NEW YORK STATE IS NOT IN THE BUSINESS OF SUPPLYING WATER
TOWN OF HEMPSTEAD IS!
LI Clean Air Water & Soil always requested state assistance and authorization for a public takeover. However, the state is not in the business of supplying water. The Town of Hempstead already operates six water districts! The town refused to supply public water to all of its residents despite previous state authorization and its recent taxpayer funded study showing we will save millions of dollars with a town takeover of NYAW. The town even rejected the conclusions of its own study, and failed to step up. Now, the governor is finally pushing this issue but the town still shirks its responsibility.
It's the height of hypocrisy that the Town is asking the State for a water authority now when it dissolved the Water Authority of Southeast Nassau County in 2015 on false pretenses and continues to deceive the public about the outcome of the more recent December 31, 2020 study that showed substantial savings to NYAW ratepayers were the Town to acquire the Hempstead portion of NYAW.
Rory Lancman, Special Counsel appointed by Cuomo to oversee a feasibility study of a public takeover of NYAW, stated in Newsday:
"If Hempstead is suggesting that New York American Water be municipalized and run by a new public authority, that’s certainly something the governor has charged us with studying," Lancman said. "If Hempstead is suggesting that New York State directly take over and run a local water district, well that's the definition of infeasible: expecting the state to do the job that Hempstead’s own hired expert concluded should be done by Hempstead itself."
Lancman said that town and other officials "instead of standing in front of a bank of microphones and TV cameras calling for a solution that does not exist, should be standing in front of a gigantic mirror. The governor is committed to achieving rate reform while maintaining local oversight of water service delivery, and our study will produce a plan to do just that."
Click here to read the Newsday article.
LI CAWS, in the LI Herald Article "State set to study NYAW takeover", proposed establishing a water authority as another solution to merging with the Town of Hempstead's water districts. An excerpt from the article reads as follows:
Dave Denenberg, a co-director of Long Island Clean Air Water and Soil, a Merrick-based advocacy group, said that South Shore lawmakers should develop “mirror-image” legislation to establish such an authority for NYAW’s customers in southeastern Nassau County...
Denenberg said he saw the state study as good news, saying, “This move may be a signal that New York will finally step up and stop this corporate monopoly’s control over a basic necessity and its financial abuse of Long Island ratepayers.”
September 15, 2017 - Newsday - Customers Sue Over High Water Rates
JOIN THE VIRTUAL HEARING AND TELL THEM
WE DESERVE PUBLIC WATER, TOO!
To register, visit www.webex.com and click "Join Meeting". Type in the Event Number posted below for the day in which you would like to attend and register.
Public Service Commission Special Counsel to Hold Hearings on Public Takeover of American Water
LI Clean Air Water & Soil was successful at postponing the sale of New York American Water ("NYAW") to Liberty Utility until after NYS Special Counsel Rory Lancman studies the impact a full or partial public takeover would have on water safety, rates, property taxes, service delivery, and transparency and accountability. Mr. Lancman will take into consideration the proposals by the Village of Sea Cliff, Massapequa Water District and the Town of Hempstead.
At this time, Mr. Lancman is seeking public comment and will be holding virtual public hearings on the dates and times posted below.
To register, visit www.webex.com and click "Join Meeting". Type in the Event Number for the day in which you would like to attend, and register.
1. Northern Nassau County (e.g., Sea Cliff and Mill Neck Estates service areas):
Date: Tuesday, February 23, 2021
Time: 6:00 pm
Event number: 179 075 0213
Event password: Feb23-6pm
Phone-Only Access: 518-549-0500
Access Code: 179 075 0213
2. Southeastern Nassau County (e.g., Massapequa service area):
Date: Wednesday, February 24, 2021
Time: 6:00 pm
Event number: 179 227 5361
Event password: Feb24-6pm
Phone-Only Access: 518-549-0500
Access Code: 179 227 5361
3. Southern Nassau County (e.g., service area in the Town of Hempstead):
Date: Thursday, February 25, 2021
Time: 6:00 pm
Event number: 179 560 8800
Event password: Feb25-6pm
Phone-Only Access: 518-549-0500
Access Code: 179 560 8800
CLICK ONTO "CAWS v. PSC - ARTICLE 78" Page to see status of our legal action against the Public Service Commission, Department of Public Service and American Water..
September 17, 2017 - News12
August 17, 2017 -LI Herald - .Residents to Take American Water to Court
August 9, 2017 - Newsday
April 23, 017 - Newsday
Feb 3, 2017 - CBS News
Aug 9, 2016 - YourNewsMag
Aug 10, 2016 = Press Release
April 23, 017 - Newsday
HISTORY OF OUR QUEST FOR PUBLIC WATER
Reported by Claudia Borecky After WASENC was disbanded:
How we were blindsided
This report will not be one of my typical reports. I’m angry. I’m more than angry, I’m furious. We’ve been blindsided by Hempstead Supervisor Santino, Oyster Bay Supervisor Venditto, their boards and County Legislator Rhoads.
