Rockland Sues State, Water Utility Over Desalination Plant Costs

John Jordan | July 2016

From left, Rockland Assistant County Attorney Tom Simeti and Rockland County Executive Ed Day

NEW CITY— Rockland County Executive Ed Day announced on June 27th that the county had filed a lawsuit against its water company—Suez Water New York, Inc.—and two state agencies in connection with tens of millions of dollars in costs being charged to Rockland County water ratepayers for a failed desalination plant in Haverstraw.

The legal action focuses on a reimbursement request by Suez, the county’s water company, has made to the Public Service Commission. The lawsuit names the Public Service Commission, the New York State Department of Public Service and Suez Water New York as defendants. The reimbursement for costs center on Suez Water New York’s predecessor United Water New York’s failed desalination plant in Haverstraw. In 2014, the PSC ordered the water utility to discontinue its efforts to secure approval of the project.

United Water New York had been seeking to secure approvals to build the “Haverstraw Water Supply” project based on Consent Orders issued by the PSC in 2006 and 2010. However, the PSC in May 2013 announced it would hold hearings on the controversial project as well as reassess whether the desalination plant was necessary due to forecasted water shortages in future years in Rockland County.

While environmental groups, such as Scenic Hudson and Riverkeeper came out against the project, a host of business and building trades interests came out in support of the venture at that time.  In its decision handed down on Nov. 13, 2014, the PSC determined that “due to changed circumstances there was no longer an immediate need for a new water supply source in United Water New York’s service territory.”

The utility had sought to recover $52.1 million in costs related to the desalination plant project. The PSC later determined that $39.7 million in plant development costs could be recoverable. Suez is asking the Public Service Commission to approve an 18.7% rate hike that would raise residential water bills $100 annually, Rockland County noted in its press announcement.

“Rockland residents should not be left holding the bag for an ill-advised and poorly managed project—especially one that no one wanted and one that was ultimately shown to be unnecessary,” Rockland County Executive Day said.

In court documents filed on Friday June 24th in New York State Supreme Court in Albany, Rockland County is asking for class action status and court intervention.

“The Public Service Commission was supposed to be the watchdog for the consumer, making sure that the water company acted responsibly,” Day said. “Suez did not act responsibly. The costs they are looking to have us pay are not just and reasonable.”

At a hearing asking the PSC for a surcharge, United Water submitted 9,532 pages of copies of schedules and invoices for legal and other expenses related to the proposed Haverstraw desalination plant. In an order filed on Feb. 25, 2016, the PSC reduced the previously approved $39.7 million in plant costs for future recovery to $38,827,895.

“The State Department of Public Service did not verify these expenses,” Rockland County charges. The department merely performed a sample audit of the invoices.” Rockland County Executive Day added, “We don’t even know what we are being asked to pay for.”

William Madden, director of external affairs for Suez, said in a prepared statement, “SUEZ is proposing to recover its costs of approximately $54 million associated with its long-term water supply project over a 20-year period. The New York State Public Service Commission’s Feb. 25, 2016, Order concluded that $39 million incurred pursuing the Haverstraw Water Supply Project was done so prudently. The Feb. 25, 2016 order is legally sound and the County of Rockland’s lawsuit is without merit.”

Madden tells Real Estate In-Depth that in addition to the $38.8 million in approved recoverable costs, there is another $14 million in additional expenses yet to be reviewed by the PSC.

He added, “The record is unmistakably clear that the County of Rockland strongly advocated for the expedited development of a long-term water supply project in the company’s 2006 and 2010 rate cases. To suggest otherwise is unfair and not supported by the facts.”

In regards to the company’s rate filing with the PSC, Madden stated that its filing features a new rate structure that will lower bills for 20% of its customers and involve $150 million in infrastructure improvements over the next five years.

Photo Caption From left, Rockland Assistant County Attorney Tom Simeti and Rockland County Executive Ed Day.

John Jordan
Editor, Real Estate In-Depth