Thursday, 01 August 2013 00:00
Since 1992, the Manhasset-Lakeville Water District (MLWD) has been the sole source of water used and consumed by all residents and businesses in the Village of Plandome. The Village purchased water from MLWD under a 20-year contract that expired at end of 2011, and now purchases water from MLWD under a three-year contract that commenced in January 2012. The Village has been investigating alternate options for its water supply, but at this time remains a fully captive customer of MLWD.
MLWD recently notified the Village that it is raising its rate for water supplied to the Village of Plandome from $4.20/1,000 gallons to $4.84/1,000 gallons, an increase of more than 15 percent. MLWD further indicated that it is making that increase retroactively effective, back to January 1, 2013.
At the outset of the current contract, MLWD’s rate was $3.85. MLWD raised that rate by 9 percent, to $4.20, effective January 2012. With the latest increase, from $4.20 to $4.84, MLWD has now increased its rate for water it supplies to the Village by nearly 26 percent since January 2012, a staggering increase by any measure. “It is fair to question whether MLWD is exploiting the Village’s captive status to impose such large back-to-back rate increases over such a short period of time,” stated M. Lloyd Williams, the Village’s Mayor.
The sheer magnitude of MLWD rate increases is exacerbated by the fact that MLWD merely provides wholesale service to the Village and yet improperly insists on charging the Village as if MLWD were providing the Village full retail service. MLWD’s unjustified approach results in charging the Village a water rate that is excessive and that does not bear any rational relationship to the actual costs that MLWD incurs in supplying the Village with bulk water. As Mayor Williams said, “The latest rate increase only adds insult to injury.”
In particular, because it only supplies bulk water to the Village, MLWD does not provide the Village any of the retail-related services that MLWD provides to its in-district residents, such as operating and maintaining fire hydrants, and performing all invoicing-related functions. The Village incurs those types of retail-related expenses as a result of owning, operating and maintaining – and being solely responsible for – a separate water distribution system that is physically located within the Village.
As Mayor Williams explained, MLWD “solely provides wholesale service to the Village, but improperly charges the Village as if it receives full retail service from MLWD.” Judy Bode, who serves on the Village’s Board of Trustees, added that “MLWD’s unjustified position essentially forces Village residents to pay twice for retail expenses, once for MLWD’s retail-related expenses that are not incurred to serve Village residents, and again for the Village’s retail-related expenses that are incurred to serve Village residents.”
Mayor Williams and Trustee Bode further noted that, apart from the mistreatment of the Village as a full-service retail customer, MLWD applies an unjustified 5 percent inflation adder and appears to be using questionable math in calculating its cost of service and deriving the rate charged to the Village. They said that MLWD is engaging in double-counting of certain expenses and other improper accounting practices.
The Village brought a lawsuit in state court against MLWD last year to attempt to secure a court order requiring MLWD to correct its improper approach. The lawsuit remains pending at this time, with all briefing completed and the parties now awaiting the court’s ruling. The Village has also reached out for assistance on this matter from the separate Comptroller offices of New York State and the Town of North Hempstead.
Finally, the Village has notified MLWD that, until the Village obtains a better understanding of MLWD’s latest rate increase, the Village will pay the amount of that increase into an escrow account.
Plandome Village Clerk