All the pieces have come together. The lengths that our representatives went to deceive the public is mindboggling – all along leading us to believe that they were going to help us. The Water Authority of Southeast Nassau County (“WASENC”), the Towns and our Legislator conspired to end the quest for affordable water. From the very beginning, we were being led to believe a public acquisition was moving forward. Had people known that their representatives were looking to squash their hopes of getting affordable water, hundreds of people would have come down with pitchforks.
I should have seen it coming. When I saw that on January 26, 2016, the Town of Hempstead filled a vacancy on the WASENC board, I thought that WASENC was getting ready to take it to the next level – public acquisition of Long Island American Water (“LIAW”). But last night, we were blindsided by Supervisor Santino and the Town Board, who apparently only filled the vacancy so that they would have a full board to approve its own demise a week later. Shamefully, that same day, I received an email from Secretary Reinhardt, notifying me of the February 2 meeting. We were blindsided by the Town of Hempstead, which never let on that they intended to pass a Resolution to dissolve WASENC.
In reflection, I thought it strange that when Legislator Rhoads spoke at the WASENC meeting, they said that they were going to give him our contact information after the meeting. I wondered why WASENC, an independent public benefit corporation, established by New York State whose members were appointed by the Towns of Hempstead and Oyster Bay, would give our contact information to a county legislator. As a civic leader, I never share people’s contact information with anyone. I realize now that we were again blindsided by Legislator Rhoads who knew that this would be WASENC’s last meeting.
How to Kill a Water Authority
Because of the high cost of our water bills in comparison to our neighbors who have public water, we protested, rallied and got hundreds of signatures, demanding public water. For years, Legislator Denenberg had been asking the town for public water and Supervisor Murray on countless occasions, claimed that the town could do nothing about it. Then in 2009, when then Aqua Water wanted to raise our water rates by 21%, Legislator Denenberg investigated the issue and found that not only can the town do something, but discovered that the Water Authority of Southeast Nassau County was established in the 1990’s and had never been dissolved. We worked together with other civics in the area, hundreds of concerned residents and our legislator in demanding that the Towns of Hempstead and Oyster Bay reconstitute WASENC.
On January 11, 2010, the day before a town board meeting in which about 200 people were planning to come, Supervisors Murray and Venditto announced that it was reconstituting WASENC to study the feasibility of a public takeover of Aqua Water which is now Long Island American Water (“LIAW”). WASENC is comprised of five members, three appointed by the Town of Hempstead and two appointed by the Town of Oyster Bay.
Upon learning that Hempstead was interviewing civic leaders to appoint to the board, several residents from all over the district asked me to interview for the position. At that point, I had already done extensive investigation into this issue and had volumes of documentation from the Public Service Commission. I had discovered that Aqua was paying school taxes to 33 school districts even though it only served eight school districts. In fact, it paid five times more money to the East Meadow School District than it did to North Merrick – and East Meadow has public water. Aqua was passing 100% of its tax obligation onto us – the consumers. I had the ammunition to make public acquisition possible.
I interviewed with the Town of Hempstead, but suffice it to say, they did not appoint me because I didn’t belong to their party. Instead, a civic leader from Massapequa was appointed to the board. I think it was obvious to most that it was just another patronage appointment.
But what we didn’t realize then was that the Town never was going to allow a public takeover to happen. The Towns dragged their feet, taking nine months to make their appointments. We held their feet to the fire and in July 2012, WASENC hired George E. Sansoucy ("GES"), a New Hampshire company, to conduct a “preliminary” study to determine the value of New York Water's portion of LIAW. It found a value of $80 million, which we believe was grossly inflated since LIAW purchased Aqua Water for $71 million in 2012 and it included four systems throughout New York State, while we were only looking to acquire Nassau County’s portion of the system. Allowing for $20 million in operating expenses, GES determined that if the Water Authority bonded for $100 million, it would cost the average resident $133 per year for 30 years to pay for the acquisition.
Since the Towns never intended to seriously look into a public takeover, WASENC never asked GES to look at a takeover by Hempstead, which studies and history has found to realize savings to residents from day one. Instead, GES was only asked to conduct an appraisal of LIAW and do an analysis of a takeover by WASENC, which was by far the most expensive scenario in that it assumed we would have to pay $8.8 million in taxes anyway. However, the analysis compared apples with oranges.
