DPS: Sea Cliff water customers to get credit for overpayment

New York American Water overpaid taxes in the Sea Cliff district by $2.3 million over the past four years and its customers are due $65.37 each in credits over the next 12 months, the state Department of Public Service has recommended.

In an interim report released Monday following an investigation, the department found that the company’s “erroneous tax calculations” caused the $2.3 million overpayment. The department found that, in total, customers overpaid by $281,421,

In addition to recommending credits to customers on future bills, the department is also calculating that customers will see a tax-related reduction of $2.4 million on future bills.

In a prepared statement, New York American Water president Carmen Tierno noted the company brought the error to the state’s attention in December.

He said the company “remains unconditionally committed to protecting our customers from any impact of this tax over-assessment,” will “thoroughly review the staff’s report and we look forward to resolving this issue.”

The move comes as New York American Water last week served a lawsuit filed in state court on Jan. 31 against Nassau County, Oyster Bay Town and the North Shore Central School district, among others, charging that its property taxes were erroneous and “illegal” starting in 2014. The company charged the miscalculation was the result of failure to properly revalue the Glenwood Landing power plant after it was demolished. LIPA’s tax payments on the property that year decreased to around $16 million from $23 million.

The department’s findings come as customers in the area who saw water bills more than double last year explore options for taking over the privately owned water system as a municipally run entity, or merging it with Jericho’s public water system. Any such option would require a series of approvals, including the Public Service Commisssion.

The Department of Public Service, which is the administrative arm of the PSC, said it continues to pursue a second phase of its investigation, which focuses on determining how the miscalculation happened. It’s due by the end of June.

After discovery of the errors last year, the water company on Jan. 1 reduced two property tax surcharges for Sea Cliff district customers totaling $1.8 million based on an “initial calculation.”

It’s unclear if the continuing DPS investigation will examine how the agency’s own auditors did not detect the miscalculation, but in a statement the agency said its staff “continues to investigate how the company initially made the mistake, why it allowed errors to persist for so long without being corrected, and why did the company fail to notify staff and the commission about the errors.”

CORRECTION: A $2.3 million tax overpayment by New York American Water over four years resulted in overcharges to customers in the Sea Cliff district of $281,421, according to the Public Service Commission. The amount customers overpaid was misstated in a previous version of this story.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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