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Community Corner

NJ American Water Proposes Rate Hike

The move should prove unpopular, particularly in light of recent "brown water."

Maplewood customers are facing a 14.3 percent water rate increase while the township is looking at potentially $12,000 more per month in hydrant fees, as New Jersey American Water seeks to raise rates for the new year.

Calling New Jersey American Water Company out of touch with the current economy and its proposed rate hike unacceptable and unfair, residential customers and officials asked that it be reconsidered during a public hearing last night at Westfield Memorial Library.

The 40-minute hearing was the fourth and final one during the last week or so. Evidentiary hearings are scheduled this fall before an administrative law judge and a decision by the state Board of Public Utilities could come as early as the new year. Also appearing at Wednesday night's hearing before an administrative law judge were representatives from the water company, the BPU and the state Division of Rate Counsel.

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Under the proposed rate case, filed in April, the average residential customer statewide consuming 7,000 gallons per month would pay about $56.6—a 14.3-percent increase over the current average $49.53. In addition, the hike would impact hydrant fees to the Township of Maplewood. Right now, the Township pays about $225,000 a year for hydrant water usage. NJAMC's proposed 5 percent increase will add another $12,000 to that fee.

Some service areas would see higher increases, as much as 20 percent, while some towns face increases for fire protection and hydrant service but others do not. NJAW, through its parent company, serves 16 million customers in 35 states, including New Jersey.

The rate hike proposal would boost revenue by $84.7 million for New Jersey American, or approximately 13.6 percent over present rate revenues of $622.6 million. Richard Barnes, external affairs manager for NJAW, said the revenue raised by the rate hike will cover various capital projects completed in the past two and a half years since the last rate hike. That increase was 15.2 percent, presented in March 2008 and granted by the BPU in December 2008.

The company contends that the rate increase is driven by capital expenditures "to foster adequate, safe utility service." Barnes emphasized that even if the rate increase is approved, water will remain one of the cheapest utility bills, costing less than a penny per gallon.

The average residential home would see a 22-percent hike in their monthly, fixed service charge, from $9 to $11. Rates for private fire protection service customers would face a 15-percent increase. The range of increases is an effort to bring different areas in line after previous companies were acquired by New Jersey American over the years, he said.

Based in Voorhees, N.J., New Jersey American Water is a wholly owned subsidiary of American Water, a public company that trades on the New York Stock Exchange closing at $22.27 per share on Wednesday.

American Water also has filed rate cases in Pennsylvania, California and West Virginia that would boost revenues $168.7 million and is awaiting final orders for general rate cases in eight states that would increase revenues $223.9 million. The firm serves about 16 million people in 35 states and parts of Canada.

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