Financial Bid
RATE PLAN
New Jersey American Water proposes to adopt the Borough’s 2022 rates for wastewater service upon close of the transaction and hold the Borough’s rates steady for two years. The company would then implement a three percent annual increase over the next three years, followed by a four percent annual increase in years six and seven, on rates associated with the wastewater collection system. Rates associated with wastewater treatment by the Somerset Raritan Valley Sewerage Authority will continue to be treated as a pass-through charge for customers and not subject to New Jersey American Water’s proposed rate schedule. Assuming Somerset Raritan Valley Sewerage Authority rates remain flat, New Jersey American Water’s proposed rate schedule would result in an approximately one percent annual increase on a Somerville resident’s total wastewater bill over the seven-year period.
It is our intention to propose and implement the long-term rate plan as outlined. As a regulated utility, New Jersey American Water rates are ultimately approved and set by NJBPU. After the first seven years, the Borough’s rates would adjust on the same timeline and frequency as all future New Jersey American Water general rate cases, which have historically occurred every two to three years. Future years would include gradual, manageable increases due to our ability to spread costs across our customer base and leverage the size and scale of American Water.
Under New Jersey American Water ownership, Borough residents can anticipate a merging of their wastewater rates into New Jersey American Water’s wastewater tariff over approximately 20 years, subject to NJBPU approvals. Ultimately, the amount of capital investment required in the system and the NJBPU’s approval in future rate cases will dictate the system’s final rate increase. It is our intent to implement just and reasonable increases for Borough’s residents to offer stability and predictability to all of our customers over the long-term.
PROPOSED SEVEN YEAR RATE SCHEDULE
| Year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 |
|---|---|---|---|---|---|---|---|
| Proposed Increase on Wastewater Collection System Rates |
0% | 0% | 3% | 3% | 3% | 4% | 4% |
| Assuming Somerset Raritan Valley Sewerage Authority rates remain flat, New Jersey American Water’s proposed rate schedule would result in an approximately one percent annual increase on a Somerville resident’s total wastewater bill over the seven-year period. | |||||||
The proposed seven-year rate schedule is applicable to the portion of the bill related to the Borough’s wastewater collection system. The Somerset Raritan Valley Sewerage Authority wastewater treatment rates are considered a direct pass-through to customers and make up a significant portion of a Borough resident’s wastewater bill. New Jersey American Water does not determine Somerset Raritan Valley Sewerage Authority rates; however, New Jersey American Water plans to undertake significant capital investment in the system to