Water Rate Hike a Wash Out for Local Businesses

Water is the least expensive utility for most local business owners, but a rate increase set to take effect this fall is yet another sign of bleak economic times.

A new joint settlement announced in July between United Water Westchester, Inc. (UWWC), Rye, Rye Brook and Port Chester will likely increase customers' water bills by more than 6 percent starting in December. The four-year agreement would generate more than $4 million for United Water Westchester until 2014, increasing each customer's water bill by more than 5 percent each remaining year of the proposal.

The average customer who consumes about 22,400 gallons of water every three months will likely see a $3.70 a month increase in their bill the first year, according to Steven Goudsmith, a spokesperson for United Water. That figure will jump to $9.59 a month in the fourth year of the agreement.

Some business owners in Rye said that while the increases aren't necessarily exorbitant, they're another recession-induced hit to their bottom line.

Sammy Diedwards, manager at the family-owned Rye Country Boarding Kennels, said of the settlement, "It's not good. Everything keeps going up besides revenues. Our water bill has gone up a lot in the past 10 years."

"We use a lot of water here, but you just can't turn around and pass all your expenses onto your customers," Diedwards said.

The settlement was reached after UWWC proposed a 14.8 percent increase in water rates, but officials in Rye and Rye Brook said that number was unreasonable. The municipalities involved ultimately reached a compromise that will generate millions in additional revenue for the company over the next four years, while also stipulating the company fix inefficiencies in its system.

Rye City Manager Scott D. Pickup said that the increases are contingent upon United Water making "capital investments in their infrastructure."

"Almost 28 percent of the water in their system doesn't go through a meter to get billed," Pickup explained. "If they don't make their investment, it decreases the amount they can raise their rates."

The joint agreement stipulates that UWWC will spend $1.5 million during the first year of the agreement and $1.25 million each subsequent year on the Underground Infrastructure Renewal Project. The investment will include work on water mains, sub-meters, and pressure regulation as well as an additional $180,000 investment for valve replacements.

In May, U.S. Senator Robert Menendez (D-NJ) introduced legislation that would remove caps on state-held bonds for investment in water and sewage infrastructure. The Sustainable Water Infrastructure Reinvestment Act of 2010 (S.3262) was endorsed by United Water, which is owned by the Paris-based Suez Environnement. A similar bill was introduced in the House last year.

In November 2008, the New York State Department of Health released a study on the state's drinking water infrastructure. The report said that "the cconservative cost estimate of repairing, replacing, and updating New York's drinking water infrastructure is $38.7 billion over the next 20 years."

From 1996 to 2008, the Drinking Water State Revolving Fund, an effort by the state and federal governments, invested $2.4 billion in drinking water infrastructure, though "approximately 95 percent of the projects submitted for inclusion in the program remain unfunded due to a lack of available funds."

A public hearing was held in Albany this week after residents voiced their concerns about the rate increases during a public forum at Rye City Hall last Thursday. The New York State Public Service Commission will evaluate the proposal this fall before voting on the measure sometime in December, Goudsmith said.

"I know there's been a lot of discussion on it and we're waiting to see what happens," said John Ambrose, co-owner of the Pier Restaurant and Tiki Bar in Rye.

While he would not comment on the restaurant's finances, Ambrose said that the increase in water charges will have an effect "across the board, whether you're a business or a resident."

Jim Amico, owner of The Personal Touch of Rye Auto Spa, Inc. was optimistic that his business would weather the recession and easily absorb the extra expense.

He explained that said his business' water bill averages about $1,000 anually.

"It comes out to about $3 a week. It's not a lot of money," he said.

"The water bill is definitely the cheapest utility," Amico said. "It comes down to pennies. When you add it to everything else in the economy, we wouldn't raise our prices because of an increase in water prices."