority of Southeastern

 Nassau County
P.O. Box 1098
Bellmore, New York 11710-0176

 
Re: Feasibility Study

Dear Mr. Ronan:

 I again write on behalf of the North and Central Merrick Civic Association and Aqua customers regarding the feasibility study of a public acquisition of Aqua New York's Long Island operations ("Aqua").

  

Upon information and belief, the Water Authority of Southeastern Nassau County ("WASENC") is currently reviewing proposals from two firms to undertake the above-mentioned feasibility study. Private water utilities pay property taxes to the county, town and local school districts. However, as I understand it, a payment in lieu of taxes ("PILOT") would only replace school taxes. In the interest of assuring that a thorough investigation is conducted of cost-saving initiatives that can be achieved by acquiring Aqua, please assure that the study to include the following scenarios:

 

1. A cost analysis with PILOTS made to the school districts that Aqua currently pays taxes to;

2. A cost analysis with PILOTS made only to the school districts that Aqua currently serves;

3. A cost analysis with WASENC paying PILOTS under each of the above-mentioned

 scenarios in perpetuity;

 4. A cost analysis with WASENC paying PILOTS under each of the above-mentioned scenarios that decreases at a steady rate until it is eliminated at the end of thirty years; and

 5. A cost analysis with WASENC assuming no PILOTS.

Further, please conduct: 

6. A cost analysis of Aqua being acquired and wholly operated by the Towns of Hempstead and Oyster Bay as separate water districts under the auspices of the Towns and NOT as the water authority as defined in New York State Public Authorities Law, Title 7-A, § 1174.

 To further assure that the process moves forward in a timely manner, I respectfully request that WASENC schedule a public meeting within the next couple weeks to discuss our concerns regarding the feasibility study and the current status of American Water's acquisition of Aqua New York, Inc.

 I am attaching some rough estimates of calculated savings. Please pass them onto the firm that will be conducting the feasibility study.

Thank you for your courtesy and cooperation. Please keep me informed as to the status of these requests.

Very truly yours,

Claudia Borecky, President

 

April 19, 2012 Update  -  Now that the sale price is known, a feasibility study should not take
too long.

PRESS RELEASE:
AMERICAN WATER WORKS ACQUISITION APPROVED
— Water Rates Frozen for Next 2 Years —
 
Albany, NY—04/19/12—The New York State Public Service Commission today approved a
Joint Proposal for the transfer of all the capital stock of Aqua New York, Inc. (Aqua NY), a
wholly owned subsidiary of Aqua Utilities, Inc., (Aqua Utilities) to American Water Works
Company, Inc. (American Water).
 
“Commission approval of American Water’s acquisition of Aqua NY 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 beyond what otherwise could prevail,” said
Commission Chairman Garry Brown.  The rates were previously determined by the Public Service
Commission and by law, could not have been raised as a result of this acquisition.
 
American Water is the parent company of Long Island American Water (LIAW), which operates
in Nassau County. Aqua NY has two subsidiaries providing service in Nassau County—New
York Water Service Corp. (NYWS) and Aquarion Water Company of Sea Cliff, Inc. (Sea
Cliff)—and itself serves five upstate water districts in Westchester, Ulster, and Washington
Counties, as more fully described below.
 
The Commission noted that for customers, the American Water acquisition entails a number of
benefits, chief among those are:
 A two-year moratorium on rate increases for NYWS, Sea Cliff, and all five of the Aqua
NY’s upstate water district customers;
 Reconciliation mechanism providing incentives to minimize increases in or reduce
property taxes, and to capture all or the lion’s share of reductions for ratepayers;
 Earnings sharing mechanism that would capture half of any significant earnings flowing
from currently unquantifiable consolidation synergies and savings; and
 An additional $4 million in required capital expenditures for NYWS in 2012 (for a total
of $4.9 million), with deferral for ratepayers of any under-spending amount.
The Commission also noted that approval of the terms of the Joint Proposal for the American
Water acquisition would not adversely affect the ability of the Water Authority of Southeastern
Nassau County to consider takeover of NYWS, if it decides to do so.
In addition, the Commission denied the Willows Homeowners Association’s petition to merge
the American Water acquisition proceeding with Case 10-W-0652. It noted that approving the
Aqua NY stock transfer to American Water would no prejudice the outcome of a pending
petition for rehearing in that case, in which the Association seeks refunds from Aqua NY.
In a separate decision by the Commission last month approving a three-year rate plan for the
Long Island American Water in Case 11-W-0200, approval of the American Water acquisition of
Aqua NY will result in synergy savings of about $0.9 million that inures to the benefit of LIAW
ratepayers.
 
