The New York Public Service Commission (PSC) issued a Notice Soliciting Comments from municipalities and other water authorities interested in serving, consolidating, acquiring or otherwise providing service to areas currently served by American Water Company (NYSE: AWK). 

The PSC has received many requests to replace the current providers of water service with a municipal owner and operator.  The Commission is tasked with determining if the transfer to another private owner of utilities would be in the public interest – which includes considering viable potential alternatives such as municipalization.  This consideration of alternatives is why the Commission is seeking comments.  Specifically, the PSC is asking interested agencies (among other things):

  • How would the municipality provide water service, what source of water, system pressure, interconnections, management and employee expertise, billing systems and customer service plans. 
  • An estimated range of what the municipality would pay for the portions of AWK that they propose acquiring.
  • Plans for making any payment in lieu or taxes (sometimes called PILOT) to related taxing authorities
  • What other savings beyond property and income taxes would be saved by the proposed municipalization? 
  • Why is the proposed consolidation in the best interest of the ratepayers? 
  • What would be the potential timeline for such a regionalization effort (including raising capital)? 

In addition, the PSC is also challenging the private owners of the utility to submit plans for reducing the property and income tax burden on customers if the utilities were not to change to municipal ownership. 

The PSC notes that AWK serves customers in New York in many different areas, including the following counties:

  • Nassau County:  Villages of Atlantic Beach, Cedarhurst, East Rockaway, Hewlett Bay Park, Hewlett Harbor, Hewlett Neck, Island Park, Lawrence, Lynbrook, Malverne, Valley Stream, Woodsburgh, Mill Neck and Massapequa Park.  The Towns of Hempstead, Oyster Bay (portions of each).
  • Orange County:  The Towns of New Windsor, Cornwall and Mount Hope
  • Putman County:  The Town of Southeast (Mt. Ebo District) ad the Town of Carmel (West Branch Acres District)
  • Sullivan County:  The Towns of Forestburgh and Town of Mamakating. 
  • Ulster County:  The Town of Ulster (former Kingsvale areas of Whittier and Deer Run neighborhoods) and the Town of Rochester (Lucas Estates). 
  • Washington County:  Village of Cambridge and Town of Jackson. 

The utility systems currently serve more than 120,000 customer connections in New York with a 2019 reported total Operating Revenue of more than $110,000,000. 

Walden Environmental Engineering is active in this specialized area of utility engineering and consulting.  Walden has the experts, engineers, scientists and experience that can offer transition advisory services, utility valuations, feasibility studies, return on investment, break-even point and other related merger and acquisition supportWalden has published a Guide for determining and maximizing the value of your utility assets and has succeeded in saving ratepayers money while getting better water quality and service. 

If you are interested in growing your utility through acquisition, regionalization, additional services, outside investment or refinancing debt, give Walden a call to discuss your goals and how we can help.