New York American Water to be sold for $608M

Valley Streamers say it’s the brown water: It ruins clothing in the wash, and is regarded by a few as undrinkable. Some have said it gives off an odour, while another homeowner said he regrouts his bathtub every year because it stains so frequently.

Now there’s a chance that something will change, after American Water Works Co. announced in a Nov. 20 press release that it would sell its New York operation to Liberty Utilities for $608 million (S$827.1 million) in cash. The deal follows years-long criticism from Nassau County customers, lawmakers and watchdogs who have questioned the private company’s rate structure, water service and infrastructure management.

NYAW serves nearly 120,000 Nassau residents across three districts: Merrick, Lynbrook and Sea Cliff. Valley Stream falls within its Lynbrook district. The sale is expected to close by late 2020, following approval by the state Public Service Commission, according to the release.

“After a careful and comprehensive analysis, we believe it is in the best interest of our customers in New York to sell to Liberty,” NYAW President Lynda DiMenna wrote in a letter to local ratepayers. “We are committed to working together to ensure that the transition is unnoticeable . . . and that safe and reliable water service continues throughout the transition and beyond.”

A sub-utility of Ontario-based Algonquin Power & Utilities Corp., Liberty owns and operates water, wastewater and energy utilities in 14 states, serving over 800,000 customers. DiMenna indicated that Liberty already manages utilities in upstate New York, and would “have a larger presence in New York once the agreement closes.”

“We are excited to expand our customer base in the great state of New York, and to bring our experience in multiple states as a water utility operator committed to excellence,” Algonquin’s CEO, Ian Robertson, stated in the release.

A spokesman for American Water said the company has spent “significant time and effort over the past several months” negotiating the sale with Liberty. DiMenna added that the acquisition would not impact customers’ water rates, and that the utility is working with NYAW, regulators and state officials “to ensure the affordability of water services,” she said, including addressing the local property-tax burden, which accounts for more than half of local customers’ monthly bills.

Officials and residents who have spoken out against the company were quick to respond to the announcement. For State Sen. Todd Kaminsky, a Democrat from Long Beach, the message was celebratory. “Good riddance, American Water,” he said in a release, “and don’t let the door hit you on the way out.”

With the potential for the utility to soon be out of the picture, Kaminsky said, the pending sale was an opportunity to “get some wins for the ratepayers who have been mistreated.”

It is now incumbent on the Public Service Commission, Kaminsky added, to approve the deal and require whatever company that wants to take over the utility’s holdings on the Island demonstrate “that they actually will care about the consumers they serve, and have a plan to undo some of the damage American Water caused.”

In addition to the issue of brown water, as well as rate hikes that began to take effect in 2017, intended to discourage excessive water use — and which reportedly hit customers in the Lynbrook district particularly hard — Valley Streamers have also had to contend with the presence of the utility’s infrastructure in the area.

Early this year, neighbours of its Starfire Court water-treatment facility objected to the addition of a chemical shed on the site, which is in a Federal Emergency Management Agency flood plain. In mid-2018, there was an outcry over the appearance of New York American Water’s iron-removal plant on West Merrick Road — a main thoroughfare in the neighbourhood — which came online that summer. New York American Water officials promised to build a metal shed around the facility’s grey metal tanks, and to plant Leyland cypresses and Japanese zelkova trees around the site to address complaints.

According to Lee Mueller, New York American Water’s external affairs manager, the project will not be affected by the sale. The iron-removal plant is currently operational, she said, and the enclosure is scheduled for completion by May.

Overwhelmingly, however, for some Valley Stream residents, the main issue has been brown water, which in the past, officials said was due to high concentrations of iron in mains and pipes. Jim Lavery, who lives in Millbrook, said that brown or rusty water has been a problem for the 25 years he has lived in the neighbourhood. He regrouts his bathtub every year, and he said that many of his neighbours have discoloured water as well. “Most of us drink bottled or filtered water,” he said.

Anthony Natoli, who lives in south Valley Stream, said he had one request for whatever firm might take American Water’s place: “That our white clothes do not become brown anymore.”

His was a sentiment repeated in response to a Herald social media request for comment. “No more yellow water or stained laundry, please,” Rosalie Giasullo Rau wrote.

“I hope I won’t have brown water anymore,” Jeannine Bold-Maloney posted, “but that should be an expectation not a hope.”

Long Island Clean Air Water and Soil, a Merrick-based advocacy group, urged the Public Service Commission in an emailed newsletter to authorise a public takeover “instead of approving a private sale” to remove the profit incentive.

David Denenberg, a co-director of LI CAWS, argued that when NYAW acquired the Merrick and Sea Cliff districts from Aqua Water in 2012, it cost $71 million (S$96.6 million). Since the districts account for 40% of the company’s New York operation, he said, it would suggest the total valuation of the company would only be worth about $180 million now. “The sale is more than a 300% increase,” Denenberg said. “We will pay for that, and the PSC needs to answer to that.”

Co-Director Claurdia Borecky said that LI CAWS was planning news conferences, rallies and meetings — “an entire revolution” — to unite ratepayers in the Merrick, Lynbrook and Sea Cliff water districts in opposition to the sale.

“We are not going to let this happen,” she said. “We are going to push our state representatives to oppose any kind of sale, and use these proceedings to condemn New York American and move forward with a public acquisition.”