Background
American Water is the largest investor-owned water and wastewater utility company in the
United States. Among other things, American Water already owns LIAW, which provides water
service to about 75,000 customers in Nassau County. Aqua NY, by itself and through its utility
subsidiaries, serves more than 50,000 customers in Nassau, Ulster, Washington, and Westchester
Counties.
 
Aqua NY has two wholly-owned subsidiaries currently providing water service in Nassau
County: New York Water Service Corporation, serving about 45,000 customers in the Towns of
Hempstead and Oyster Bay; and Aquarion Water Company of Sea Cliff, serving about 4,300
customers in the Town of Oyster Bay.
 
Aqua NY itself provides water service directly to five separate rate districts outside Long Island:
Cambridge, with about 475 customers in the Village of Cambridge, Towns of Jackson and White
Creek, Washington County; Kingsvale with about 220 customers in the Town of Ulster, Ulster
county; Dykeer, with about 120 customers in the Hamlet of Lincolndale, Town of Somers,
Westchester County; Waccabuc, with about 80 customers in the Town of Lewisboro,
Westchester County; and Wild Oaks, with about 190 customers in several developments also
located in Westchester County.
 
Under the proposed stock transfer, American Water would pay Aqua Utilities $42.2 million for
all of the stock of Aqua NY, which would then become a wholly-owned subsidiary of American
Water. In addition, American Water would assume $28.8 million of long-term debt, current
liabilities, and regulatory and other non-current liabilities of Aqua NY. As part of the overall
transaction, American Water would also sell its currently owned subsidiary, Ohio American
Water Company, to Aqua Ohio, Inc., for $88.6 million.
 
The Commission’s decision, when issued, may be obtained by going to the Commission’s
www.dps.ny.gov Web site and entering Case 11-W-0472 in the input box labeled “Search for
Case/Matter Number.” Many libraries offer free Internet access. Commission orders may also be
obtained from the Commission’s Files Office, 14th floor, Three Empire State Plaza, Albany, NY
12223 (518-474-2500).


Water Authority is Now Party to the Public Service Commission's Settlement Negotiations between Aqua and American Water
They cannot ignore us any longer...

Dear Editor,

I would like to thank the Water Authority of Southeast Nassau County (WASENC) for diligently requesting suspension of the NYS Public Service Commission’s (PSC) settlement negotiation proceedings pertaining to Aqua New York, Inc.’s (Aqua) petition to sell its stock to American Water Works Company, Inc. (American Water). 

As promised by WASENC at its January 11, 2012 meeting, they filed a motion the following day with the PSC requesting suspension of the proceedings.  The PSC granted its motion and suspended the proceedings while they considered the argument as to whether WASENC should have been served with a notice of the impending negotiations and whether WASENC should receive party status in these negotiations.

I would also like to thank the community for sending in hundreds of emails and letters requesting the suspension of a decision on this acquisition until the feasibility study is complete. I feel it is important for the PSC, American Water and Aqua to know that we, the people, want to acquire Aqua.  They should not go forward with this sale as if we don’t exist.  

Of course, American Water objected to our request, claiming that a study could take months, even years to complete and ultimately would not depend on whether American Water acquired Aqua.  WASNEC responded that the proposed acquisition by American Water might indirectly deter a public takeover by increasing Aqua’s future value.  Further, WASENC inferred that it should be a participant in this case because of its mandate to protect taxpayers and water customers in southeast Nassau.

On January 17, 2012, WASENC was granted party status with the understanding that the settlement negotiations remain confidential.  However, the protective order that would not allow WASNEC “insight into how each petitioner valued a transaction” was granted prior to WASNEC’s obtaining party status.  Therefore, the protective order relating to how American Water reached its valuation of Aqua still remains.  We believed that having that information might have helped us determine the market value of Aqua’s Long Island operations.  Since the bulk of work performed in any feasibility study involves determining the market value, it may have saved us time, effort and thousands of dollars. 

So, it’s been a very exciting new year for us Aqua customers. In January, WASNEC hired an attorney and stated they were sending out requests for bids for the feasibility study. In February, after we petitioned, wrote letters and rallied the Town of Hempstead to fund the feasibility study, the Towns granted WASNEC $75,000 for the study.  And, in response to our cries, “Why aren’t we up in Albany negotiating with the PSC right now?” we now are a party to the settlement negotiations with American Water and Aqua. 

WASNEC needs to be commended for fighting for the taxpayers of Nassau County.  We are beginning to see a light at the end of the tunnel and have a renewed optimism that a public acquisition is not only possible, but probable. Thank you for your dedication and commitment.