The problems lie in what the study omitted. The bottom line is that the Public Service Commission (“PSC”) allows LIAW to get 7.85% on its investment. That profit amounts to about $73 per year out of our pockets. Hempstead does not pay school, town or county taxes. LIAW pays $8.8 million in property taxes, making up one-third of LIAW’s expenses, which we pay through our water bills. What the report does not even look at is:
North Merrick School District received $64,000 from LIAW in 2009. If we had public water, we would only pay $30 per year per household to fill the hole left from lost revenue from LIAW. However, we are already paying those taxes and more through our water bill, but we can’t deduct them on our income tax.
Hempstead only charges $75 to lease a fire hydrant to the fire departments and LIAW charges our fire departments $700 just to lease one hydrant. Savings to our fire departments would reflect in savings on our fire district taxes, which was never examined.
Hempstead doesn’t pay sales tax.
Hempstead doesn’t pay corporate taxes.
We were blindsided by WASENC, which was formed to “investigate, analyze and evaluate various options for the distribution of water to the district” because it never intended to look into a viable option. Truth is that a public takeover by the Town of Hempstead was never studied by WASENC or GES. It was studied by former County Comptroller Howard Weitzman in 2007. That study found that if a water authority acquired New York Water and paid a PILOT (payment in lieu of taxes), not at first, but in years to come, residents would realize a savings. However, in that same report, it found that if the Town of Hempstead (and not WASENC) acquired New York Water, residents would realize huge savings from day one. Yet, that scenario has never been investigated by WASENC or GES, no matter how many requests we made for WASENC to do so.
I find it too much of a coincidence that GES came up with a value of $80 million with $20 million in operating expenses when that is the exact same amount that Secretary Reinhardt said that it would cost before GES was hired. Isn’t it more likely that WASENC hired GES to fix the numbers to come up with a value of $100 million?
And then last night, we learned that if we had decided to take over LIAW within the first two years of LIAW’s acquisition of Aqua Water, LIAW’s closing costs would be returned. Could that be why WASENC didn’t make its feasibility study public until June 2014 – just over two years from when LIAW acquired Aqua?
It is apparent that we’ve been deceived for the past six years by the Towns of Hempstead and Oyster Bay. They spent $100,000 and waited out six years in a feeble attempt to disprove what every resident knows. A private corporation should not have a monopoly over a public necessity. Once you take profits out of the equation, of course, you’re going to save money. And they’ve been either denying, hiding or ignoring the facts all along.
Borecky's Synopsis of the Sansoucy Report
WASENC hired George E. Sansoucy ("GES"), a New Hampshire company, to conduct a feasibility study, which determined that New York Water's portion of LI American Water is valued at $80 million. Allowing for $20 million in operating expenses, if Hempstead bonded for $100 million, GES found that it would cost the average resident $133 per year for 30 years to pay for the acquisition.
Claudia Borecky discovered that GES has a disreputable record. In lawsuits, they were found to use unreliable methodology and technique in a manner accepted by the Uniform Standards of Professional Appraisal Practices. She found that its study had discrepancies; it made valuations based on hypotheticals that were not based on fact; compared apples with oranges; and failed to conduct an analysis of a takeover by the Towns of Hempstead and Oyster Bay. Our concerns are as follows:
1. Comparing apples to oranges: In 2009, Aqua (our former water company) paid taxes to 33 school districts and it only served 8 of those districts. Through our water bill, we were paying taxes to 25 school districts that have public water. It is unclear whether that situation had been rectified since we first brought it to their attention and the amount of property taxes reported in the report does not specify which, if any, school districts it pays taxes to.
The GES Report did not compare the tax obligation of a public takeover scenario because it assumed we would still be obligated either way to pay taxes so it would zero out. However, if the portion of its obligation to the North Merrick School District was removed, for example, it would only cost a North Merrick resident $30 a year to fill the hole left from the lost revenue it would have received from LIAW. If the Town of Hempstead took over, we would not be responsible for paying for the education of children who do not live in our district, nor have to pay property tax to the county, town or villages. Since property taxes make up one-third of LIAW's expenses, a public acquisition should reduce our bill by one-third right off the bat.
2. GES projected that the cost of providing water would rise equally, whether it be public or private. This hypothesis is not based on fact. Town of Hempstead's water rate hadn't risen in ten years, while the Public Service Commission consistently allows our private water company to raise our rates much by as much as 14% so that it can make a profit.
3. George E. Sanscoucy record: The New Hampshire firm that conducted the feasibility study has been legally challenged on their findings, methods, calculations and level of expertise.
