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Another big selling point? The replacement of lead-lined drinking water pipes.

In 2021, Gov. Phil Murphy signed a package of bills that will drastically change how New Jersey deals with the threat of lead poisoning, which can be especially dangerous for kids, pregnant women and other vulnerable populations.

Hundreds of community water systems in New Jersey are now required to replace their lead service lines within the next decade. The pipes – which connect local homes and businesses to the local water supply – can potentially leach contamination as water passes through them. A portion of the pipes may be privately owned, complicating efforts to replace them.

It’s a huge effort that many environmental advocates cheered for – but which will also cost a pretty penny.

According to the proposed ordinance in South Orange, the company would assume lead service line replacement for the village, taking a costly burden off its financial to-do list.

WATER BILLS

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How would the sale impact local residents’ water bills? The short answer: they’ll go up – eventually.

The proposed agreement would include five years of “rate stabilization,” although it doesn’t make any assurances beyond that time frame. There would be no rate increase for the first two years after the sale. Water bills would go up 3 percent in the third, fourth and fifth years.

However, if South Orange residents vote against the referendum, their water bill will likely end up increasing anyway, according to the ordinance:

“If a majority of the legal votes cast in the village are ‘NO,’ [South Orange] will retain the system and will immediately begin a process to increase rates to the extent required to address the need for additional capital improvements, lead line replacement program and maintenance activities.”

The ordinance notes that the village council authorized the release of a request for bids regarding the sale in March. South Orange eventually got two bids: NJAW’s offer of $19.7 million and another bid from Veolia, Inc. in the amount of $12.5 million.

OTHER OPTIONS

At the July 8 village council meeting, Mayor Sheena Collum said that South Orange administrators have been gathering information and studying the issue for years – and the ordinance currently on the table is “just a starting point.”

At some point soon, however, the village will have to decide what to do about its drinking water infrastructure. There are three other possibilities besides a sale to NJAW, Collum said:

More data on these possibilities will be shared with the community if the ordinance passes a second reading, the mayor said.

Collum acknowledged there are concerns that come with privatization, but pointed out that NJAW is a private company that is publicly regulated by New Jersey. The village previously had issues with the East Orange Water Commission, she pointed out – and they are a public entity.

“There is going to be up and downsides with whoever we go with,” Collum said.

The money received from the sale would first go to retiring debt associated with South Orange’s water utility – which currently stands between $16 million to $16.5 million. Any remaining funds would have to be applied to retiring municipal debt, Collum stated.

If a ballot referendum eventually passes, it wouldn’t bind the village to an agreement with NJAW – only clear the way for a potential deal, she said.

The issue of privatizing the village’s water system is likely to be yet another hot-button topic for voters in a year that is already seeing a controversial presidential election. And local officials are expecting a “very high-turnout” when November swings around, Collum added.

CONCERNS

Sam DiFalco, an organizer with advocacy nonprofit Food & Water Watch, spoke to the village council at last week’s meeting, saying that the group has several concerns about the proposal currently on the table.

“We believe that water is a human right, and, along with that, is access to affordable, safe drinking water,” DiFalco said.

One concern? The company will jack up its rates for households in South Orange.

According to DiFalco, a typical South Orange household pays an average of $720 per year right now. That bill could potentially rise to about $1,000 per year, she said.

“Often, communities have been promised rate freezes and they don’t materialize,” DiFalco added.

DiFalco encouraged village administrators to look into the possibility of getting federal or state grants to make improvements to its water system, or putting out municipal bonds, which is “considerably cheaper than reliance on privatization.”

“We’d like to encourage the village council to hit pause on this and spend some more time thinking about it,” she said.

WATER IN SOUTH ORANGE: THE BASICS

The South Orange Village Water Utility consists of more than 70 plus miles of main that deliver about 2.5 million gallons of water per day to South Orange. The system contains three water storage tanks/zones; the South Orange Avenue Main Reservoir, the Crest Drive Storage Tank, and the Brentwood Watersphere, which hold a combined total of 3.7 million gallons.

According to the municipal website:

“The village’s water supply is purchased from New Jersey American Water who also supplies Maplewood and West Orange. The vast majority of water delivered by New Jersey American Water is treated at their new, state-of-the-art Canoe Brook Water Treatment Plant in Millburn. The village also maintains emergency water supply interconnections with New Jersey American Water at Luddington Road and the East Orange Water Commission at South Orange Avenue Reservoir.”

American Water Operations and Maintenance Inc., a sister company of New Jersey American Water, took over day-to-day operations, maintenance, customer service, billing and collections responsibility for the village water system in 2017.

NEW JERSEY AMERICAN WATER: RECENT DEALS, SALES

South Orange isn’t the only New Jersey municipality that NJAW has been trying to make a deal with over the past few years.

The company acquired the 2,800-customer Bound Brook sewer system in 2022, the 2,900-customer Long Hill Township sewer system in 2020, and the 1,800-customer Mount Ephraim sewer system in 2019.

New Jersey American Water wants to purchase control of wastewater-collection services in Gloucester Township for $143 million, an offer which municipal officials have tentatively accepted, but which will require voter approval. The town’s mayor, David Mayer, is New Jersey American Water’s director of government affairs. See Related: Residents Blast Proposed Sale Of Gloucester Township’s Sewer Utility

Other recent talks include:

MANVILLE

In March 2023, the company announced that it signed an agreement to acquire the wastewater collection system of the Borough of Manville for $6.5 million.

The municipally owned system serves about 3,700 customers, most of whom already received water service from New Jersey American Water at the time of the sale. The agreement followed a voter referendum that took place in November 2023. More than 80 percent of the voters approved the sale.

The company agreed to invest a minimum of $10 million in sewer system improvements over the 10 years following completion of the acquisition.

EGG HARBOR CITY

In June 2023, the company announced it completed its acquisition of the water and wastewater systems of Egg Harbor City for $21.8 million. The sale of these systems was estimated to serve about 3,000 customer connections.

The deal with Egg Harbor City was the first in the state to be completed through the Water Infrastructure Protection Act of 2015, which permits the sale or lease of municipally owned water or wastewater systems under certain conditions.

Under the agreement, New Jersey American Water agreed to invest $14 million in the first 10 years to make needed upgrades to the city’s water and wastewater systems, including $9 million in the first five years, while “keeping rates stable for customers.”

SOMERVILLE

In October 2023, the company announced that it completed its acquisition of the wastewater collection system of the Borough of Somerville for $7 million

The municipally owned system serves about 3,800 customers, most of whom already were already receiving service from New Jersey American Water. The agreement to purchase the system was approved in a voter referendum in November 2022, which passed with 75 percent of the voters approving the sale. As part of the agreement, NJAW committed to invest a minimum of $9.5 million in sewer system improvements over the next 10 years.

SALEM

In June, the company announced that it completed its acquisition of the water and wastewater systems of the City of Salem for $18 million. The systems serve more than 2,300 water and 2,300 wastewater customers.

The deal followed a voter referendum that took place in November 2023, which passed with more than 60 percent of voters approving the sale. As part of the agreement, New Jersey American Water agreed to invest more than $50 million in improvements over the first 10 years.

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