Water Rate Hike Makes Waves Among Freeholders, but the Real Surge Is Yet to Come

The price of New Jersey American Water's services is set to jump 20 percent and Freeholder Director Garganio is peeved. But a survey of the industry puts this pricing trend on a slippery slope—up.

We do not know the value of water until we go dry. - Irish Proverb

Actually, we know the value of water right now, and it's about to be 20 percent higher than it used to be if New Jersey American Water's rate increases go through. As , the public utility filed a request through the state to increase revenues from rates $95.5 million.

The bump will increase the average home's monthly bill by $7.63.

Burlington County Freeholder Director Bruce Garganio has taken a stand on this issue. His aim is not just in protesting the price hike, but in holding New Jersey American Water (NJAW) accountable for notifying the public and more vociferously explaining the need for the price increase in the first place.

As his letter to all Burlington County residents reads, "NJAW should be compelled to explain to you why they need a 20 percent increase—especially since they already have received four increases since 2004 that add up to a compounded increase of 51 percent. If the latest increase is approved that compounded increase will top 73 percent!"

He implores county residents to sign a petition calling for NJAW to hold another round of public hearings. More than 3200 have signed.

His impassioned plea is commendable. Our county-level leader is defending the taxpayer's right to be adequately informed, and hoping to buffer us from what he calls an "outrageous" price increase. It's what we'd expect from an elected official who has brought down county taxes by $8.6 million in the last four years.

According to Richard Barnes, external affairs manager for NJAW, the utility met all requirements for notifying the public, including hosting four hearings, each with sufficient advance notice in the media. Most local to Burlington County, NJAW held a public hearing in Westampton in December 2011.

Garganio doesn't dispute that, but does excoriate the Voorhees-based water giant for not inserting notices into customers' monthly bills.

The sufficiency of the notification aside, what's the 20 percent spike all about?

Turns out, this is hardly a New Jersey issue. Nationwide, the cost of providing water and wastewater services is fast rising. The rates for single-family homes in metropolitan areas across the country in 2011 rose 9.4 percent. Areas with price jumps north of 10 percent include New York, San Francisco, Atlanta, Milwaukee and Indianapolis—the latter two in the 30 percent range.

Chicago tops them all, with a recent pre-emptive declaration that prices will rise 70 percent over the next four years.

A common thread running through those cities is their age—specifically the era in which their populations boomed and their infrastructures were laid. Much of that infrastructure is now decrepit and in need of massive infusions of capital to make it to the next generation.

Fifteen percent of the New Jersey infrastructure under NJAW's purview is now 100 years old.

It's those types of infrastructure upgrades that NJAW has been making—$1.2 billion worth in New Jersey since 2004—and will be continuing to make as facilities age. Barnes listed the various types of equipment that don't stand the test of time, and will require costly replacements, including mains, filters, valves, and pump stations.

"When we file with the Board of Public Utilities [for a rate increase], it's to recover the investments already made," Barnes said, noting they spent $300 million on such projects in 2011, $35 million of which occurred in Burlington County.

But the highest tide is still in front of us.

According to the American Water Works Association, our current annual spending on water infrastructure of $13 billion will need to grow to $30 billion by 2040 to keep ahead of end-of-life system failures. It's this perpetual onslaught of maintenance to which we can attribute such a steep price rise.

Of course, as Garganio noted, the issue is also the 73 percent increase since 2004. That's explosive growth. But in the context of other critical resources, it's actually on par.

Over the same period, gasoline at the pump has risen 90 percent, heating oil has risen 220 percent and key foodstocks like sugar, corn and wheat tripled.

That is to say, destabilizing economic forces in the past decade have made for a topsy-turvy residential balance sheet. But this one is closer to annoying than economically crippling. That's because water is and always has been insanely cheap.

For the life-affirming services of procuring water, purifying it, distributing it and finally collecting it as waste, we pay a meager half-a-penny a gallon. The real problem arose when we each started using 100 gallons of it every day.

While absorbing a price shock in a short period is never welcomed, it's a reality, and one that's only beginning to be realized. So what's a better way to hold the water bill at bay? Conservation. Where's the petition for that?

Ric February 28, 2012 at 10:16 PM
Excuse me but there is no way "Fifteen percent of the [Cinnaminson's] infrastructure under NJAW's purview is now one hundred years old. A hundred years ago there were probably just 40 families in the whole town. The bottom line is New Jersey American is a greedy company that is taking advantage of its monopoly. Years ago it was part of IU International and the Seabrook family ran it like a personal piggy bank. Nothing has changed. Anyone who claims New Jersey American is being fair needs to check in for help. Heck, they get the water free from the Delaware. Cinnaminson or the county ought to charge American water a drawing fee. I would not be surprised to learn that New Jersey American is looking into ways to charge us for breathing air.
Sam February 28, 2012 at 11:42 PM
It makes me wonder if the CSA is in some kind of partnership with NJAW... let the corruption continue! And don't forget about the Governing body that voted to make OUR choices as a town. Remember the Commissioners were all appointed by the Township Committee (Our governing body elected to watch out for the Residents of this Great town.) But not a single person on either the Township Committee or Commissioners of the CSA will step up and claim responsibility. So we the people are left to figure this out by what? Guessing? NJAW sounds to me like more corruption! NJ Residents (Cinnaminson especially) don't have a chance!
vincent3403 February 29, 2012 at 12:06 AM
Get to the next meeting, pack everyone in the room, make sure we as residents get answers. Because, just as the story of CSA has died down and no additional comments have been made by the board or the township, if we don't show up this will get swept under the rug. And, we'll have no one to blame if that happens except ourselves. This is our town, our money; the elected officials work for us and if they won't or can't get to the bottom of this it's up to us to assist them.
vincent3403 February 29, 2012 at 12:17 AM
Know it's not on topic but state Comptroller's office stated that local governments and taxpayers could save more than $100 million annually by opting for the state health plan instead of costlier alternatives. http://www.nj.com/news/index.ssf/2012/02/local_governmentstaxpayers_cou.html
JimE March 01, 2012 at 07:45 PM
Forget about Water and Sewer that suck another 20-30 bucks out of my pocket every month. I want to know what happened and is happening to all the money thats being robbed from me in property taxes every day. My taxes almost tripled in the big bubble. Not because they were running a deficit, Not because they had a big expansion project looming, Just because someone said; hey, look at how much money your house is worth if you move, now give us more. Forget the argument if that's justified and just ask yourself what the hell did they/are they doing with all that extra money? The sad thing about the CSA story is; if it wasn't mishandled one way, it would have been mishandled the other. Its not like we'd have seen a difference in services or charges. Waste and inside deals are the way of life in all of these organizations. They make sure they use or loose every cent they get, so they can get even more next year. Its all a big lie we have no control over. All of these Township agencys should be investigated!


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