By Lea Kahn, Staff Writer
Township Council gave its stamp of approval to the proposed sale of the Trenton Water Works’ suburban water lines which affects about 5,000 households in southern Lawrence Township to the New Jersey American Water Co. for $75 million Tuesday night.
Township Council approved the stipulation of settlement with Councilman Greg Puliti abstaining from the vote because he was sworn into office last week and did not take part in the discussions.
The sale of the suburban water lines affects portions of Ewing, Hamilton, Hopewell and Lawrence townships. The Hopewell Township Committee signed off on the deal last week, and the Trenton City Council also reportedly approved the sale of the water lines to NJAWC Tuesday night.
Once Ewing and Hamilton townships formally approve the settlement, it will be sent to an Office of Administrative Law judge and then to the state Board of Public Utilities for final approval.
The City of Trenton had reached an agreement to sell the suburban water lines to NJAWC for $100 million last year, but the four townships challenged the sale and took the issue to the BPU. The state Division of Rate Counsel in the Public Advocate’s Office placed the value at $54 million.
After several months of wrangling, Trenton officials and the four townships negotiated a settlement that calls for the suburban water lines to be sold to NJAWC for $75 million, according to Municipal Manager Richard Krawczun.
The water company also will pay $5 million to Trenton in consideration for advisory and consulting services after the transfer of ownership, Mr. Krawczun said. He speculated that because Trenton has “first-hand knowledge” of the suburban water lines, its employees would help NJAWC.
The sale price will be borne by NJAWC’s 600,000 customers statewide, he said. It will not be charged exclusively to the water company’s newly acquired customers in the four townships.
The deal also calls for NJAWC to buy water from the Trenton Water Works for the next 20 years, Mr. Krawczun said. NJAWC is obligated to pay Trenton for 14 million gallons of water per day for the first three years. After that point, NJAWC will pay Trenton based on the amount of water that it actually uses, he said.
It is impossible to meter the amount of water used by the four townships at this time, Mr. Krawczun said. The NJAWC will replace the 77 connection points between the city and the townships with 13 connections, and meters will be installed at the new connections, he said.
”The other advantage of the sale is that it will allow NJAWC to create interconnections within its network of various other water systems (statewide),” he said. “In the event of an extreme weather system or a matter of security, water can be transferred from one system to another, which is a significant matter of importance to homeland security.”
Another benefit of the sale is that the 40 percent rate hike enacted by the Trenton City Council in September 2007 would be partially rolled back, Mr. Krawczun said. The city’s rate hike would be rolled back by 25 percent, so the actual rate increase would be 30 percent, he said.
Affected customers in the four townships would pay $32.70 per 7,000 gallons of water when NJAWC assumes control of the suburban water lines, as compared to the rate of $35.21 per 7,000 gallons of water under the water rate hike ordinance approved by the Trenton City Council.
”Going forward, the rates will be adjusted to a point where they are equalized with the statewide rate charged by the NJAWC,” Mr. Krawczun said, adding that the water company files for a rate increase about every two years. He noted that the NJAWC rate hikes are regulated by the BPU, unlike the Trenton Water Works rate hikes.
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 40-percent rate hike, 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.
Mr. Krawczun pointed out that the rates for fire hydrant water service would be rolled back to the rate charged prior to Oct. 1, 2008, when the city’s 40 percent rate hike took effect. The rate for the fire hydrants would be frozen for five years, saving Lawrence Township about $500,000, he said.
The manager said the new owner of the suburban water lines would be more responsive to customers’ needs than the Trenton Water Works. When township officials reported four water leaks to the Trenton Water Works and asked for repairs, they were told that the city would have to hire crews to do the work, he said.
In the meantime, the water leaks created hazardous conditions, Mr. Krawczun said. The township’s Department of Public Works had to cut away the ice with a road grader, and also had to put down salt on the roads so they would be passable, he said.
”This is another benefit of going with NJAWC the dependability of the service and the responsiveness in emergencies will improve,” he said. “I am satisfied that this will put Lawrence residents who are customers of the Trenton Water Works in an improved position for service, reliability and improved economies of operation.”
”And finally, Lawrence Township residents will no longer be subsidizing the budget of the City of Trenton by being overcharged by the Trenton Water Works utility,” Mr. Krawczun said.
