Water System Valuation and Feasibility Study of American Water (New York) for the Service Area for the Town of Hempstead (2021)

The Town of Hempstead retained Walden to determine the value, feasibility, process, and cost of extending their district to include the Town of Hempstead water service area of New York American Water (NYAW). The Town’s interest in the system included more than 110,000 customers, dozens of wells and production facilities, metering stations, above-ground storage tanks, fire hydrants and below-ground supply/transmission lines, water mains, and other underground piping and service line connections. The engineering and water system assessment included feasibility investigations regarding the regionalization with nearby communities and provided utility service and long-term water quality planning.  The Water System Valuation and Appraisal process included four (4) different methods: Asset (Cost) Method; Income Method; Market (Comparative Sales) Method; and Rate Base Method.  The Asset (Cost) Method utilizes Original and Replacement Cost information and the determination of Replacement Cost New Less Depreciation (RCNLD) values for the assets. The feasibility of the acquisition was based on a Public Service Commission criterion of ‘public benefit’ and modeled side-by-side test year and rate results under public or private ownership. The Town has found that public ownership of the water utility assets can be feasible but is challenged by the expected level of debt to continue the pursuit of the transfer of the water system at this time.


Posted on

May 3, 2021