Bedminster pressing to defeat proposed water fee hike

September 30, 2020

BEDMINSTER TWP. – Having spearheaded a multi-town fight against a proposed rate increase by New Jersey American Water (NJAW), township officials remain hopeful that the hike will be scuttled.

After negotiations failed to produce a settlement, hearings on the proposal began Monday, Sept. 21, before the state Board of Public Utilities (BPU), which will decide the matter.

The status was reported at the Township Committee meeting on Sept. 21. Committeeman R. Colin Hickey noted that NJAW had been granted rate increases in 2015 and 2018, so the increase would be the third in five years.

“I think the work that we have championed and the investment we have made in this is right because left unchecked, New Jersey American would just continue to hike rates and our residents would suffer and suffer tremendously,” Hickey said.

The impact “could be up to $100 per year and that’s every year,” he added.

The case was also discussed at the Peapack-Gladstone Borough Council meeting on Tuesday, Sept. 22.

“What the public should know,” said Acting Borough Administrator Randy Bahr, “is that New Jersey American Water is seeking double-digit increases within the next 18 months, in the midst of a pandemic when there have been a lot of lost wages, a lot of lost jobs.”

The consortium’s legal team “feels they have New Jersey American a little scared,” Bahr added. “We’re hoping to come to some sort of settlement.”

In the meantime, the participating towns plan to issue a press release, he said. “I don’t think the public is aware New Jersey American is seeking this kind of increase.”

NJAW, the largest water utility in the state, filed a proposal last December that would increase its annual revenue by $87.7 million. The utility said its rate request was based on “the significant investment the company has made or will make into its water and wastewater infrastructure.”

The Bedminster Township Committee launched a fight against the proposal on Jan. 27, when it hired a law firm and a public utility analyst. Township officials said that while NJAW put the proposed rate increase at 11 percent, the cost-per-gallon hike would amount to 28 percent.

Attorney William K. Mosca of the Bevan, Mosca, Giuditta and Zarillo law firm of Basking Ridge was hired as legal counsel for a fee not to exceed $25,000. Exeter Associates of Columbia, Md., an economic expert in the specialized field of public utility analysis, was also hired at a fee not to exceed $10,000.

Bedminster then asked other towns to collectively join as interveners and help pay the costs. Through early July, it received formal commitments from Bernardsville, Far Hills, Peapack-Gladstone, Bridgewater Township, Raritan Township and Raritan Borough.

By Aug. 17, the legal fees had grown to $69,000.

Also expressing interest in joining the consortium were Bernards Township, Branchburg Township and Hillsborough Township.

But at the Sept. 8 committee meeting, Bedminster Township Administrator Judith Sullivan said the three towns had chosen not to participate.

Bernards Township Mayor James Baldassare Jr., in an email response to this newspaper on Friday, Sept. 25, said that “after careful consideration and deliberation, the Township Committee felt it was in the township’s best interests to forego this litigation and instead use established channels” such as the ratepayer advocate office.

Baldassare said that while he didn’t recall a specific dollar amount to join the consortium, “I believe that it was based off of the number of meters which would have resulted in a significant portion.”

Bernards Township would have been the consortium’s second most populous member after Bridgewater Township.

“Added to this is the fact that this litigation is open ended and litigation costs could have easily gone up exponentially as time goes by for this statewide rate increase,” Baldassare said.

An initial discussion between consortium and NJAW representatives was held in June but failed to produce any movement, according to Bedminster officials.

At the committee’s Sept. 21 meeting, Hickey denounced the utility’s quest.

“Frankly, this is a blatant attempt by New Jersey American Water to serve their stockholders as opposed to the ratepayers,” he said.

He noted that the utility’s literature boasted that NJAW had a 27 percent rate of return on investments, which was seven points higher than the industry average; and over-performed on the stock market by producing a 152 percent stock price increase over the last five years.

“So they’re getting their returns on the backs of ratepayers,” Hickey argued. He said Bedminster is pushing for no increase in the rate.

“Our testimony and our economic analysis has had a tremendous impact on these proceedings,” he said. “We’ve convinced the company to lower their demands significantly.”

Mayor Larry Jacobs said the impact of the coronavirus pandemic on jobs and wages convinced township officials to “pull back” and rework the 2020 municipal budget in February. He said one might have thought the pandemic would make a utility “more circumspect and judicious” in reviewing a proposed rate increase, but NJAW “did not pull back.”

Jacobs said that while he meant no offense to the ratepayer advocate, he had been informed that “the research our attorneys and our economic advisor provided – they’re leading the way.” He said that at the initial hearing, the NJAW president was cross-examined exclusively by the consortium attorney.

“So these few towns,” he added, “that got together to challenge this increase will hopefully have profound impact for the towns involved and maybe with the rest of New Jersey who are New Jersey American Water customers.”

Editor’s note: This article originally appeared in The Bernardsville News.

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