United Water Rate Hike Spread Out Over Three Years

The New York State Public Service Commission Thursday voted to approve a new three-year rate plan that boosts bills for customers of United Water New York Inc., which provides water to New City residents and much of Rockland County.

As a result, the average United Water residential customer will see the following increases in quarterly bills: $12.17 (9.01 percent) in the first year; $11.27 (7.65 percent) in the second year; and $15.48 (9.76 percent) in the third year.

The plan also includes provisions that will enable United Water to move ahead with plans to improve the overall reliability of the water system.

"The decision to raise rates, especially in these hard economic times, is certainly not something done lightly and without significant consideration and review," said Commission Chairman Garry Brown. "However, this plan allows for the continuation of improvements to system infrastructure, while ensuring a safe and adequate supply of water to meet customer needs."

In September 2009, United Water, filed for a $17.8 million rate increase. Adjusting the rate request amount for the surcharge revenues the company already collects and is rolling into base rates, the incremental $14.4 million rate increase request amounted to 23.9 percent.

Several months ago, Department of Public Service staff developed at a three-year rate plan which the commission has now approved that will increase annual revenues each year of the rate plan by $6.37 million beginning September 2010 through August 2013.

The approved rate increase for the first year is roughly one-third the amount the company originally sought. Increases in the first two years of the rate plan reflect certain offsetting refunds.

During the next three years, United Water will provide outreach and education to customers to increase their awareness and understanding of such water service matters as service quality, system improvements, water conservation and customer rights. The company will provide its outreach and education plan to Department of Public Service staff for annual review. The plan will include a detailed budget, specified outreach campaigns and program goals. Criteria for measuring the company's achievements will also be provided.

Throughout this case, water customers, concerned citizens and local officials provided comments about United Water, its rates for water service and its plans for new water supplies. On April 22, a public statement hearing was held in the Town of Ramapo.

The primary drivers of the rate increases, according to the PSC, are significant capital expenditures, increased real estate taxes, and higher employee-related expenses such as medical benefits and pension costs. The agency said the rate increases are necessary to recover prudently-incurred costs and they will benefit customers by enabling the company to build and maintain safe and reliable water facilities.

The three-year rate plan provides certainty for customers and allows the company to concentrate on its operations and maintenance activity rather than on rate proceedings, according to the PSC.

As part of the agreement, United Water commits to enhancing its distribution and transmission plant by spending about $5.5 million a year on construction projects. Further, a hydrant maintenance program will continue to improve the water system's hydrants and provide adequate water supplies to fight fires, according to the PSC.