N.J. American Water seeking a 15 percent rate hike

Posted: December 20, 2011

New Jersey American Water is seeking an average 15 percent rate increase for 2012, prompting one local official to call the request "obscene."

The Voorhees-based company, which has 640,000 customers in 188 municipalities in South Jersey and across the state, says it needs the increase to help pay for the more than $300 million it has invested in infrastructure this year.

Burlington County Freeholder Director Bruce Garganio is calling on officials of other counties and mayors to join forces to fight the proposal.

The utility is "making enough money," said Garganio, who called the request obscene. American Water, the parent company, which serves 30 states and parts of Canada, reported net income of $269 million in the first nine months of this year - nearly 18 percent more than in the same period last year.

Under the proposal, a ratepayer who on average pays $596 a year for water would see a $92 increase.

Last year, utilities regulators approved a 7.5 percent average rate increase for the company. In 2008, it got a 15 percent bump.

"I was not freeholder then," Garganio said.

New Jersey American's rates - and rate increases - vary among its customers in part because it has acquired other suppliers over the years.

Its current request is undergoing a review. The Division of Rate Counsel, an advocate for ratepayers, is examining the water company's books.

"We pour through everything," said Stefanie Brand, the director.

That includes profits, the prices paid for improvements, and revenues, to make sure they "are fairly allocated between the ratepayers and shareholders," she said.

Next month, Brand said, her division will decide whether the rate increase is justified, and if it is not, will begin negotiations with the water company to settle.

Then in March, the state Board of Public Utilities is scheduled to hold hearings. It will have the final say over whether to grant an increase.

Garganio said municipal utility authorities in Mount Laurel, Pemberton, Florence, and other towns charge much less than the rates New Jersey American is charging.

"They need to tighten their belts and draw the line just like everyone else," he said of the utility.

This month, the Burlington County Board of Freeholders passed a resolution opposing the requested increase.

Richard Barnes, a spokesman for New Jersey American, said the company has been replacing or improving aging water mains, hydrants, meters, and other equipment across the state.

"We have 8,600 miles of main throughout New Jersey and a good portion is nearing the end of its useful life. Some of it was put into the ground around the World War II era," he said.

If the rate hike is approved, Barnes said, the company will "still be charging less than a penny per gallon of water."


Contact staff writer Jan Hefler at 856-779-3224 or jhefler@phillynews.com or @JanHefler on Twitter. Read her blog at www.philly.com/BurlcoBuzz

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