I am not opposed to the concept of proposed merger if it can be demonstrated that it is truly in the best interest of the rate payer, however, given the current proposal and the rate of return that is being suggested for United Water - it appears that the only interest being considered is that of United Water.
My real concerns are regarding the Legislation that emerged out of the state last November which Gov Cuomo quickly signed into law- it, in my opinion, while it may have been with good intent, it is completely flawed and yet was approved by the PSC.
Representing both Eastchester and New Rochelle I am in a unique position where I am able to see first hand how this legislation is effecting the rate payers.
Eastchester decided NOT to opt in while New Rochelle quickly took advantage of the enabling legislation. The legislation that was proposed allows a municipality - if they elect to do so - to place the full cost of the Fire Hydrants squarely on the rate payer by removing it from the municipal budget. In doing so, the municipality no longer pays for the hydrants. The rate payer will instead be billed for a surcharge which will appear monthly on their bill, every month and due to the fact that it is a surcharge it can not be written off as it previously could when it was a portion of their property taxes. The surcharge, that I have seen so far ranges, depending on the size of the meter, from $8 to $12 a month.
Having worked with municipal budgets for well over a decade now I am familiar with the hydrant charges in the municipal budget. Over 10 years ago the cost of a hydrant was approximately between $275 to $300 a hydrant per annum. In 2009 when United water presented their tariff to the PSC the proposed hydrant charge was $1500.00 a year, per hydrant. Eastchester has 437 hydrants, New Rochelle has over 1500. A consortium was formed with the municipalities impacted and as a result the tariff that was approved by the PSC allowed for a hydrant charge that would increase on a yearly basis. The charges approved were as follows: 2010-2011 $739, 2011-2012 $864, 2012-2013 $991.00 and the final year 2013-2014 $992.
The tariff presently before the PSC calls for an increase of the hydrant charge of over 40%, proposing the cost at $1392. To put that in perspective, that alone will cause a $145,521 hit to the town of Eastchester bringing their total hydrant charge, per year to $579,000.
Had Eastchester opted to place the burden on the rate payer- I did some rough math. While I do not have the exact number of meters in the town (although I have requested this information from UWNR). Assuming that each household was a meter, and assuming (on the very low end) that there were 10,000 meters in the Town of Eastchester. Additionally (staying on the low end) that each meter was charged $8 a month, or $96 a year. Based on those (again conservatively low estimates) United water, under the new legislation, would reap $960,000 a year instead of the previous formula which would only yield $579,000 a year. That's almost $400,000 a year more than what they would have received at a controlled per hydrant charge. Take those numbers and apply them to New Rochelle residents.....the taxpayer/rate payer is getting hosed.
Additionally, the legislation that the state so swiftly produced, does not redefine or exempt hydrants that are located in gated communities or communities that have private hydrants. Those residents are now being double billed for the hydrant - for both public sand private use.
In addition to denying an enormous rate of return for the utility company, the PSC needs to set forth a moratorium on this merger until 2 things can be done...the rate payers are provided with a clear cut formula for how their surcharges are being calculated and a redefinition
of those private hydrants.
The NYS legislature needs to go back to the drawing board with this legislation and fix the flaws that the ultimately tax payers will be burdened with for many years to come..