4. Public takeover: The NCMCA asked that the study look at six different scenarios, but it only analyzed LIAW being acquired by WASENC - the most costly to the consumer because WASENC would likely by a PILOT (payment in lieu of taxes.) No one looked at the feasibility of LIAW being acquired by the Town of Hempstead and merged with its existent public water district. Borecky surmised the following:
a. LIAW pays almost $9 million in property taxes, which is one-third of its expenses. We pay 100% of its obligation through our water bills. However, Hempstead Water District does not pay property or corporate tax.
b. LIAW receives a 7.85% profit from us. They claim to have strong earnings and dividend growth of 9%. Town of Hempstead does not make a profit.
c. CEO of LIAW makes approx. $4 million annually. Hempstead Water Commissioner makes approx. $140,000.
d. If the Town of Hempstead acquires LIAW, it would eliminate a redundancy of services, facilities, equipment, purchases and employees to some extent.
Posted below are six different scenario that we requested be undertaken. GES only conducted an analysis of Scenario 1 - the least cost-effective plan.
A cost analysis with PILOTS made to the school districts that Aqua currently pays taxes to;
A cost analysis with PILOTS made only to the school districts that Aqua currently serves;
A cost analysis with WASENC paying PILOTS under each of the above-mentioned scenarios in perpetuity;
A cost analysis with WASENC paying PILOTS under each of the above-mentioned scenarios that decreases at a steady rate until it is eliminated at the end of thirty years; and
A cost analysis with WASENC assuming no PILOTS.
A cost analysis of Aqua being acquired and wholly operated by the Towns of Hempstead and Oyster Bay as separate water districts under the auspices of the Towns and NOT as the water authority as defined in New York State Public Authorities Law, Title 7-A, § 1174.
Based on previous studies, Scenario 5 or 6 will save us hundreds of dollars on our water bill annually and yet neither of those scenarios was studied. Therefore, I find the GES Study inconclusive and not based on facts.
AUGUST 12, 2018 STATUS REPORT
New York American Water Corporation ("NYAW") is a private corporate monopoly that has a stronghold on a public necessity - our water. As a corporation, NYAW's goal is to deliver high profits to their shareholders. NYAW is skilled at creating new ways to raise our rates so that they reap record profits and the Public Service Commission ("PSC") always allows them to do so.
Where are NYAW's territories?
NYAW has 124,000 customers in Nassau alone along with customers in Westchester, Putnam and Washington counties. In a May 18, 2018 Rate Order Establishing Rates ("Rate Order"), NYAW consolidated its districts into two service areas:
Service Area One:
Atlantic Beach, Baldwin, Baldwin Harbor, Barnum Island, Bay Park, Cedarhurst,
East Atlantic Beach, East Rockaway, Harbor Isle, Hewlett, Hewlett Bay Park,
Hewlett Harbor, Hewlett Neck, Inwood, Island Park, Lakeview, Lawrence,
Lynbrook, Malverne, Malverne Park-Oaks, Meadowmere, North Lawrence,
North Lynbrook, North Woodmere, Oceanside, Roosevelt, South Hempstead,
Valley Stream, West Hempstead, Woodmere and Woodsburgh.
Cambridge District - Cambridge, Washington County
Wild Oaks District - Golden Bridge, Putnam County
Kingsville District- serves Kingston, Ulster County
Dykeer District - Somers, Westchester County
Waccabuc District - Golden Bridge and Katonah, Westchester County
Mt. Ebo District - Town of Southeast Brewster, Putnam County
Service Area Two:
Merrick, Bellmore, N. Bellmore, Wantagh, Seaford, Massapequa,
Massapequa Park, Levittown,S Farmingdale
Sea Cliff District:
Village of Sea Cliff, Glen Cove, Glen Head, Glenwood Landing, Old
Brookville and Roslyn Harbor
HOW NYAW PROFITS
A private corporation should not hold its ratepayers hostage with a monopoly on a public necessity - our water.
NYAWs objective, as a for-profit organization, is to deliver profits to its shareholders. Approximately 25% of our water bills has helped NYAW shareholders reap record profits over the years. Nassau residents with public water may complain about a commissioner of a water district getting a salary of $100,000, but through our water bills, we are paying American Water's CEO a whopping $4 million per year.
The Rate Order gives NYAW at least 9.1% profit on our base rate. If it makes more than that, it still gets to retain a portion of its profits..
However, there are other ways that NYAW profits above and beyond those provided in our base rates. As will be described in detail below, when NYAW grieves its taxes, it keeps 20-50% of the tax refunds that are paid wholly by the ratepayers. It often drags tax grievances over 10 years so that it makes millions of dollars more. NYAW also gets to keep 15% of the amount it overcharges for property taxes in their rates if they can prove that it was as the result of some action that NYAW took to reduce the taxes.
