With Stroke of Pen, Christie Makes It Easy Sell off Water, Wastewater Facilities

Proponents argue new law will make it possible to upgrade aging infrastructure, but opponent argue it means higher prices for H2O

Without comment, Gov. Chris Christie yesterday signed a bill that would allow financially strapped municipalities to more rapidly sell off, lease, or transfer government-owned water-supply facilities and wastewater treatment plants to the private sector.

The legislation (A-3628), dubbed the Water Infrastructure Protection Act, is viewed by proponents as helping address a long neglected problem in the state — the lack of financial resources for towns to fix and upgrade aging facilities to meet tougher environmental mandates.

That problem has intensified after extreme storms like Sandy caused widespread damage to water-supply systems and sewer treatment plants, burdening communities with huge new costs they had not anticipated or budgeted for.

Even without such events, New Jersey faces staggering costs to upgrade aging water infrastructure. Various studies have projected the state needs to spend upward of $40 billion to upgrade a water infrastructure that is in some cases more than a century old.

But critics argued the bill enacted yesterday would allow private companies to buy up at a cheap price facilities and infrastructure that customers have spent billions of dollars building — and then billing customers at higher rates.

“It’s great for shareholders of investor-owned utilities, not so great for their customers,’’ said Peggy Gallos, executive director of the Association of Environmental Authorities, a trade group representing water and wastewater facilities.

“Going forward, I hope people in towns with aging water systems understand that, if elected officials choose to sell, they are probably choosing the most expensive option,’’ Gallos said.

Advocates of the bill disagreed, saying the challenges of maintaining and replacing aging water infrastructure can escalate beyond the technical and financial means of government entities and taxpayers.

“Prior law made it nearly impossible to let those with sufficient resources and knowhow to take over these systems and effectively address emergent conditions,’’ said Sen. Joseph Kyrillos (R-Monmouth), a sponsor of the bill.

Richard Barnes, external affairs manager for New Jersey American Water, the state’s largest water company, agreed. “The law will allow municipalities to address their water and wastewater infrastructure needs by offering communities more flexibility to upgrade their systems,’’ he said.

But many others, including the state Division of Rate Counsel, New Jersey League of Municipalities, New Jersey Business & Industry Association, opposed the bill.

Division of Rate Counsel Director Stefanie Brand argued in testimony before one legislative committee the bill would strip away the Board of Public Utilities’ authority to decide how much of the purchase price should be passed on to customers.

Jeff Tittel, director of the New Jersey Sierra Club, noted customers of these systems already have invested billions of dollars in building water and wastewater facilities.

“We’re giving it away at a very cheap price and the bill for ratepayers will rise for the cost of taking over these water systems,’’ he said. Tittel said the new law basically deregulates water-supply systems.

Opponents of the bill also argued the public would be shut out of having a say on any proposed deal unless 15 percent of voters sign a petition to put the matter up to a referendum in the community.