State PSC approves buyout of New York American Water

The state Public Service Commission Thursday voted unanimously to approve the purchase of embattled New York American Water by Canadian-based Liberty Utilities in a $608 million transaction that could be finalized by early next year.

In advance of the vote, some commissioners lamented that structural problems may remain with the new entity so long as local taxing jurisdictions continue to draw large amounts of revenue from private utilities — taxes that are paid by ratepayers.

Commissioner John Maggiore cited the $43 million in taxes collected each by Nassau entities from American Water ratepayers, and noted that the tax burden "would not be erased by the takeover." He added, "There's a bit of a shell-game going on here."

Commissioner Tracey Edwards, in support of the proposal, noted the service issues and high rates customers "had to endure," but added, "This is definitely not a 100% fix. What we don't want is for the same issues to creep up with another company."

Commissioner John Howard called it "unfathomable" that a third to a half of American Water customer bills in Nassau is for property taxes and he "implored the incoming administration in Nassau County and the legislature to take this issue head on. It is not going away."

The PSC had previously agreed to consider approval of the sale with the provision that Liberty engage in good-faith negotiations for certain portions of the 125,000-customer Nassau system to be taken public, along with a rate freeze through at least 2023 and monetary rate relief.

PSC Commissioner Diane Burman noted the long, complex history of American Water proceedings with the PSC, including a 2016 rate case that included erroneous property tax calculations that led to PSC and other probes. "There are a lot of lessons to be learned," she said.

Already, the Massapequa Water District and the Village of Sea Cliff have found such municipal takeovers of portions of the system to be feasible. Gov. Kathy Hochul in the fall signed legislation that creates two new water authorities, one on the South Shore, one on the North, to begin the work of taking over parts of the system Liberty intends to purchase.

State Sen. Todd Kaminsky (D-Long Beach) said it was now incumbent on municipalities, including the Town of Hempsted, to move forward with municipalization plans. He called the sale to Liberty "more rearranging of deck chairs on the Titanic" and said his "number one mission" will be to facilitate a public takeover of the entire water system.

Sen. John Brooks (D-Seaford) said he objected to the sale, in part because he believes the system is at least partly ratepayer-owned already, and the deal does not include language that would reduce what he called significantly inflated fire-hydrant fees for Nassau fire companies in the district compared with municipal water companies. He said he has commitments from Liberty to address the hydrant issue in the next month.

Chris Alario, who was formerly president of Liberty's California operations, is expected to take over as president of New York American Water after the sale. In a statement he said Liberty was "very pleased with the PSC’s approval of the sale, and will continue to work with New York American Water to successfully close the transaction. We look forward to providing safe and reliable water services to Long Island customers, and to building strong community relationships like we have done in the other communities where we operate."

The company will retain existing employees for at least two years, and maintain its headquarters in Merrick, officials said during the PSC hearing.

Current New York American Water president Lynda DiMenna, in a statement said PSC approval "is strongly in customers best interest and we are committed to a seamless transition for customers upon completion of the transaction."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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