Claudia Borecky, President

North and Central Merrick Civic Association

FEBRUARY 23, 2012 - DEADLINE FOR COMMENTS TO PUBLIC SERVICE COMMISSION ON AMERICAN WATER'S ACQUISITION OF AGUA WATER
 

On January 13, 2012, the NCMCA sent an update to this membership on the last water authority meeting.  At that time, we asked that you contact the Public Service Commission and tell them to postpone a decision on American Water's acquisition of Aqua Water at least until such time as the Water Authority completes its feasibility study.  

 

We must let the Public Service Commission know that we, the people, are very serious about taking over our water system. 

 

If they receive hundreds of emails, maybe they will realize that we are serious. 

 

If you have not already done so, please submit your concerns regarding the sale of Aqua New York to American Water. Comments must be filed by February 23.
   
Comments can be written and submitted electronically to the secretary at secretary@dps.ny.gov. or by mail to Hon. Jaclyn A Brilling, Secretary, Public Service Commission, Three Empire State Plaza, Albany, New York 12223-1350. Comments should refer to "Case 11-W-0472 - American Water Works Acquisition." You may also call 1-800-335-2120; press #1 to leave comments about the American Water Works Acquisition Proposal. 

 On Janaury 12, 2012, the NCMCA made the following comment regarding this sale. Please feel free to copy, paste it and submit it on your behalf, or use it as a guide for a letter of your own:

 

"The Water Authority of Southeastern Nassau County hired an attorney, and received almost $100,000 in grant money to move forward and take all action necessary to acquire Aqua Water's Long Island operations. We believe that the pending sale of Aqua Water to American Water will affect our public takeover of Aqua Water. The court has already ruled that we will not have an opportunity to use the data obtained by those two corporations because of the "privacy rights" of corporations.

 

The Public Service Commission was created to protect the public. We respectfully request that the Public Service Commission take our comments into consideration when making its decision on American Water's acquisition of Aqua Water. Further, please withhold a decision on this deal until our feasibility is complete. Withholding a decision on this matter will do what the Public Service Commission is commissioned to do -- protect the public."

 

 

------------------------------------------------------------------------------------

To reiterate the problem.  The court ruled to protect American Water's and Aqua Water's right to privacy as "private corporations." 

 

It was our hope that since most of the work in any feasibility study involves determining its market value, that we would be able to use the data arrived at by American Water in determining Aqua's market value for our feasibility study. This would have saved us time and thousands of dollars. However, the court intervened and ruled to protect the companies' right to privacy, stating that if that information were to be made available to us, it would give us an unfair advantage in acquiring Aqua Water.

 

So, we are back at square one. But WASNEC is moving forward. At their January meeting, they hired an attorney and were sending out Requests for Proposals ("RFP") for a firm to conduct the feasibility study. The firms will have 30 days to submit proposals. After 30 days, the winning bidder will be asked to submit its findings within three to six months.

 

WASENC moved forward with all the conditions I addressed in my December 21, 2012 letter to the WASENC. It conducted its own analysis of the data; retained counsel; is sending out RFPs and procured $75,000 from the Towns to do the study. Having waited two years for this study, I grew impatient and submitted my own renderings of how much a public takeover would cost us. I found that even with us having to make up the money that will be lost to our school districts because a public company does not pay school taxes, we would still save money. WASNEC will submit its and my findings to the winning bidder to help them in their study.

 

It has been over 2 years to the day that the Towns reconstituted the water authority. If WASNEC had taken those actions one year ago, we would have been up in Albany discussing acquiring Aqua Water. American Water would not have been in the picture. We are concerned that once American Water acquires Aqua, we will be dealing with a very different company. American Water already serves most of southwestern Nassau. Now they will be monopolizing most of the water on the south shore. It is our belief that this sale will make an acquisition by eminent domain a more costly venture for Aqua customers.

I would like to thank the people of our community who signed petitions, rallied Town Hall for funding, attended meetings and helped us keep the Water Authority's feet to the fire.

 

 

Thank you for your attention to this matter.

