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New Jersey American Water Granted New Rates by NJ Board of Public Utilities

The New Jersey Board of Public Utilities (BPU) today approved new water and wastewater rates for New Jersey American Water, effective immediately. The new rates recognize the more than $300 million the company has spent over the past two years to replace and upgrade its complex web of nearly 9,000 miles of water and sewer mains in order to continue providing customers with uninterrupted access to high-quality, reliable water service. While the new rates represent a $30 million increase in revenues for the company, the cost of tap water for customers remains less than a penny a gallon.

“We are certainly aware and sensitive to the difficulties the current economic situation that many of our customers face, and we are mindful of that as we strive to ensure that the communities we serve never experience the potentially disastrous results of a failing water system,” said David K. Baker, president of New Jersey American Water. “We are committed to maintaining that balance for our customers. Keeping our rates less than a penny a gallon means that water remains quite a value, and is one of the lowest utility bills for homeowners.

“For more than a century we have provided quality, reliable water service and fire protection in New Jersey. When we put in the water mains for Thomas Edison’s West Orange laboratory in 1904, the cast iron main cost about 45 cents a foot. That same operation today costs hundreds of dollars a foot.”

Water system improvements that will be completed by the company and recovered in the new rates include:

  • Construction of a new state-of-the art water treatment plant in Short Hills that will replace an 1920s-era treatment plant and meet new federal water quality requirements
  • Replacement, cleaning and lining of many miles of pipelines
  • Rehabilitation of water storage tanks to enhance service reliability
  • Installation of three solar projects that produce about two megawatts of electricity, enough to power about 325 average homes. These projects reduce the company’s reliance on traditional power sources, lower energy costs, and eliminate more than 1,600 metric tons of carbon dioxide.

“Our capital expenditures have not only improved the reliability and quality of our water service to customers, but have also contributed to approximately 2,000 direct and indirect jobs statewide,” said Baker.

The company has also been making significant progress to reduce its operating expenses. “We have instituted several initiatives to drive down the costs of providing our customers with water service,” said Baker. “We’ve reduced our operating expenses by nearly $10 million over the last couple of years.”

Another aspect of the BPU decision was the recognition of declining water consumption, which was reflected in the revenue allowances. “Our customers are using less water than they have in the past, however the infrastructure required to bring water to homes, businesses and fire hydrants still needs to be properly maintained,” said Baker. “This decline in demand is a result of many factors, which include the wider adoption of more efficient washing appliances, low-flow toilets, and personal conservation. More and more, customers recognize that the water they use is a critical, but limited resource.”

Since filing for the rate increase in July 2011, New Jersey American Water's request underwent extensive public and regulatory scrutiny. The ratemaking process required a lengthy and detailed review by the staff of the BPU, the New Jersey Division of Rate Counsel, the Office of Administrative Law, and more than a dozen interested groups, who the state of New Jersey granted full intervener status in the proceedings. The process also included several public hearings for customer input before an Administrative Law Judge.

The new rates granted by NJBPU continue to provide help for customers who have been particularly hard hit by the current economic environment. In addition to providing customers with financial assistance through the company’s low-income programs, eligible customers are able to receive a comprehensive telephone audit of their water use; free water-saving retrofit kits; as well as plumbing assistance to install water-efficient devices. “For those families who are struggling to pay their bills, we want them to know that assistance is available through our H2O Help to Others Program™,” said Baker. The program offers grants of up to $500 and a discount on the monthly service charge, and is administered by New Jersey SHARES (1-877-652-9426 or 1-877-NJAWH2O).

New Jersey American Water, a wholly owned subsidiary of American Water (NYSE: AWK) is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 2.5 million people. Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 15 million people in more than 30 states, as well as parts of Canada. More information can be found by visiting


New Jersey American Water
Peter A. Eschbach, 856-782-2316
Richard Barnes, 856-782-2371

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