Townships decry pipeline sale plan

Suburban leaders fight proposed 36% water rate hike

Thursday, July 24, 2008
BY RYAN TRACY

HAMILTON -- One day after accusing the city of improperly siphoning off surplus from
the Trenton Water Works utility to balance its annual budget, officials from four suburban
townships took aim last night at Trenton's plan to sell the utility's suburban pipelines.

Leaders from Hamilton, Ewing, Lawrence and Hopewell townships are fighting a
proposed 36 percent water rate hike for suburban Trenton Water customers. The
increase could come if the state Board of Public Utilities allows the city to sell the
suburban assets of Trenton Water to Cherry Hill-based New Jersey American Water Co.
for $100 million.

Trenton claims it must sell the infrastructure in order to avoid a 40 percent rate increase
needed to cover current debts and fund future capital projects in excess of $80 million.

But at a public hearing on the rate increase in Hamilton last night, the suburban leaders
once again denounced the plan. The nearly 100 residents and public officials in
attendance often met their comments with applause.

"The track record of New Jersey American is that wherever they go, the rates skyrocket,"
said Ewing Mayor Jack Ball.

"We are untied on this," said Hopewell Township Mayor Vanessa Sandom. "We all
oppose this sale."

While the towns blasted Trenton for transferring $9.2 million from the water utility to the
city budget over the last two years, they also argued the sale would entail excessive
costs.

An attorney representing New Jersey American told the crowd that the company offered
more efficient service and could reduce rate increases by spreading its costs statewide.

But joining the New Jersey American system would also saddle Trenton Water Works
customers with a share of the $100 million purchase price as well as at least $20 million
in other capital improvements necessary as part of the sale, according to testimony
submitted to the BPU on the case.

"The city has the best of both worlds," Ball said. "They collected the money from us, they
applied a good portion of the money to their municipal budget, now they're going to sell it
and are going to get even more benefits. We're left holding the bag."

City business administrator Jane Feigenbaum has defended the transfers as legal,
despite charges from Lawrence Township manager Richard Krawczun that the city was
only authorized to transfer $2.7 million of the surplus over two years under state law.
Krawczun and others questioned why the city would tap the water utility budget when it
was aware of the need for investment in the water system.

Hamilton mayor's aide Dominic DeGregory, reading comments from Mayor John
Bencivengo, joined others in taking issue with Trenton's projection of a 40 percent rate
increase.

If transfers to the city's general budget and other "questionable factors are not included
in the calculations, it has been suggested that no more than a 21 percent rate increase
would be needed," DeGregory said, referring to testimony submitted to BPU by the state
Department of the Public Advocate.

He also noted New Jersey American's expressed intention to achieve one statewide
rate, a move the Public Advocate's testimony claims could eventually add 114 percent to
current Trenton Water Works bills.

Sandom added that the ratepayers acknowledged capital improvements were

necessary, but called the $100 million sale price a "windfall" for Trenton, given that the
city did not pay for a large part of the suburban infrastructure.

The value of infrastructure built by land developers in the four townships and turned over
to Trenton Water stands at just over $40 million, according the Public Advocate
testimony.

And since those developers already passed on the cost of the water pipelines to home
and business owners who use the buildings, representatives from the four townships
argued that the ratepayers will be paying twice.

The Trenton Water Works assets to be sold include 462 miles of water mains, two
pumping stations and five water towers, according to the city. The utility serves all of
Ewing and parts of Hamilton, Lawrence and Hopewell.