As we recently discovered, NYAW also provides an incentive to deceive the public. NYAW has an Annual Performance plan which gives a 20% salary bonus if an employee helps NYAW reach a weighted goal of 50% of its overall goal for NYAW's earnings per share. In fact, the Dept. of Public Service ("DPS") Report claims that the employees who knew about the errors to the Merrick and Sea Cliff Districts had an incentive to lie and cover up their mistakes. In fact, all those who knew about these errors and perjured themselves in their testimony in Albany and throughout the rate proceedings were eligible for this program and had an incentive to "cover up" the errors.
Further, each time NYAW acquires a new water district at Long Island ratepayers' expense, NYAW's receives more revenue and, of course, more profit.
Changes in Billing
* Monthly Rates - Lynbrook had summer and winter rates and commercial and residential rates. Merrick and Sea Cliff had one rate for everyone. Merrick was billed every other month and Sea Cliff was billed each quarter. The PSC ordered NYAW to bill every ratepayer monthly.
* Conservation Rates - Almost all of Long Island gets its water from the Magothy Aquifer. NYAW's water source is no different from those on affordable municipal water. In the Rate Order, NYAW initiated what it calls "Conservation Rates." Sounds like NYAW all of a suddenly cares about our aquifer.. You never see NYAW representatives at meetings about the ever-threatening Grumman Plume. Nowhere in NYAW's testimony does it claim it is introducing high/low water usage rates to protect Long Island's aquifers. So, it shouldn't surprise anyone that setting rates according to usage is just another way for NYAW to profit.
In Nassau County, water conservation laws prohibit watering lawns between the hours of 10 am and 4 pm. Residents must only water on odd/even days. These conservation laws are for all Nassau County residents. However, municipal water districts don't bill residents differing rates depending on water usage - especially since water usage is in decline.
As NYAW representative Gregory P. Roach evidenced in his April 29, 2016 testimony, water consumption has been trending downward over the past ten years, largely because appliances are more efficient, i.e., toilets went from using 3.5 to 1.6 gallons per flush and dishwashers went from 14 gallons to 6.5 gallons per use. So, how does that impact NYAW's profits?
"The inability of NYAW to meet its allowed revenue over the period of 2008-2015 is linked directly to water usage reductions attributed to the 4.897-billion-gallon shortfall in total sales levels set in the Lynbrook's district's cases over that period. This chronic under recovery of the authorized revenue requirement reflects the need to incorporate the current and future trends of residential customer usage when setting rates." Gregory P. Roach Direct Testimony-p 1
NYAW representative Dante DeStefano, based on Roach's report, calculated that usage has been declining by 1.57%. For this reason, DeStefano claims that NYAW's rates need to be raised to meet revenue requirements and, of course, ensure that NYAW profits.
* Low Income Program - In the Rate Order, NYAW was to initiate a LIPP program with press outreach and social media posting, as well as bill inserts and bill messaging. NYAW is supposed to coordinate with local legislative and municipal offices, providing them with print and other resource materials they can distribute. NYAW states that will also provide information to the Call Center for customer service representatives to provide.
CAWS has not seen anything from NYAW about this program and NYAW representatives never mentioned it at the hearing in East Rockaway Thursday night.
Qualifications for this program is similar to other public assistance programs. If anyone believes they qualify for this low-income program, please contact NYAW.
* Customer Service Performance Mechanism - In the Rate Order, deferred credit is due to customers based on the number of complaints that the PSC receives from NYAW customers. In other words, if the PSC receives a large number of complaints from ratepayers, ratepayers will receive a deferred credit. Problem is that most people don't tell the PSC about their complaints so NYAW has a low complaint record.
The Water Tax
As a private corporation, NYAW pays property, income and sales tax. Municipal water districts are tax exempt. The PSC allows NYAW to pass 100% of its tax burden onto its ratepayers. Approximately 40% of our water bills pay for taxes on NYAW's utility properties - a tax that residents with municipal/public water do not have to pay.
What's even more egregious is when NYAW grieves its taxes and gets a refund, it gets to keep 15% of the refund plus expenses, sometimes equaling 50% of the refund. In other words, NYAW shareholders profit on a tax refund for taxes it never paid.
In the Rate Order, NYAW projects 4% increases in property taxes each year of the four-year plan. CAWS Directors Dave Denenberg and Claudia Borecky traveled to Albany and questioned NYAW and the Dept. of Public Service ("DPS") for 9 hours, mainly about property taxes. We questioned why they projected a 4% increase when we are protected by the NYS Tax Cap of 2%. They did not even know what the tax cap was. Yet, the PSC allows 100% of NYAW's property tax payments to be passed onto ratepayers.and even grant incentives for NYAW to over-charge property taxes. Yes, that's right. If the tax rate comes in under 4% and NYAW shows an attempt to lower its tax obligation, NYAW gets to keep up to 15% of over-charges.