 

Sincerely,

Claudia Borecky, President

North and Central Merrick Civic Association

 

January 29, 2012 Aqua Water Closes Well in Seaford/Levittown Due to Contaminants from Grumman ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~  Trace levels of volatile organic compounds (VOCs) was detected in our water.  These levels were less than the amount allowed under the Department of Health's drinking water standards.   A plume of contaminated water, originating from the former Grumman property approximately 2.5 miles from Aqua's Seamans Neck Road Water Plant at the Seaford/Levittown border, has skirted its wells. Aqua Water closed down one of its wells last summer because the plume was getting dangerously close to the well.  Aqua representatives claim that no contaminants ever made it into our drinking water.   Aqua customers were never notified that Aqua was closing its well and we were not made aware that the plume had reached its wells until it decided to go before the Hempstead Board of Zoning Appeals last week.   The US Navy is installing a temporary treatment system for the well that is closed, followed by a final treatment system for both wells and long-term operation at Aqua New York.  These 20,000-pound Granular Activated Carbon vessels will be installed in February to April 2012 and be enclosed within a building that will be approximately 27' high and will operate until December 2012.  One 21,000 Gallon temporary tank will be used to store wastewater.   The interim and final treatment systems will consist of vessels containing granular activated carbon (GAC), which it claims is a large-scale version of the common home filtration systems.

Water Authority Update
January 15, 2012

Great News!  Yes, we rallied Town Hall.  Yes, we wrote dozens of letters.  Yes, hundreds of us signed petitions. And thanks to our perseverance, the Towns of Hempstead and Oyster Bay are now funding the Water Authority of Southeastern Nassau County (“WASENC”) study to determine if it’s feasible to acquire Aqua Water and run it as a public utility.  Hempstead is granting $50,000 and Oyster Bay is granting $25,000 to fund the study. 

That’s the good news.  The bad news is that the court ruled to protect American Water’s and Aqua Water’s right to privacy as “private corporations.”  Today, American Water and Aqua Water met with the Public Service Commission in Albany to negotiate American Water’s acquisition of Aqua Water.  The sale is expected to be finalized in February.  It was our hope that since most of the work in any feasibility study involves determining its market value, that we would be able to use the data arrived at by American Water in determining Aqua’s market value for our feasibility study.  This would have saved us time and thousands of dollars.  However, the court intervened and ruled to protect the companies’ right to privacy, stating that if that information were to be made available to us, it would give us an unfair advantage in acquiring Aqua Water. 

So, we are back at square one.  But WASNEC is moving forward.  Last night, they hired an attorney and expect to send out Requests for Proposals (“RFP”) for a firm to conduct the feasibility study. The firms will have 30 days to submit proposals.  After 30 days, the winning bidder will be asked to submit its findings within three to six months.

WASENC moved forward with all the conditions I addressed in my December 21, 2012 letter to the WASENC.  It conducted its own analysis of the data; retained counsel; is sending out RFPs and procured $75,000 from the Towns to do the study. Having waited two years for this study, I grew impatient and submitted my own renderings of how much a public takeover would cost us.  I found that even with us having to make up the money that will be lost to our school districts because a public company does not pay school taxes, we would still save money.  WASNEC will submit its and my findings to the winning bidder to help them in their study. 

It had been exactly 2 years to the day that the Towns reconstituted the water authority.  If WASNEC had taken those actions one year ago, we would have been up in Albany discussing acquiring Aqua Water.  American Water would not have been in the picture.  We are concerned that once American Water acquires Aqua, we will be dealing with a very different company.  American Water already serves most of southwestern Nassau.  Now they will be monopolizing most of the water on the south shore.  It is our belief that this sale will make an acquisition by eminent domain a more costly venture for Aqua customers. 

I would like to thank the people of our community who signed petitions, rallied Town Hall for funding, attended meetings and helped us keep the Water Authority’s feet to the fire.

Now, we must let the Public Service Commission know that we are very serious about this takeover.  Please visit   http://documents.dps.ny.gov/public/Comments/PublicComments.aspx?MatterCaseNo=11-W-0472  and submit your comment on the sale of Aqua Water to American Water. If the PSC receives hundreds of opposing comments, they will be required to consider them in rendering their decision.

The NCMCA made the following comment regarding this sale.  Please feel free to copy, paste it and submit it on your behalf, or use it as a guide for a letter of your own:

 “The Water Authority of Southeastern Nassau County hired an attorney, and received almost  $100,000 in grant money to move forward and take all action necessary to acquire Aqua Water's Long Island operations.  We believe that the pending sale of Aqua Water to American Water will affect our public takeover of Aqua Water.  The court has already ruled that we will not have an opportunity to use the data obtained by those two corporations because of the "privacy rights" of corporations. 

The Public Service Commission was created to protect the public. We respectfully request that the Public Service Commission take our comments into consideration when making its decision on American Water's acquisition of Aqua Water.  Further, please withhold a decision on this deal until our feasibility is complete.  Withholding a decision on this matter will do what the Public Service Commission is commissioned to do -- protect the public.”

Thank you for your attention to this matter. 

Sincerely,

Claudia Borecky, President

North and Central Merrick Civic Association

D