Bill Text: NJ SR59 | 2012-2013 | Regular Session | Introduced
Bill Title: Urges Division of Rate Counsel to end settlement negotiations with New Jersey-American Water and pursue a $45.8 million rate decrease.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2012-03-16 - Filed with Secretary of State [SR59 Detail]
Download: New_Jersey-2012-SR59-Introduced.html
Sponsored by:
Senator DAWN MARIE ADDIEGO
District 8 (Atlantic, Burlington and Camden)
Senator JEFF VAN DREW
District 1 (Atlantic, Cape May and Cumberland)
Co-Sponsored by:
Senator Madden
SYNOPSIS
Urges Division of Rate Counsel to end settlement negotiations with New Jersey-American Water and pursue a $45.8 million rate decrease.
CURRENT VERSION OF TEXT
As introduced.
A Senate Resolution urging the Division of Rate Counsel to cease settlement negotiations in a rate case regarding New Jersey-American Water Inc. and pursue a $45.8 million rate decrease at Board of Public Utilities and Office of Administrative Law rate hearings.
Whereas, The American Water Works Company, headquartered in Voorhees, New Jersey, is the largest investor-owned water and wastewater utility company in the United States; and
Whereas, New Jersey-American Water, the State subsidiary of American Water, is the largest water utility in New Jersey, serving 2.5 million people in 17 counties across 188 municipalities; and
Whereas, New Jersey-American Water filed a petition on July 29, 2011 with the Board of Public Utilities seeking a $95.5 million rate increase or approximately 16.9% over current revenues of $565 million; and
Whereas, Rate increases must be approved by the Board of Public Utilities following public hearings that include input from the Division of Rate Counsel whose primary mission is to protect and represent ratepayers; and
Whereas, New Jersey-American Water has already received four different rate increases of 9.56% in 2004, 12.46% in 2007, 15.19% in 2008, and 6.8% in 2010 for a total compound rate increase of 51%, and with the proposed increase, the total rate increase since 2004 would surpass 75%, despite already having among the highest rates in the State; and
Whereas, The Division of Rate Counsel retained expert witnesses to evaluate New Jersey-American Water's petition and found the petition to contain "unreliable" expense projections, "misleading" revenue calculations, $6 million in incentive compensation for non-union employees in addition to annual salary increases of over three percent, $5 million in overstated pension costs and benefits for "top executives," $1.4 million in attorney and other fees to support the rate increases, as well as promotional marketing fees, public relations expenses, lobbying fees, and country club fees; and
Whereas, The same expert found that New Jersey-American Water should actually be ordered to reduce its current rate by $45 million rather than obtain a $95.5 million increase; and
Whereas, Despite the finding of its own experts, the Division of Rate Counsel, whose mission is to protect consumers and ratepayers, has entered into negotiations with New Jersey-American Water for a compromise rate increase; and
Whereas, This untenable position by the Division of Rate Counsel comes at a time when ratepayers and residents throughout New Jersey are facing unemployment and underemployment, plunging home values, mortgage foreclosure and other mounting debt, and seniors on fixed incomes are struggling to maintain their homes and health; now, therefore,
Be It Resolved by the Senate of the State of New Jersey:
1. The Division of Rate Counsel in, but not of, the Department of Treasury, is urged to immediately cease negotiations with New Jersey-American Water on a settlement in the matter of BPU Docket No. WR11070460 and OAL Docket No. PUC09799-2011N and instead demand that New Jersey-American Water ratepayers receive a rate decrease of $45 million as recommended by the Division of Rate Counsel's own experts.
2. The Division of Rate Counsel is urged to pursue a rate decrease of $45 million before the Board of Public Utilities and the Office of Administrative Law by defending and litigating to conclusion the pending rate case petitioned for by New Jersey-American Water in BPU Docket No. WR11070460 and OAL Docket No. PUC09799-2011N.
3. A duly authenticated copy of this resolution signed by the President of the Senate and attested by the Secretary thereof, shall be transmitted to the Division of Rate Counsel.
STATEMENT
This resolution urges the Division of Rate Counsel ("division") to stop negotiating and not to settle with New Jersey-American Water concerning the 16.9% or $95.5 million increase that they filed on July 29, 2011. Instead the division is urged to demand the full $45 million decrease in rates that the division's own experts deemed appropriate. Given that the division's own expert found that New Jersey-American Water's petition includes expenses for items such as country club fees, supplemental retirement benefits for top executives, special bonuses on top of salary increases, lobbying expenses, promotional marketing fees, and the cost of petitioning for the increase itself in an economic climate in which ratepayers are facing job losses, falling home values, and limited financial prospects, allowing any rate increase whatsoever is unacceptable. The resolution further urges the division to take the rate increase case before the Board of Public Utilities and pursue a full $45 million rate decrease.
