Advocates for Safe, Clean, Affordable Water Oppose System to Raise Water Rates by Bypassing Standard Regulatory Review

In a move to protect New Jersey consumers from skyrocketing drinking and wastewater bills, Food & Water Watch and thirteen other organizations today urged the New Jersey Board of Public Utilities (BPU) to implement a 60 day public comment period and hold public hearings on a proposed system that would allow private water utility companies to raise rates without public review. Commonly referred to as a Distribution System Improvement Charge (DSIC), the scheme would let private water providers bypass standard consumer protections, thereby boosting profits and reducing public input and oversight of these shared resources.

"As investor-owned utilities face mounting scrutiny for shady billing practices and shoddy service, some are resorting to more desperate and obscure strategies to circumvent public oversight," said Jim Walsh, Eastern Region Director for Food & Water Watch. "While everyone depends on safe, clean, affordable water, infrastructure surcharges are merely money-making schemes for private water companies and their Wall Street cronies. Such a scheme would be bad for New Jersey and its essential infrastructure resources."

The New Jersey BPU voted to move forward with the proposed infrastructure surcharge on November 9, and on Monday December 5, the proposal is expected to be published in the state register.

"Less regulatory oversight for private, for-profit water companies is a bad idea for both workers and consumers," stated Noel Christmas, president of the New Jersey Council of Utility Workers. "Utility workers support investment in New Jersey's critical water infrastructure, but handing profit-driven corporations like American Water a free rein with consumers' pocketbooks is reckless and unnecessary."

If approved, drinking and wastewater utilities could automatically increase customer water bills by as much as 5 percent without filing for a standard rate case or holding public hearings. According to Food & Water Watch, DSICs allow investor owned utilities to more quickly make a return on certain infrastructure projects and ensure profits for investors, while evading full public and regulatory scrutiny of their financial practices, placing an unjustified financial burden on consumers.

"We believe this is a rip off of ratepayers and consumers. All this is a new form of corporate welfare being paid for by the rest of us. This will raise the rate base without public process or input. All this will do is enrich the private water companies at the expense of clean water and the environment. This will be used to subside sprawl and other developments that will actually threaten our drinking water," said Jeff Tittel, director, NJ Sierra Club.

In Pennsylvania, where DSICs have been used since 1997, infrastructure surcharges accounted for approximately 36 percent, or $80 million, of Aqua Pennsylvania's total increase in rates between 1997 and 2010. To date, eight states including Connecticut, Delaware, Illinois, Indiana, Missouri, New York, Ohio and Pennsylvania permit the use of infrastructure surcharges, and two states -California and New Hampshire-have pilot programs.

"Any rate increases for water rates should receive strong public scrutiny, and the DSIC flies in the face of this concept. This will end up increasing housing costs, and landlords will find a way to pass those increased costs on to tenants either through rent increases or sub-metering schemes. Tenants should not suffer these increased costs just to line the pockets of private water company CEOs," said Matt Shapiro, NJ Tenants Organization President.

Signatories to the letter submitted to the BPU include:

BlueWaveNJ; Communication Workers of America Local 1081, Food & Water Watch; Utility Workers Union of America, AFL-CIO; New Jersey Progressive Democratic Caucus; Newark Water Group; Progressive Democrats of New Jersey; New Jersey Turnpike Employees' Union Local 194; New Jersey Council of Utility Workers Union of America; New Jersey Sierra Club; NJ PEER; New Jersey State Industrial Union Council; New Jersey Tenants Organization.

For more information on distribution system improvement charges read Food & Water Watch's fact sheet, The Distribution System Improvement Charge: A Rip-Off For Consumers.