Burlington County Freeholder Director Bruce Garganio has called on the New Jersey Division of Rate Counsel to “cease and desist” negotiations aimed at arriving at a compromise with New Jersey American Water (NJAW) on its request for a 20 percent rate increase.
In a letter to Rate Counsel Director Stefanie Brand, Garganio demanded the agency stand firm on its own expert’s analysis that calls for a decrease in water rate revenue in the amount of $45.8 million. NJAW is currently seeking $95.5 million over its current revenues of $565 million.
“This is not the time to play ‘let’s make a deal,’” wrote Garganio. “The outrage from ratepayers and residents is clear: It’s time to draw a line in the sand and end the business-as-usual process of approving these ridiculous water rate increases.”
Garganio’s demand comes less than a week after he was advised. However, Brand backtracked the following day, telling reporters her agency was instead negotiating for a “substantial reduction” in the increase sought by American Water, according to a statement released by the county Tuesday.
“For too long the system has been manipulated to the benefit of New Jersey American Water, to the detriment of ratepayers whose interests you are sworn to protect,” Garganio said in his correspondence to Brand. “On behalf of the residents of Burlington County and American Water customers across the state, I demand that you immediately cease negotiations and commit to defending and implementing the $45.8 million rate decrease your experts say is justified.”
If NJAW's proposed 20 percent rate increase went into effect, , according to township officials.
Garganio said testimony by one of the rate counsel’s own experts, Robert J. Henkes of Henkes Consulting in Rhode Island, states the company’s petition for a rate increase is “misleading” and in several instances labeled its expense projections as “unreliable.”
NJAW has responded to the county’s opposition by explaining that the primary driver behind the proposed rate increase is infrastructure improvements.
"The overwhelming majority of our rate request is centered on ,” Richard Barnes, external affairs manager for NJAW, stated. “New Jersey American Water has invested more than $300 million in infrastructure upgrades since our last rate case, including more than $37 million invested to improve water service in Burlington County. If we are granted the rates as requested, the cost of water will remain less than a penny a gallon."
However, the county pointed to Henkes’ testimony, which noted NJAW’s rate increase is bloated by $6 million in incentive compensation for non-union employees, who are already scheduled to receive annual salary increases in excess of three percent; $5 million in overestimated pension costs and supplemental retirement benefits for “top executives”; an unreasonable projection of $1.4 million in attorney and other fees in support of its rate increase; as well as promotional marketing fees, public relations expenses, employee award expenses, lobbying fees, and country club fees, according to the county release.
“To add insult to injury, the company’s picture of itself needing more revenue to address pressing infrastructure needs runs counter to the most recent financial report of its parent company,” Garganio wrote in his letter to Brand.
Last week, American Water Works Company, Inc. reported a year-over-year 15.6 percent increase in net income and 19.3 percent increase in adjust net income, as well as increases in revenues and cash flow, the county release stated.
“Director Brand, please contrast American Water’s lack of fiscal responsibility with that of local and county governments, that are struggling to stay within a two percent cap and cut taxes,” the freeholder director said, noting freeholders have cut county taxes $8.6 million over the past four years. “In this fiscal environment, when so many are struggling to get by, everyone—including New Jersey American Water—needs to be part of the solution.”
Garganio said more than 5,000 households thus far had signed the county’s online petition opposing the rate increase or had mailed in their names to be added to the list.
- Information provided by the county's Public Information Office