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Federal judge denies Middletown request for preliminary injunction to block surcharge on water and sewer bills

By Dan Miller, danmiller@pressandjournal.com
Posted 7/20/18

An 11.5 percent surcharge added to the bills of Middletown water and sewer customers in April by Suez will remain in effect, until a broader dispute between the borough and Suez regarding a water …

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Federal judge denies Middletown request for preliminary injunction to block surcharge on water and sewer bills

Posted

An 11.5 percent surcharge added to the bills of Middletown water and sewer customers in April by Suez will remain in effect, until a broader dispute between the borough and Suez regarding a water sales shortfall can be resolved.

On Thursday July 19 Chief Judge Christopher C. Conner of the U.S. Middle District Court issued an order denying the borough’s request for a preliminary injunction which would have blocked further imposition of the surcharge, pending resolution of the dispute.

"We'd like to put this behind us and begin working with the borough and the administration to move forward," Suez spokesman Rich Henning said reacting to Conner's decision. "There is a lot of work to be done. These are (water and sewer) systems that need investment and improvement to better serve the residents in the borough."

The borough in April took Suez, which is part of Middletown Water Joint Venture LLC, to court to try and block the 11.5 percent surcharge, which is based on Suez seeking to recoup revenue lost from a shortfall in water sales from Jan. 1 2015 through the end of 2017.

Suez operates the borough’s water and sewer systems under a 50-year lease between the borough and the joint venture which was approved by borough council and the former borough authority in September 2014. The lease went into effect on Jan. 1, 2015.

The borough in the lawsuit contends that language in the contract between the joint venture and the borough regarding what constitutes a water sales shortfall must be changed, as the language is unfair to the borough and amounts to what the borough contends is a financial windfall for the joint venture at the expense of Middletown water and sewer customers.

The borough and the joint venture are also involved in a separate arbitration proceeding over the borough alleging that defective water meters contributed to the water sales shortfall.

The preliminary injunction request, now denied by Conner, would have also stayed imposition of the 11.5 percent surcharge pending the outcome of the arbitration proceeding, according to court documents.

Borough council President Damon Suglia did not immediately respond to a request for comment regarding Conner’s decision to deny the borough’s request for a preliminary injunction.