However, from the onset, it was apparent that NYAW was hiding something. CAWS' repeated requests for documentation showing property tax assessments in years prior to 2012 were met with resistance from NYAW, the DPS and the Administrative Law Judges ("ALJs"). NYAW refused to respond to simple requests for documents and interrogatory responses regarding changes in property tax payments, reasons for such changes, whether the PSC reviews NYAW's tax grievance process and any records of NYAW's attempts to administratively resolve tax grievances.
Ratepayers Article 78
In September 2017, CAWS and several ratepayers from the three Long Island districts served by NYAW, namely the Lynbrook, Merrick and Sea Cliff Districts, hired Teresa Butler, Esq. to bring an Article 78 proceeding ("Ratepayers Article 78") before the New York Supreme Court against the Rate Order because, among other reasons, NYAW proposed, and the PSC accepted, arbitrary and capricious rates without documentation to back up those numbers. See Article 78 page.
The Ratepayers Article 78 specifically alleged that the property tax calculations and the base rate were inaccurate and erroneous, therefore arbitrary and capricious, and that the PSC and ALJs refusal to consider any questions regarding tax payments prior to 2016 and constitutional arguments regarding residents on private water paying property taxes for water which benefit residents on public water who do not pay property taxes for water.
The Ratepayer Article 78 is progressing well along these issues. And community input has been huge, contributing $7,400 for legal fess so far. We need to collect another $2,600 to bring this lawsuit to a successful conclusion - vacating the Rate Order.
Please consider helping us cut your water bills by either writing a check to Teresa Butler, Esq. or LI CAWS and mailing it to LI CAWS, P.O. Box 500, Merrick, NY 11566 or visiting our Go Fund Me Page "Water Bills are Too Damn High" by clicking here.
In December 2017, three months after the Ratepayers Article 78 was commenced against NYAW, the DPS and the PSC for their egregious rates and property tax calculations, NYAW purportedly found that it inaccurately overvalued its properties in the Sea Cliff District to the tune of $2,027,646 since 2013. That is, after the rate proceeding concluded, and after the Ratepayers Article 78 was filed, NYAW admitted that not only were the utility's property tax rates based on significant errors, but NYAW knew about the error for years.
On June 29, 2018, the DPS issued a scathing report, finding that NYAW engaged in fraudulent, deceptive and illegal conduct. The DPS Report states that NYAW representatives knowingly and intentionally filed false and fraudulent testimony. "Staff's investigation on the Company's withholding of material information in rate proceedings focuses primarily on the members of the Rates and Regulatory Team who knew of the material errors and failed to disclose that. information in rate proceedings before the Commission." P. 21, lines 2-6. What the DPS Report failed to report is that during the 9-hr evidentiary hearing in Albany, CAWS was the only one asking questions regarding the erroneous property taxes. The DPS Report conveniently does not mention that the withholding of information by NYAW and its fraudulent acts were in response to CAWS inquiries and questions at the Evidentiary Hearing. The PSC, by its attorney, objected over 75 times to CAWS' questions regarding property taxes, seemingly enabling NYAW to further its diabolical scheme to deceive the PSC and the public.
Over the years, NYAW consistently lied to the DPS, PSC and ratepayers about property tax values, capital improvements, infrastructure repairs and the quality of our water.
CAWS asked the U.S. Attorney, Albany and Nassau District Attorneys and the Attorney Generalto investigate possible criminal acts of fraud, mail fraud, perjury and violations of the Securities Exchange Act. It is imperative that such fraudulent and deceptive acts by NYAW not go unpunished.
Under state law, the public is forced to trust that the PSC is protecting them from fraud and ensuring that utility rates are fair and equitable. Here, the PSC failed in its duties to protect the public.
CAWS and ratepayers asked Governor Cuomo to revoke NYAW's franchise agreement, or charter, to provide water in the State of New York be revoked. The reasons for revocation are simple - NYAW rates are anything but fair and reasonable, NYAW withheld information and engaged in fraudulent, deceptive and illegal conduct and the public has been, is and will continue to be harmed.
