NYS starting immediate review of taking Nassau's New York American Water system public

Gov. Andrew M. Cuomo isn’t waiting for his utility reform legislation to pass the legislature to begin a comprehensive study of taking the New York American Water system on Long Island public; he ordered a state special counsel to begin a study immediately.

Cuomo had first broached the prospect of a study of the feasibility of taking the 120,000-customer Nassau County system public last year, when he introduced broader utility legislation that also seeks greater penalties for electric utilities that, for instance, perform poorly in response to storms, among other things.

But in a statement issued Wednesday, Cuomo said the issue was too pressing to wait.

"For far too long, the 120,000 customers of New York American Water on Long Island have been plagued by exorbitantly high rates for water — this simply cannot continue," he said, announcing the study that would review all options to reduce customer costs "for this vital necessity and a basic right, including a public takeover. New Yorkers deserve access to clean, safe and affordable water and we are going to pursue every avenue to make that happen."

In a statement, Lynda DiMenna, president of New York American Water, said the "best path forward" for ratepayers is completion of the sale of NYAW to Liberty Utilities of Canada, along with elimination of a special franchise tax the investor-owned utility must pay and pass along to ratepayers.

"A public takeover would lead to an increase in the debt-service obligations of Long Island residents by hundreds of millions of dollars," she charged. "We do not believe this is a financially prudent option for our customers in the midst of a global pandemic and unemployment crisis."

New York American Water in late 2019 announced it had agreed to be purchased by Liberty Utilities of Canada for $607 million, a sale that requires state Public Service Commission approval. The company had expected the deal to close in the second half of 2020, but the PSC has held up any ruling after previously calling for proposals for a possible public takeover.

At least three other public entities have studied takeover of at least part of American Water’s service areas in Nassau, including the Massapequa Water District and the Village of Sea Cliff, both of which found a takeover of just under 5,000 customers and infrastructure feasible. The Town of Hempstead also studied the prospect, and while its outside consultant found the move feasible, the Republican-controlled town government filed a statement expressing concern for the increased debt level it would saddle the town with.

Sen. Todd Kaminsky (D-Long Beach) said he’d like the special counsel’s review to take a deeper look at the prospect of Hempstead Town, which has its own municipal water district, taking over that portion of the system. "My constituents in Hempstead think it would be valuable, and the Town of Hempstead found it would be a savings to them," Kaminsky said. "I think the town should reconsider their position of not wanting to do it."

Cuomo has given the task of conducting the study to Rory Lancman, his recently appointed special counsel for ratepayer protection, who in a statement said Cuomo is "leaving no option off the table" for the future of the American Water service area in Nassau, including municipalizing "all or part" of the company.

Lancman’s work will come under the auspices of the state Department of Public Service, which is expected to hold public hearings on the matter. Ratepayers of New York American Water have been particularly passionate at public hearings and protests in the half decade since the company filed a proceeding to raise rates and was discovered to have misrepresented some aspects of the request. State investigations commenced, ratepayers railed against high rates and poor notification of new conservation rates.