Water rates for many Westchester County business owners and residents jumped Friday, the result of a merger between two sister companies that was approved by a state utilities regulator last month.
The Public Service Commission approved rate hikes that will cost some United Water customers as much as $20 more per month by the end of a three-year period. Bills will now come monthly as opposed to quarterly.
The PSC announced its decision Nov. 23, touting the rate increases as having minimized the impact on ratepayers because the agency approved a total of $10.2 million in rate increases over the three-year period while the utilities had proposed $14.4 million in increases. The PSC said it agreed to the doube-digit hike to cover increases in operational expenses and property taxes, among other costs.
PSC Chairwoman Audrey Zibelman said the agreement was the result of negotiations between “normally adversarial parties.” “It will allow the company to continue to provide safe and reliable services while allowing customers the ability to budget their funds knowing rates increases will be fixed over the term of the three-year rate plan, thereby balancing customer interests and the financial viability of the company,” she said.
The merger combines United Water New Rochelle Inc. and United Water Westchester Inc., both of which are owned by the French conglomerate Suez Environnement. They will operate under the name United Water Westchester.
The previously existing companies shared some services but said the merger will reduce administrative costs by $187,000 in the first year alone. The new company will keep two different rate districts for customers.
The 144,000 customers of United Water New Rochelle, which serves areas including New Rochelle, Eastchester and Pelham, will see their water rates increase an average of 13 percent in year one of the plan, 7.5 percent in year two and 7 percent in year three. The average monthly residential bill will increase from $68.50 to $89.05 by October 2017.
United Water Westchester’s 54,000 customers in Rye, Rye Brook and Port Chester will see their rates increase about 2.4 percent overall, pumping up the average residential water bill from $67.17 to $68.81 by the third year. The rate hikes would be larger for United Water New Rochelle customers because the company has more infrastructure than its counterpart, according to a spokeswoman.
The increases were approved despite opposition from a consortium of nine local communities. Bronxville Mayor Mary Marvin, a Republican and attorney by trade, said in her weekly newsletter that the consortium would not appeal the decision because of legal costs and the unlikelihood it would be reversed based on municipal appeals case law.
“After a cost-benefit analysis, we determined that these legal remedies do not make economic sense,” she said.
At a public hearing at New Rochelle City Hall on Aug. 5, city resident Joyce Furfero told commission representatives she did not understand why allowing a merger meant also raising rates.
“If anything, we should be lowering rates as a result of a merger,” she said.
In a recent interview with the Business Journal, United Water spokeswoman Deb Rizzi said the two main cost drivers for the companies are infrastructure and capital investments. She said the company has spent an average of $1,300 per customer connection in the last five years and expects to invest heavily in upgrading infrastructure. Rizzi said as much as 27 percent of a customer”™s bill goes to paying real estate and franchise taxes.
“These rates meet our needs and they are substantial,” she said.
