Freeholders Oppose Proposed Water Rate Hike

CREST HAVEN — In a fluid motion, Cape May County freeholders passed a resolution, Tue., March 13 opposing a rate increase sought by New Jersey-American Water.
The utility serves customers in parts of Middle and Upper townships and Ocean City. It manages Avalon’s water utility, according to Peter A. Eschbach, the company’s director of communications and external affairs.
The rate increase will be determined by the state Board of Public Utilities. Eschbach could not state when the board’s action might become final, since the matter is still before the N.J. Division of Rate Counsel.
The average user of 6,500 gallons per month pays $49.69. If the increase is allowed, the increase would $5-$7 a month, said Eschbach in a telephone interview Fri., March 16.
“It’s a pretty good value,” said Eschbach. Water, he noted, ‘Is the lowest utility bill most people pay when compared to gas and electric.” If the increase is granted, he added water would increase less than one cent per gallon.
While the freeholder resolution won unanimous support (Freeholder Will Morey was absent), it passed without comment.
It states that the utility seeks a “proposed rate increase of $95.5 million, or approximately 20 percent over present rate revenues of $565 million.”
Eschbach said that was “inaccurate” since the board “has no way of knowing our revenues. We are an operating unit of a publicly-traded company on the New York Stock Exchange. To compare the rate in New Jersey with the revenues of the overall parent company is not correct.”
He added “part of this rate case…is for people in Cape May (County) targeting helping low-income folks.”
He said it would be “irresponsible” not to fix infrastructure until it breaks, at which time it might cost “ten times more to fix.”
New Jersey-American Water must prove what it requested is backed by a filled need. At the present, Eschbach said the utility and Rate Counsel are in a discovery-type stage.
The rate increase was announced July 29, 2011 via press release, he said. Notice of the rate increase was also sent to municipal clerks in the affected municipalities. Freeholders also received a copy of the request, Eschbach said.
“In July and August, we spent time notifying as many as we could,” he continued.
A hearing was held in Ocean City late in 2011, Eschbach said. At that time, the county did not protest the increase in any fashion. When the Herald notified him for comment was the first he heard about the county’s opposition to the increase. He said no one from the county had reached out to the utility for any information regarding the rate increase.
The resolution cited a fact tat the Division of Rate Counsel conducted research…and determined that the …request for a rate increase is not warranted based on the information provided by the NJAWC…”
Rate Counsel brought in an expert from Rhode Island, Eschbach said. That person, he said, testified the utility should decrease its rates by 45 percent.
“The politicians seized on that one part of his testimony,” he said.
The Ocean City water tower on Eighth Street underwent routine maintenance at a cost of $1.5 million, said Eschbach.
A copy of the freeholder resolution was forwarded to the BPU and Division of Rate Counsel as well as to state and federal legislators and governing bodies in affected municipalities.