Lynbrook District is Paying for the Acquisition of Upstate Water Districts
Since LI Water Service's last rate proceeding, NYAW acquired, not only the Merrick and Sea Cliff Districts from Aqua New York, but also the Cambridge, Wild Oaks, Kingsville, Mt. Elbo, Dykeer and Waccabuc Water Districts in Westchester, Ulster, Sullivan and Washington Counties. In the Rate Order, the PSC allowed NYAW to consolidate the upstate districts with the Lynbrook District in what is considered Service Area 1. Ratepayers in the Lynbrook District have seen their rates increase by as much as 69% in winter and 38% in summer. Consolidating the Lynbrook District with the Upstate Districts show low usage rates decreased by as much as 80% in the Upstate Districts. See below:
Service Area One:
Cambridge - Down 35%
Wild Oaks - Down 30%
Kingsville - Down 46%
Dykeer - Down 80%
Waccabuc - Down 61%
Mt. Ebo - Down 69%
(Lynbrook High Usage - Up 69% winter, Up 38% summer)
Apparently, Lynbrook ratepayers pay a higher water rate to help lower the cost of failing districts in upstate New York. CAWS objected to discriminately burdening Long Island ratepayers with the expense of, not only acquiring the upstate districts, but bailing-out ratepayers in those areas. As a result, future acquisitions were taken out of the rate proceeding. However, the PSC not only allows, but encourages NYAW to acquire failing districts. Why not? We're paying for it.
Barely a month since the scathing DPS Report revealed NYAW's criminal acts of greed and ineptitude, the PSC has been asked to conduct another investigation - this time into the accuracy of the new water meters that were recently installed in homes in the Lynbrook District, which resulted in ratepayers' water bills tripling. It should be noted that Merrick and Sea Cliff Districts made similar complaints when new meters were installed at their homes years ago. And, with tax money, the PSC started a court action so that a judge may issue an order that NYAW should provide accurate information to the PSC. The PSC should be finding inaccuracies and issuing the strongest of sanctions against NYAW, not running to court to make NYAW stop lying in the future.
Much of the Merrick and Sea Cliff Districts have meters that are read remotely. Hundreds of residents complained of soaring rates when they were first installed. Often new meters are replacing 30 year old meters that were not accurately reading usage - some only recording 50% of the actual usage - seemingly doubling the usage shown in our water bills.
However, CAWS questions the reliability of NYAW's new meters. The Town of Hempstead Water Department states that most of their residents have the new remote meters. However, we have not heard of similar complaints from Hempstead ratepayers.
CAWS called for a audit into the operations of NYAW by the NYS Comptroller's Office. Governor Cuomo has ordered an independent monitor to look into these claims.
The Lynbrook District has more complaints of brown water than the Merrick or Sea Cliff Districts. NYAW claims that the brown water is from iron. The Health Dept. claims that it is considered safe to drink. Seriously? Who is going to pick up a glass of brown water and pour it into a baby's bottle? In some areas, people cannot even do laundry without staining their clothes. The infrastructure in the Lynbrook District is aging. NYAW is replacing pipes and building iron-removal facilities in the Lynbrook District more aggressively than in the Sea Cliff or Merrick Districts and that does cost money.
However, NYAW's blames their high rates on their "investments" in infrastructure. Yet, in the Rate Order, the PSC allowed NYAW to charge separate surcharges for such capital projects. Expect to see SIC charges on your bills in the next four years to pay for the following projects in the Lynbrook District:
Plant No. 20 - Portable Iron Removal Facility $1.5 million
Plant No. 22 - Portable Iron Removal Facility $1.9 million
Plant No. 4 - Iron Removal Facility $8.8 million
Plant No. 7 - Tank Roof Replacement $1.6 million
Plant No. 1 - Iron Removal Facility $9.0 million
Plant No. 6 - Iron Removal Facility $6.8 million
Submarine Crossing $2.0 million
Transmission Main - Baldwin Plant 12-13 $4.0 million
TOTALING: $35.6 million in Lynbrook District
If all the above projects come in as projected, in addition to the high usage rates that are crippling the Lynbrook District, each customer will be charged an additional $475 for the above-listed capital projects which are not included in their current rates.
The following project is proposed for the Merrick District:
Demott Tank and Booster Station $3.0 million
Not all the projects proposed will be implemented. For example, CAWS argued that the Demott Tank and Booster Station were projects proposed in the last rate proceeding in 2009 and were never implemented. The PSC allows NYAW to change their mind about projects and use the money for something else. CAWS complained that this does not allow for public input. NYAW gives no public notice about projects that may have a negative impact on the community.
The proposed water tower in Glen Head was taken out of this rate proceeding because NYAW feared that would have made the Sea Cliff District's rates even higher. CAWS suspects that NYAW will sneak it by without public notice when they hope no one is paying attention and then add a surcharge to Sea Cliff's already high water rates.
