locally owned since 1854

Borough sues Suez over 11.5 percent hike, wants injunction to stop water and sewer bill increase

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 4/18/18

As assured to residents by borough council, Middletown has gone to Dauphin County Court to try and stop Suez from imposing an 11.5 percent surcharge on water and sewer bills.

On Monday, lawyers …

This item is available in full to subscribers.

Please log in to continue

Log in

Borough sues Suez over 11.5 percent hike, wants injunction to stop water and sewer bill increase

Posted

As assured to residents by borough council, Middletown has gone to Dauphin County Court to try and stop Suez from imposing an 11.5 percent surcharge on water and sewer bills.

On Monday, lawyers for the borough filed a complaint in county court requesting that a judge order an injunction blocking Suez from imposing the surcharge, pending the borough and Suez resolving a dispute over provisions in the 50-year lease of the water and sewer systems pertaining to a water sales shortfall.

New Jersey-based Suez is the operator of the water and sewer systems under the lease that borough council and the former borough water authority approved in 2014 with Middletown Water Joint Venture LLC. The joint venture is the defendant in the lawsuit just filed by the borough.

The joint venture says that the 11.5 percent surcharge is to be collected from borough water and sewer system customers to make up for water sales throughout the system falling below a threshold specified in the lease.

According to the joint venture, water sales fell below this target for the first three years of the lease, from Jan. 1, 2015, through Jan. 1, 2018, so for that reason the 11.5 percent surcharge is to be added to water and sewer bills for the next three years. Suez has told the Press & Journal that the surcharge is increasing the average bill by 20 cents per day, or by roughly $72 a year.

The borough in its lawsuit said it is disputing the joint venture’s “assessment” of the water sales shortfall leading to the 11.5 percent surcharge.

Suez spokeswoman Ghilianie Soto said it is Suez policy that the company does not comment on pending litigation.

The borough said it discovered while preparing for a mediation concerning the joint venture that the threshold used regarding the water sales shortfall was “wrong.”

“Rather than simply protecting the (joint venture) from an unexpected drop in retail water sales, it created a built-in shortfall immediately upon inception of the lease, with the result that water and sewer charges would begin to increase in 2018” even before the annual rate increases allowed under the lease could go into effect starting in 2019, according to the lawsuit filed on behalf of the borough by James J. Rodgers, an attorney with Dilworth Paxson LLP.

The borough in the lawsuit also questions the accuracy of the numbers the joint venture uses upon which the alleged water shortfall is based, due to problems with meters that are detailed in the complaint.

According to the lawsuit, the borough on or around June 2, 2016, raised “questions” about the “reliability” of the records used by the joint venture regarding water use, due to “several meters” not having been “promptly fixed” and other meters possibly having similar problems.

The problems include malfunctions in several large compound meters, the joint venture not having “diligently investigated” meter reports showing customers with “zero reported flow,” and several unmetered fire service lines to building sprinkler systems.

In addition, not all service lines to buildings are equipped with a back flow prevention device, which can lead to dials on a meter running backward in case of a water main break or high flow due to a fire hydrant being used, according to the borough’s complaint.

While the information provided by Suez indicates the 11.5 percent surcharge would cost the average water and sewer customer $72 a year, the borough in the lawsuit contends that the joint venture’s “proposed price increases will lead to the average consumer paying $240 more per year for their water service.”

“The median rent in Middletown is $809. Increases in water and sewer bills of the type sought by the (joint venture) could cause a significant increase in the monthly expenses of most Middletown residents,” the borough says in the lawsuit.

These rate increases could force some Middletown residents to “move out, and many will decide not to move to Middletown if it gains a reputation for unreasonably high water and sewer rates,” the borough says.

New businesses will be deterred from moving into the borough as a result, and existing businesses — especially those whose operations are water-dependent — could be “induced to move out,” among those businesses such as the Tattered Flag Brewery & Still Works and Univar, the borough contends in the lawsuit.

The borough in the lawsuit also objects to a “last minute inclusion” in the lease by the joint venture that resulted in an “unfair calculation” of the water shortfall amount, “because it does not take into account that some retail water customers are water-only customers, and thus it overstates ‘lost’ sewer revenue dollars, placing an unreasonable burden on the entire system.”