Water Rate Hike Makes Waves, But the Real Surge is Yet to Come

The price of New Jersey American Water's services is set to jump 20 percent and the freeholders are peeved. But a survey of the industry puts this pricing trend on a slippery slope—up.

We do not know the value of water until we go dry. - Irish Proverb

Actually, we know the value of water right now, and it's about to be 20 percent higher than it used to be if New Jersey American Water's rate increases go through. As , the public utility filed a request through the state to increase revenues from rates to $95.5 million.

The bump will increase the average home's monthly bill by $7.63.

Burlington County Freeholder Director Bruce Garganio has taken a stand on this issue. His aim is not just in protesting the price hike, but in holding New Jersey American Water (NJAW) accountable for notifying the public and more vociferously explaining the need for the price increase in the first place.

As his letter to all Burlington County residents reads, "NJAW should be compelled to explain to you why they need a 20 percent increase—especially since they already have received four increases since 2004 that add up to a compounded increase of 51 percent. If the latest increase is approved that compounded increase will top 73 percent!"

He implores county residents to sign a petition calling for NJAW to hold another round of public hearings. More than 3,200 have signed.

His impassioned plea is commendable. Our county-level leader is defending the taxpayer's right to be adequately informed, and hoping to buffer us from what he calls an "outrageous" price increase. It's what we'd expect from an elected official who has brought down county taxes by $8.6 million in the last four years.

According to Richard Barnes, external affairs manager for NJAW, the utility met all requirements for notifying the public, including hosting four hearings, each with sufficient advance notice in the media. Most local to Burlington County, NJAW held a public hearing in Westampton in December 2011.

Garganio doesn't dispute that, but does excoriate the Voorhees-based water giant for not inserting notices into customers' monthly bills. 

The sufficiency of the notification aside, what's the 20 percent spike all about?

Turns out, this is hardly a New Jersey issue. Nationwide, the cost of providing water and wastewater services is fast rising. The rates for single-family homes in metropolitan areas across the country in 2011 rose 9.4 percent. Areas with price jumps north of 10 percent include New York, San Francisco, Atlanta, Milwaukee and Indianapolis—the latter two in the 30 percent range.

Chicago tops them all, with a recent pre-emptive declaration that prices will rise 70 percent over the next four years.

A common thread running through those cities is their age—specifically the era in which their populations boomed and their infrastructures were laid. Much of that infrastructure is now decrepit and in need of massive infusions of capital to make it to the next generation.

Fifteen percent of the New Jersey infrastructure under NJAW's purview is now 100 years old.

It's those types of infrastructure upgrades that NJAW has been making—$1.2 billion worth in New Jersey since 2004—and will be continuing to make as facilities age. Barnes listed the various types of equipment that don't stand the test of time, and will require costly replacements, including mains, filters, valves, and pump stations.

"When we file with the Board of Public Utilities [for a rate increase], it's to recover the investments already made," Barnes said, noting they spent $300 million on such projects in 2011, $35 million of which were in Burlington County.

But the highest tide is still in front of us.

According to the American Water Works Association, our current annual spending on water infrastructure—$13 billion—will need to grow to $30 billion by 2040 to keep ahead of end-of-life system failures. It's this perpetual onslaught of maintenance to which we can attribute such a steep price rise.

Of course, as Garganio noted, the issue is also the 73 percent increase since 2004. That's explosive growth. But in the context of other critical resources, it's actually on par.

Over the same period, gasoline at the pump has risen 90 percent, heating oil has risen 220 percent and key foodstocks like sugar, corn and wheat tripled.

That is to say, destabilizing economic forces in the past decade have made for a topsy-turvy residential balance sheet. But this one is closer to annoying than economically crippling. That's because water is and always has been insanely cheap.

For the life-affirming services of procuring water, purifying it, distributing it and finally collecting it as waste, we pay a meager half-a-penny a gallon. The real problem arose when we each started using 100 gallons of it every day.

While absorbing a price shock in a short period is never welcomed, it's a reality, and one that's only beginning to be realized. So what's a better way to hold the water bill at bay? Conservation. Where's the petition for that?

Town Crier February 28, 2012 at 07:16 PM
The municipal tax rate went up slightly. The school taxes went up1.19% water rates went up some but may have have been higher in some parts of town such as Laurel Creek who are connected with mt holly.
Suzanne February 28, 2012 at 09:28 PM
I'm not sure if you were trying to answer my question or not but if what you added is correct, the township, county and schools all raised taxes yet the county is asking us to sign a petition protesting the water company for wanting to do the same? Don't you find that just a little hypocritical?
Town Crier February 28, 2012 at 10:02 PM
No that's the nj American water company raising the rates dramatically not the county govt.
Suzanne February 28, 2012 at 11:33 PM
Raising rates and raising taxes is the same thing. The county freeholders raised taxes on Moorestown residents who are struggling and now wants us to protest someone else seeking to do the same. Neither should happen.
Town Crier February 29, 2012 at 12:53 AM
No the nj American water company isn't the govt. They are a private company and own many of the aquifers in the area. While moorestown has it's own wells and supply, sometimes we need to tap into nj American supply due to demand times. Other towns may not have such a water supply or have accepted a private firm to run to majority or entire operations.


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