Sale of the Lynbrook Facility/Building Headquarters in Merrick
NYAW sold its headquarters in Lynbrook in 2014 for $5.6 million and built a new office in Merrick for $4.5 million. The Lynbrook District ratepayers alone paid for the property over its useful life and, therefore, Lynbrook ratepayers alone benefited from its sale. Proceeds from the sale were to be put in an interest-bearing account for ratepayers' benefit. Lynbrook District ratepayers realize savings by no longer having to pay for the property taxes, operations or maintenance of the Lynbrook facility.
But, what did NYAW do with the money that was supposed to be set aside for Lynbrook District ratepayers?
Water Tax to Be Eliminated
CAWS discovered that a law exists that exempts water corporations' utilities from property taxes for cities with a population over one million. Apparently, elected officials representing New York City wrote legislation to ensure that their constituents weren't paying taxes that most of NYC residents did not have to pay.
CAWS, together with civic and community leaders, in a letter and in meetings, asked our state representatives to write legislation to also exempt water corporations in counties with populations over one million from property taxes. As 40% of our water bills pay for property taxes, this could possibly almost halve our water bills.
Assemblywoman Christine Pellegrino introduced A-11295 to amend this law as we requested. We are urging our state senators to introduce a similar bills in the Senate.
See the YourNewsMag Article by clicking here.
Comptroller to Conduct a Feasibility Study of a Public Takeover of All NYAW's districts
CAWS requested the State Comptroller to conduct a study to determine the most efficient and economical public water district to take over each of NYAW's Long Island districts.
Assemblywoman Christine Pellegrino introduced A-11297 which requests the NYS Comptroller to conduct said study.
In response to CAWS letters:
Earlier this summer, the Attorney General began an investigation into CAWS' allegations that NYAW committed criminal acts of consumer fraud, mail fraud, perjury and violations of the Securities Exchange Act. The Attorney General said she initiated an investigation in early summer.
NYS Comptroller DiNapoli called to inform us that they are investigating the PSC's and NYAW's operations.
Nassau County District Attorney Singas' office called to inform us that they are looking into CAWS' allegations of NYAW's criminal acts of consumer fraud and mail fraud.
We Want Public Water - What can I do?
Ultimately, we want public water, too!
Here's what you can do about your high water bills:
1. Ask our state senators to introduce legislation in the Senate to accompany Assemblywoman
Pellegrino's Bills A-11295 to make water corporations in Nassau tax exempt and A-11297 calling
for the State Comptroller to do a feasibility study of a public takeover of all NYAW's water
districts, which is the first step toward a public takeover:
Call Senator John Brooks at 516-882-0630
Call Senator Kemp Hannon - 516-739-1700
Call Senator Todd Kaminsky At 516-766-8383
2. Call Governor Cuomo and ask him to revoke NYAW's franchise license to do business in New York:
Call Governor Andrew Cuomo - 518-474-8390
3.. Call American Water and tell them that your water bills are too high and you suspect that your meters are not accurate. We need them to examine ALL New York American Water ("NYAW") customers whose complaints have fallen on deaf ears for years.
Call American Water - 877.426.6999, M-F 7 am -7 pm.
4. The Public Service Commission ("PSC") has a "Customer Service Performance Incentive Mechanism" that actually awards NYAW for its record of a low complaint record. "How could that be?" you may ask. Well, if the complaint isn't made to the Public Service Commission ("PSC"), they just don't know about it. It may shock you to know that NYAW benefits from a "LOW" customer complaint record. PLEASE
FILE A COMPLAINT WITH THE PSC EVERY TIME YOU HAVE A COMPLAINT: Click here to file a complaint.
5. On June 29, 2018, the Department of Public Service ("DPS") issued a scathing Report about how NYAW intentionally deceived the PSC and perjured testimony in response to CAWS' questions during a 9-hr hearing in Albany. The public comment period has been extended to September 17, 2018. 1400 comments were posted in opposition to the May 18 Order to Establish Rates. Our goal is to get 1,000 more people comment on the DPS Report.
Please click here and Tell the PSC to "Kick out NYAW and give us public water now!"
6. To appeal the May 2017 rate hike, CAWS and ratepayers from the Sea Cliff, Merrick and Lynbrook Districts hired Teresa Butler, Esq. to initiate a Ratepayers Article 78, asking the Supreme Court to vacate the order based on what has now been shown to be an American Water-Gate cover-up of years of lies and deception of NYAW's greed and ineptitude. We raised $7,400 so far and need to raise $2600 more to reach a successful conclusion.
Please consider either mailing a check made out to LI CAWS or Teresa Butler, Esq. and mail to LI CAWS, P.O. Box 500, Merrick, NY 11566 or visit our
Go Fund Me page at: Water Bills Are Too Damn High
7. Next is a class action suit. Please email email@example.com to let us know if you want to help fight for public water and stay tuned. We are not backing down.