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New York American Water to be sold for $608M

Ratepayers, lawmakers question the sale

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American Water Works Co. announced in a Nov. 20 press release that it would sell its New York operation to Liberty Utilities for $608 million cash. The deal follows years-long criticism from Nassau County customers, lawmakers and watchdogs who have questioned the company’s rate structure, water service and infrastructure management.

Baldwin is among the areas that NYAW serves in Nassau County. “I would hope they would run it without a constant search to concoct ways to add fees, charges, usage surcharges, on and on, like American Water did,” Baldwinite Larry Halpert said, referring to Liberty.

The sale is expected to close by late 2020, following approval by the state Public Service Commission, according to the release.

“After a careful and comprehensive analysis, we believe it is in the best interest of our customers in New York to sell to Liberty,” NYAW President Lynda DiMenna wrote in a letter to local ratepayers. “We are committed to working together to ensure that the transition is unnoticeable . . . and that safe and reliable water service continues throughout the transition and beyond.”

NYAW services nearly 120,000 Nassau residents across three districts: Lynbrook, Merrick and Sea Cliff.

A sub-utility of Ontario-based Algonquin Power & Utilities Corp., Liberty owns and operates water, wastewater and energy utilities in 14 states, servicing over 800,000 customers. DiMenna indicated that Liberty already manages utilities in upstate New York, and would “have a larger presence in New York once the agreement closes.”

“They need to tell us — what are they going to do better?” asked Baldwin resident Sheilah O’Leary Schmidt. “Improve on our bad service — that is what is needed here.”

“We are excited to expand our customer base in the great state of New York, and to bring our experience in multiple states as a water utility operator committed to excellence,” said Algonquin’s CEO, Ian Robertson, in the release.

But members of the Baldwin Civic Association shared residents’ doubts.

“The financial irregularities surrounding operation of New York American Water has opened a debate worth exploring about privatization versus public ownership of water resources,” Darien Ward, the association president, said. “At this moment, the BCA urges, before close of sale, New York state lawmakers should advocate for a pros-and-cons public comprehensive analysis of supplying water to the Town of Hempstead. It is unconscionable that we are paying higher water rates than those who receive public water . . . The new company says nothing will change, so it really appears there will be little benefit for the community.”

An American Water spokesman said the company has spent “significant time and effort over the past several months” negotiating the sale to Liberty. DiMenna added that the acquisition would not impact customers’ water rates, and that the utility was working with NYAW, regulators and state officials “to ensure the affordability of water services,” including addressing the local property tax burden, which accounts for more than half of local customers’ monthly bills.

Officials and residents who have spoken out against the company were quick to respond to the announcement.

“Good riddance, American Water, and don’t let the door hit you on the way out,” said State Sen. Todd Kaminsky, a Democrat from Long Beach, whose district includes parts of Baldwin. “Now, with a new company trying to take over, it is imperative that we use this opportunity to get some wins for ratepayers who have been mistreated. The state must approve this deal, and if some other private company wants to be in charge, then the Public Service Commission should make them prove, by putting their money where their mouth is, that they actually will care about the consumers they serve and have a plan to undo some of the damage American Water caused.”

State Sen. John Brooks, a Democrat from Seaford, whose district includes Baldwin, met with various stakeholders two weeks ago to discuss possible ramifications and next steps as the company moves to sell.

Brooks said he had a number of questions about the sale, specifically how the valuation of NYAW was determined and how Liberty proposes to reduce taxes. Brooks added that he planned to look into the specifics of the deal, and hoped the PSC would do the same.

“The PSC has an obligation to make sure what’s being contemplated here is in the public’s best interest,” he said. “It’s too early to say whether this is good or bad for the consumer, but it was a surprise development, and I’m not sure it’s beneficial.”

“While the battle appears to be over, we have not won yet,” State Assemblywoman Judy Griffin said in a statement. “Ratepayers deserve much-needed relief, and I will work with the Public Service Commission and Liberty Utilities to see that ratepayers have a voice and are treated fairly in this process.”

Long Island Clean Air Water and Soil, a Merrick-based advocacy group, urged the PSC in an emailed newsletter to authorize a public takeover “instead of approving a private sale” to remove the profit incentive.

David Denenberg, a co-director of LI CAWS, argued that when NYAW acquired the Merrick and Sea Cliff districts from Aqua Water in 2012, it cost $71 million. Since the districts account for 40 percent of the company’s New York operation, he said, it would suggest the total valuation of the company would only be worth about $180 million now.

“The sale is more than a 300 percent increase,” Denenberg said. “We will pay for that, and the PSC needs to answer to that.”

Co-Director Claudia Borecky said LI CAWS was planning news conferences, rallies and meetings — “an entire revolution” — to unite ratepayers in the Merrick, Lynbrook and Sea Cliff water districts in opposition to the sale.

“We’re not going to let this happen,” she said. “We are going to push our state representatives to oppose any kind of sale, and use these proceedings to condemn New York American and move forward with a public acquisition.”