As Nassau customers face water-rate hikes, Liberty sees another public takeover attempt

With many of its Nassau customers facing cumulative three-year rate hikes of between 18% and 45%, Liberty Utilities is facing a new effort to take public a portion of its Nassau County service territory — this time the largest, in Hempstead.

The South Nassau Water Authority, created by state law after the approval of Liberty’s purchase of the former New York American Water in 2022, confirmed through a Hempstead Town spokesman that it has formulated a bid to acquire the 120,000-customer, primarily Hempstead service territory from Liberty for an undisclosed amount.

The authority “agreed on a price to offer Liberty” for the service area, which includes Merrick and Lynbrook, said John Reinhardt, a board member of the South Nassau Water Authority. Liberty has 60 days to respond to the offer, he said. The water district has already completed a feasibility study, said Reinhardt, who declined to specify the bid offer.

It comes as Liberty, which is based in Canada and operates in regions upstate that also will see rate increases, is facing two previously announced efforts to take public its service areas: one in Sea Cliff and another in East Massapequa.

The prospect of a public Hempstead-area water district won a key supporter in a longtime critic of the water companies: David Denenberg, co-director of activist group Long Island Clean Air, Water and Soil, which was a formal party in the rate-hike proceedings and objected to the increases.

“By all indications, they [the South Nassau Water Authority] have moved relatively quickly and I’m cautiously optimistic they’re serious about this bid,” Denenberg said. 

During a public hearing held online by the state Public Service Commission Tuesday night, Denenberg argued to administrative law judges overseeing the case that rate increases of up to 45% were "not just and reasonable," as they need to be under the law.

Another of the 10 attendees, Fred Harrison of Merrick, said the PSC should not grant a rate increase while three Long Island territories are being considered for fully public water.

In the rate-hike case, Liberty has reached a settlement agreement with the state Department of Public Service, the administrative arm of the PSC, for increases that would hike bills by a combined 45% over three years in its Lynbrook area as well as some upstate service areas, and a combined 18% in the Merrick and Sea Cliff areas starting this year. The PSC can adopt, reject or alter the plan when it votes on it this summer.

Customers in Service Area 1 will see increases starting this year of 17%, 15% next year and 13% in 2026, according to the state. That area encompasses customers in Atlantic Beach, Baldwin, Cedarhurst, East Rockaway, Hempstead, Hewlett, Hewlett Bay Park, Hewlett Harbor, Hewlett Neck, Island Park, Lawrence, Lynbrook, Malverne, Mill Neck, Oceanside, Roosevelt, Valley Stream and Woodmere. For customers with current average bills of $66.48, the 2024 increase will push them to $85.73 this year, $98.84 next year and $105.85 in 2026, the state said.

Customers in the Merrick and Sea Cliff regions would see a rate hike of 9.2% this year, 4.5% next year and 4.5% in 2026, according to the DPS. The plan includes a catch-up surcharge for the delay in the 2024 increase, which Liberty had sought to begin in April.

Merrick customers with current bills of $50 would see their bills increase to $54.91 this year, $57.56 next year and to $58.47 in 2026. In Sea Cliff, average monthly bills of $77.98 would rise to $87.72 this year, $90.56 next year and $92.34 in 2026.

Liberty New York Water President Deborah Franco noted in a statement the requested rate hikes were "the first in seven years" and said they were for "much-needed upgrades to our infrastructure," including programs to reduce lead in water pipes and help customers with arrears.

The company declined to discuss specifics about "ongoing negotiations with other water districts," but said, "we are negotiating in good faith and are following the process" outlined in a state order that paved the way for its purchase of New York American Water. 

Liberty, in a letter filed in the rate case with the state, called the proposed tax-hike settlement with the state “reasonable,” saying it “serves the public interest and satisfies the PSC’s guidelines for adopting settlements.” A spokeswoman didn’t immediately respond to a request for comment.

In agreeing to the settlement, the state noted Liberty has invested $204.9 million in infrastructure since 2017.

A state DPS review of the settlement called the rate agreement a “fair compromise,” noting the increases include implementation of a low-income discount program, a plan to study the impact of a conservation rate that impacts high users with higher rates, and new measures that “ensure the company will manage its costs.”

The state said the hikes will allow Liberty to “continue investing in the water systems and undertaking necessary capital projects,” including “significant” cybersecurity projects. The plan includes an earnings-sharing mechanism that could benefit customers, DPS said, incentivizing the company to “control its costs.” 

The rate plan is advancing as Liberty faces efforts to take public the water systems in all its Long Island territories.

The Massapequa Water District’s plan to acquire an approximately 5,800-customer service territory in East Massapequa, first announced in 2022, is said to have stalled, according to a person familiar with the bidding. The district didn’t respond to a request for comment. The district’s opening offer of $12.3 million was significantly below the $21 million the district initially valued the territory for in 2022.

“Right now they’re at a stalemate,” said the person familiar with the talks. The price Liberty is asking is “just not reasonable. They are quite a ways apart.” The district is said to be exploring the prospect of public funding to bridge the gap.

Meanwhile, the Water Authority of North Shore, also created as a result of the Liberty buyout, is close to submitting a bid for its approximately 4,500-water customers in Sea Cliff and surrounding areas. A feasibility study in advance of a formal bid is expected soon, said George Pombar, who heads civic groups that first sought the public buyout.

“We’re getting very close,” said Pombar, who said he expects the bid to be finalized by mid-August. He said he expects the buyout to result in a rate reduction for customers. “That’s the whole goal,” he said. “We can’t sustain what we’re paying now. It’s been out of control for some time.”

Pombar and his North Shore Concerned Citizens group were among the most vocal opponents of the former New York American Water, which finally sold its interest to Liberty in 2022 for $608 million. The new rate plan, Pombar said, represents “an outrageous increase."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.