Ocean City residents not happy with proposed water rate increase

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Officials say city's sewer infrastructure is to blame for high bills

OCEAN CITY — While representatives for New Jersey American Water Company and the state said they welcomed public comment on the proposed increase and vigorously defended the need for it, the public would not be swayed during a public hearing Tuesday, Feb. 11 at the Ocean City Library.

“I’m a businessman,” said 1st Ward Councilman Mike DeVlieger, a liaison to the city’s utility advisory board. “Costs get passed on to me all the time, but I don’t always get to pass it on.”

Looking to increase revenue by nearly $4.5 million to offset increasing costs, New Jersey American Water is seeking a rate increase to cover the increased cost of buying water from outside sources and sending wastewater to outside facilities to be treated.

The proposed increase to an average wastewater service customer in Ocean City utilizing 20,000 gallons in the summer and 44,000 gallons of water per year would be $2.07 per month, a 3.14-percent increase.

Bob Brabson, corporate counsel representing New Jersey American Water, said the company is not asking for an increase in their profit margin, only the funding necessary to cover the cost of sending water to outside wastewater treatment facilities.

“They charge us for that,” he said. “New Jersey American Water simply passes along the costs.”

DeVlieger said if he knocked on 100 doors, at least 60 people would bemoan the high water and sewer costs.  

Todd Miller, the administrative law judge presiding over the hearing, said many factors must be weighed. The cost of improving sewer lines often “boomerangs back” to the ratepayer, he said.

“It’s a delicate balance,” he said.

DeVlieger said he would gladly pay more to assure the lines were secure.

“What I hate seeing is a road being paved over a sewer system that is 60 years old,” he said.

He asked how many times New Jersey American Water has asked for a rate increase and how many times it has been granted, but officials had no answer. He then took them to task on the amount of money that has been reinvested into the infrastructure.

“We’re putting a whole lot of money into roads, about $5 million,” DeVlieger said of the city. “If our roads haven’t been paved in decades, I can only imagine the shape the sewer is in.”

Susan McClure, an attorney for the New Jersey Division of the Rate Counsel, said she has been on the job for 16 years and assured DeVlieger that not every increase is approved.
“It’s not anywhere near 100 percent,” she said. 

McClure said she represents ratepayers when a utility is seeking an increase.

“In order to effectively represent the public, our office uses a team of lawyers, accountants and economists to analyze requests for rate and service changes filed by utilities,” she said, adding that the rate counsel was conducting a comprehensive examination of the proposal to ascertain that New Jersey American Water’s calculations are accurate.

The company serves approximately 605,000 metered water and 35,000 sewer service customers in 188 municipalities in New Jersey.

McClure said the company must justify its expenses and provide evidence to support its calculations. Only certain costs can be passed on.

“Pension costs or an increase in the cost of chemicals can’t be passed on,” she said.

The increase will go before the New Jersey Board of Public Utilities next month.

McClure said attorneys and expert witnesses would be analyzing the data to determine the propriety of an increase. She also reminded the audience that a wastewater treatment plant must be fully operational all year-round, and second homeowners must help pay the freight, even if they only use their homes for part of the year.

“You have to have the infrastructure needed to be able to handle the peak summer day, the pressure and the amount of water, that’s what you guys are paying for, all year. Even if you only use it in the summer, it’s there for you,” she said.

Ocean City is one of only three New Jersey communities, including the Adelphia section of Howell Township and Lakewood that do not own their own sewer lines.

“Statewide, this is spread out over many customers,” said Matt Koczur, a representative of state Board of Public Utilities. “You have a much smaller customer base in Ocean City; that costs more.”

Resident Eric Sauder noted that there is a “great disparity” between what property owners in Ocean City and neighboring Sea Isle City pay for water and sewer.

“What recourse do we have?” he asked.

Sauder said he pays $150 to $230 a month, which is more in one month than he paid in three months where he used to live.

Resident Jim Tweed said that over the past eight years, his bills have almost quadrupled.

“With no change in my water use,” he said, adding that he failed to see why this was permissible.

“In the private sector, you can’t always pass the costs on,” he said. “You are forced to get creative if you want to stay in business. I don’t feel comfortable as a ratepayer that this is being done.”

Councilman Pete Guinosso, who represents the 4th Ward, said everyone is wondering why rates are so high.

“You say you are being charged more, I suggest you become more efficient,” he said.

Joe Clark, the city’s purchasing agent who serves as a liaison on the city utility advisory board, said the water and sewer issue is complicated.

The city’s sewer infrastructure was sold back in the 1960s for a reason.

“The sewer used to get dumped in the back bay,” he said. “The commissioners at the time saw the need. They said, ‘Hey, we need to get a plant built.’ They had the vision that the town was going to grow and need a sewer plant.”

It has to be ready during the peak of the summer, he said.

“We could never have developed this island the way we have without a sewer plant,” Clark said.

“Everyone thinks their water bill is high. It’s not the water, it’s the sewer and it’s because of the additional cost that we incur using the Cape May County plant,” he said. “To hold the capacity that we need, you have to have plant that size. It’s one community, split between 16,000 households. That costs more, but at the end of the day, the sewer plant is ready to deal with it.

“A lot of other towns pay lower water and sewer fees, but their local purpose tax is higher,” he said.

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