Reaction Mixed to PSC Decision on Suez NY Water Rate Hike

John Jordan | January 2017

Rockland County Executive Ed Day

NEW CITY—Reaction has been mixed to the decision by the New York State Public Service Commission earlier this week to decrease the requested water rate hike request by Suez New York, Inc. by nearly $1 million over the next three years.

Rockland County Executive Ed Day was highly critical of the PSC decision charging that Rockland County ratepayers should not have to pay for Suez New York’s failed desalination plant in Haverstraw. Day, a Republican, said the PSC did not go far enough to protect Rockland County water consumers.

Democratic Rockland County Legislator Harriet Cornell released a statement praising the reduced rate PSC proposal, noting that the proposal includes unprecedented water conservation costs. Cornell, who is the chair of the Rockland County Task Force on Water Resources Management and chair of the Legislature’s Environmental Committee, noted that the modified Suez New York rate settlement reduces by $8.2 million the $38 million Suez had sought in reimbursement costs for its failed desalination plant. The PSC also cut the company’s rate of return on the plant’s costs, reducing costs to ratepayers by $960,000.

“After carefully reviewing the terms that were initially proposed, and the arguments for and against it, we opted to adopt a rate plan that strikes a better balance for customers,” said PSC Chair Audrey Zibelman. “Our decision encourages Suez to improve system efficiency by implementing cutting-edge, proactive water-loss and conservation management practices. The public demanded reductions in the proposed rates along with greater efforts to strengthen conservation and demand reduction, and we agree. This decision is a win for Suez customers.”

The modified three-year plan implements annual revenue increases of $4.87 million to fund investments that will facilitate better management and control of water supplied and distributed by Suez to more than 290,000 people located mostly in Rockland County, the PSC stated. In the first year, the new plan for the average residential customer will result in an average monthly increase of $0.51 a month, or 0.8%.

Under the new rate design, the first year rate was set to provide average-use customers with little or no bill increase. However, in order to encourage conservation, higher rates will apply to high-use customers. In the second and third year, the rates for usage will increase. As a result, the average residential customer will see average monthly increases of $4.80 and $4.87 in the second and third years of the plan, respectively.

The modified plan was accepted by Suez New York by on Friday, Jan. 27 and will go into  effect on Feb. 1, 2017. The plan also includes a strengthened five-year conservation and efficiency plan program to reduce overall water use. It also adopts a program to promote much stronger leak management.

The strengthened conservation program approved by the commission is designed to reduce demand by more than three million gallons per day—double the level proposed in the company’s conservation plan. Meanwhile, other aspects of the improved rate plan, such as conservation-oriented rate design, advanced metering infrastructure, and conservation outreach and education, are expected to make additional contributions to conservation beyond the three million gallons per day goal.

Bill Madden, director of external affairs for the New York Division of Suez, released a statement on the PSC proposal, which stated, “In the best interest of its customers, SUEZ announced today an agreement with the New York State Public Service Commission on a three-year rate plan that will feature significant benefits to the company’s 300,000 customers in Rockland and Orange counties…”

Rockland County Executive Day stated, “This is a dent in the costs. It’s certainly not a victory for the ratepayers of Rockland County.”

He also bristled at the costs associated with the failed desalination plant. “We continue to maintain that the people of Rockland should not have to pay expenses related to the failed water desalination plant,” Day said. “The ratepayers in Rockland did nothing to deserve these costs.”

Rockland County has a legal action pending that challenges the expenses and cites the failure of the PSC to protect consumers from exorbitant charges related to the failed desalination plant. The lawsuit contends that the PSC failed to carry out its responsibility to protect the consumer from unreasonable costs. The decision by the PSC issued on Tuesday (Jan. 24) has no bearing on the lawsuit, which continues.

Legislator Cornell praised the PSC’s proposal, particularly its conservation modifications. “I have repeatedly argued that Rockland County cannot get a good grip on its water future with a robust plan for conservation,” Cornell said. “This must encompass many layers—improved utility infrastructure to curb leaks, the installation of efficient water fixtures in homes and businesses, and so much more.”

John Jordan
Editor, Real Estate In-Depth