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For many New Jersey residents, water bills will increase on Sept. 1

The increase, about half of the utility's request, will boost an average residential water bill $2.92, or 4.7%, on Sept. 1.

New Jersey American's Raritan Millstone Water Treatment Plan, where the company spent $37 million in recent years to lift the flood walls surrounding the plant. The company on Wednesday received a rate increase, which New Jersey American said was mostly driven by $985 million in infrastructure upgrades.
New Jersey American's Raritan Millstone Water Treatment Plan, where the company spent $37 million in recent years to lift the flood walls surrounding the plant. The company on Wednesday received a rate increase, which New Jersey American said was mostly driven by $985 million in infrastructure upgrades.Read moreMIGUEL MARTINEZ / For the Inquirer

New Jersey regulators have approved a water and sewer rate increase for New Jersey American Water, about half the amount the utility initially requested. A typical residential water bill will increase $2.92 a month, or 4.7%, on Sept. 1.

The New Jersey Board of Public Utilities (BPU) on Wednesday approved a settlement between the company, the BPU staff, the New Jersey Rate Counsel or public advocate, and several intervenors.

New Jersey American, which has 660,000 water customers and 50,000 sewer customers, is the state’s largest private water company with service to all but three of New Jersey’s 21 counties. Its drinking water is piped to more than 70 communities in Camden, Burlington and Gloucester Counties, including 49 towns where it is the retail provider, and about two dozen towns where it is the wholesale supplier.

For water customers, the typical monthly bill for a customer using 5,520 gallons a month will increase from $62.39 to $65.31, or 4.7%, Denise Venuti Free, a company spokeswoman, said in an email on Thursday. The company has several rate zones with different charges, depending upon when it took over service in those municipalities.

For sewer customers, who are located in 11 of the state’s 21 counties, the average monthly residential bill will increase by $3.75, or 5.8%, from $64.34 to $68.09. Average sewer bills are also based on average water usage of 5,520 gallons a month.

Detailed rates will be spelled out in a tariff that New Jersey American says it will post on its website on Sept. 1, when the new rates go into effect.

The new rates will generate $45.5 million more in annual revenue, or less than half the $94.7 million New Jersey American sought in its January rate filing.

The rate boost amounts to a 5.7% increase in the company’s current $803 million in annual revenues, according to the BPU’s order, down from 11.7% in the initial request.

In its filing with state regulators, the company said the rate increase was primarily driven by its investment of $985 million in infrastructure improvements through the end of 2022, including $454 million during the 12 months ending June 30, 2022, and $272 million more for the final six months of this year.

“We are proud of the level of investment we are able to make into our systems to continue to provide high-quality, reliable service, even through extreme weather and other challenges including the pandemic, while maximizing efficiencies to balance the impact to customers,” Mark McDonough, the president of New Jersey American, said in a statement.

The approved $45.5 million rate increase is based on a return on equity of 9.6% on the company’s total “rate base” or investment of $4.15 billion. That’s the same return on equity that New Jersey American was awarded in its last rate increase, in 2020, the company said in a filing with the U.S. Securities and Exchange Commission.