LAWRENCE: Judge rules against petition seeking to block Water Works sale

By Lea Kahn, Staff Writer
Mercer County state Superior Court Judge Linda Feinberg tossed aside a petition by Trenton residents that sought to void the sale of the Trenton Water Works’ suburban water lines to the New Jersey American Water Company on Monday.
    Citing state law, the petitioners called for a ballot vote on the sale of the water lines. But Judge Feinberg ruled that the law does not permit a referendum on municipal utility sales that affect less than 5 percent of a municipality’s residents.
    Judge Feinberg’s ruling paves the way for the sale of the outside water utility system to NJAWC. The city has agreed to sell the suburban water lines to the company for $80 million, pending approval by the state Board of Public Utilities.
    While the petition really was an issue for city residents, Municipal Manager Richard Krawczun said, the petition process highlighted the fact that suburban water customers have “no direct way to participate or influence” the setting of water rates because they do not have representation on the Trenton City Council.
    The Trenton City Council sets the rates for Trenton Water Works customers — inside the city limits, as well as those portions of Ewing, Lawrence, Hopewell and Hamilton townships that are served by the city utility. The Trenton Water Works serves about 5,000 customers in Lawrence.
    “(The judge’s ruling) highlighted the flaw in the process that the townships had no ability to elect the officials who set the rates,” Mr. Krawczun said. “Now, the process will go back to the BPU (which governs rate setting for NJAWC).”
    The Trenton City Council sets rate hikes for the Trenton Water Works customers without oversight by the BPU, because the rates for the city water lines and the suburban water lines have been equalized.
    The four affected townships challenged the Trenton City Council’s decision to hike water rates by 40 percent last year, alleging that the city transferred money from the dedicated funds of the Trenton Water Works to the City of Trenton’s operating budget. The city transferred $7.2 million from the water utility accounts to its own budget between 2004 and 2007.
    The agreement of sale to NJAWC calls for the 40 percent rate hike enacted by the Trenton City Council to be rolled back to 30 percent when NJAWC takes over. Suburban customers would pay $32.70 per 7,000 gallons of water, as compared to $35.21 per 7,000 gallons under the water rate hike approved by the Trenton City Council.
    Over time, the rates will be adjusted to a point where they would be equalized with the statewide rate charged by NJAWC. The water company files for a rate increase about every two years, Mr. Krawczun said.
    In the meantime, the sale of the outside water utility system is pending before the BPU. The deal must be reviewed by an Office of Administrative Law judge and then sent to the BPU for final approval.