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Suez, borough must seek common ground: Editorial

Posted 10/16/19

We are not lawyers, but it would be increasingly helpful if we were as we continue to sort out the ever-strained relationship between the Middletown Water Joint Venture and the borough of …

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Suez, borough must seek common ground: Editorial

Posted

We are not lawyers, but it would be increasingly helpful if we were as we continue to sort out the ever-strained relationship between the Middletown Water Joint Venture and the borough of Middletown.

Suez, Water Capital Partners and private equity investors comprise the Middletown Water Joint Venture. That’s the entity with which council and the former borough authority approved entering into a 50-year lease of the borough’s water and sewer systems in 2014.

Fifty years is a long time. There seemingly has already been enough legal wrangling and distrust to last through most of those decades.

But unfortunately, we are only about five years in. If both sides don’t continue to work toward a more amicable relationship, 50 years might seem like 500.

The current borough council doesn’t like the lease. It’s worth noting that not one current member was on the council when the agreement was signed. The current members especially don’t like the 11.5 percent surcharge that Suez imposed on water and sewer bills in April 2018, to recoup what Suez says is a water sales shortfall that occurred in the Middletown system in the first three years of the lease.

So the borough took legal action — and flat-out lost. In March, a federal judge rejected a lawsuit the borough had filed seeking to get rid of the 11.5 percent surcharge. A July 10 decision handed down by a binding arbitration panel said that Suez is entitled to recoup the cost of major capital improvements by adding a capital cost recovery charge to the bills of Middletown water and sewer ratepayers.

That July decision came to a head recently. Council at the end of its Sept. 17 meeting voted 6-0 to reject a 5-year plan for capital improvements to the borough’s water and sewer systems proposed by Suez.

That led to a guest column in the Press & Journal in which Don Correll, president of the Middletown Water Joint Venture, said that infrastructure upkeep is absolutely necessary or else “further delaying capital improvements endanger the environment as well as the health and safety of Middletown residents.”

Correll also stated: [D]espite clear defeats in federal court and a binding arbitration process, the council continues to oppose reasonable efforts made by the MWJV to invest in the borough’s crucial systems.” In other words, don’t try us in court again, because we will win again.

The capital improvement plan put forth called for Suez spending close to $17 million from 2019 to 2023, mostly for annual replacement of water and sewer lines but also to rehabilitate and recoat all three above-ground water storage tanks.

For every $1 million Suez spends on capital improvements, water and sewer bills for Middletown residents would go up by 1 percent to 1.25 percent.

Council said the costs were too high, and it questioned what it thought was a lack of specifics, including where in Middletown water lines are to be replaced.

Middletown Water Joint Venture acknowledged that the capital improvements surcharge and an annual rate increase would be on top of the 11.5 percent water sales shortfall surcharge.

For 2019 through 2033, the annual increase is 2.5 percent plus the rate of inflation. For 2034 through the end of the lease, the yearly increase is 2 percent plus the annual index for inflation.

Yes, it adds up. Some residents complained at the Sept. 17 meeting about their monthly bills.

But we also know this: If you don’t maintain your car, it’s bound to stop running. Our town’s water and sewer system needs to be maintained.

Suez and the Middletown Water Joint Venture are stating their case in full-page ads in the Press & Journal. The borough council and Mayor James H. Curry III continue their fight to stop what they believe are skyrocketing costs for residents and businesses. The Middletown Water Joint Venture disputes that costs are out of line, saying that bills are in line with national averages.

No one wants to pay higher water and sewer bills. But we also don’t want to have a major line break and leave us without those vital services.

Both sides need to keep working to build trust, find common ground and compromise on capital improvements. There are about 45 more years left in this lease — without protracted legal actions by the borough to get out of it, that is. Both sides need to be in this for the long haul.