Consumers speak out against water rate hike
Senator says firm will call on experts to support proposal
BY TOYNETT HALL Staff Writer

HOWELL - On Jan. 29 Howell residentswhose homes receivewater and sewer service from the New Jersey American Water Company showed up at a public meeting to lodge their complaints against the firm's request for a 23.35 percent rate increase.

The request for a rate hike was filed on Jan. 14.

Paul Flanagan of the New Jersey Division of Rate Counsel was in attendance at HowellMemorialMiddle School to listen to the consumers and to record their concerns.

The Division of Rate Counsel is a division within the Department of the Public Advocate and represents the interests of consumers of electric, natural gas, water, sewer, telecommunications, cable television and insurance services.

The state Board of PublicUtilities (BPU) will eventually decide onNew JerseyAmerican's request for an increase in its rates. The company serves more than two million customers throughout the Garden State.

The Jan. 29 meeting in Howell was arranged by state Sen. Robert Singer, state Assemblyman JosephMalone and stateAssemblyman Ron Dancer (all R-Monmouth, Ocean, Mercer and Burlington).

Themeeting was an educational session about the formal process of filing a utility complaint against the water company. There were no representatives of the water company in attendance.

According to Singer, the meeting between the residents and the representative of the Department of the Public Advocate was held in order to "put a face on the peoplewhowere going to be affected by the rate increase."

"I did notwant it to be just somebody out there. I wanted (the Division of Rate Counsel) to understand from the people who are facing this what it will mean for them financially," Singer said.

Flanagan listened to the residents' concerns, offered background information on the history of water monopolies and explained why they are entitled to request increases in their rates.

"Water is the last of the traditional monopolies and 100 years ago when they started, services were better provided by monopoly operators.Anumber of small systemswere taken over by larger systems and effectively there was no competition," he said.

The BPU "is required to look at filings that aremade by the utilities. If they are legitimate and have legitimate expenses they are entitled to recover those expenses," he said.

For example, "If they took a system where they had to replace $1 million worth of maims, $1 million has been invested in that. Under the utility law in New Jersey they are entitled to be given an opportunity to earn a return on their investment," Flanagan said.

Flanagan said one factor that will be considered during the formal process of considering the water company's request for a rate increase will be the firm's return on investment.

The process is expected to take at least nine months, he said.

"The rate of equity, that's the number that is generally established by expert testimony as towhat these similar type of companies, if they were in a competitive arena, would be allowed to earn," Flanagan said.

Resident Chris Estevez asked that New Jersey American not be granted any increase.

"I believe rate requests are basically a shell game. When a utility company comes and asks for a 23 percent increase, they do not expect to get a 23 percent increase. They expect to get a 10 or 12 percent increase," Estevez said. "So while the public advocate and the BPUmay see granting a 10 percent increase when New JerseyAmerican asked for a 23 percent increase as a victory, we as citizens of this township do not see it that way."

"We pay the highest sewer rates in the state of New Jersey bar none and I would respectfully request the ratepayer advocate to take that into consideration and not grant the rate increase to Howell residents until we are brought in line with the rest of the state," Estevez said.

BarbaraDixel, a resident of The Villages adult community in Howell, has been recording not only her own financial relationship with New Jersey American, but also the financial dealings of the residents who live in her community.

According to Dixel, the firmovercharges residents, provides inadequate quality water and has targeted themost financially strained community.

"We have and still have residents having to choose between paying for food or medicine, or insurance, or electric, or paying their water bills," Dixel said. "We have residentswho fill their bath tubswithwater to use for cooking, for washing clothes and for bathing to save money for the very high water bills they could not afford to pay."

Resident RobertNicastro said this is the worst time for New JerseyAmerican to ask for an increase.

"Citizens deserve to be protected by strong, sensible regulations that safeguard the water we drink and keep it affordable for all people. Water is not the same as sneaker designs, Hollywood movies, or pizza crust. There are no consumer choices. Everyone needs water to drink and bathe. Everyone develops thirst equally," Nicastro said.

Singer told the residents their opposition to the company's request for a rate increase will be a battle.

"New Jersey American will spend big bucks to get this through. They will bring in professionals and conduct studies," he said. "The problemwe have is that localmunicipalities like Howell don't have the finances to do this investigation."

Singer urged the Division of Rate Counsel to conduct a full investigation on the water company's request for an increase.He said he would forward Dixel's reports and findings to theAttorney General's office and said he would write to the BPU on Howell's behalf asking to have hearings in Howell.

Howell Mayor Joseph DiBella vowed to fight the request for the rate increase on behalf of residents who receive their water and sewer service from the New Jersey AmericanWater Company.

A typical New Jersey American customer currently pays about $44 amonth for 7,000 gallons of water. If the BPU grants the full increase being requested that customer would pay about $54 per month for the same amount, according to Lendel Jones, the company's vice president of corporate communications and governmental affairs.

The water company has said that the proposed rate increase "comes as a result of the company's effort to invest a substantial level of capital to upgrade facilities statewide while absorbing increased chemical and energy costs. The proposed rate adjustment will reflect the substantial investment in infrastructure the company continues to make in order to provide high quality, reliable water service to over two million residents throughout the state."