The Cost of Hudson River Desalination to Rockland Residents

Posted by on Jan 24, 2012 | 1 comment

I have been asked how much will Hudson River desalination cost Rockland residents?

The Short Answer Is:

Based on testimony to the New York State Public Service Commission and other documents prepared by United Water as of March 8, 2010 the Haverstraw Water Supply Project is estimated to cost approximately $140 million when completed.  The annual additional cost to United Water customers could easily approach $25.1 million, the equivalent to an annual cost of approximately $360 per customer per year.

The actual additional cost could be at least $34 million per year or $485 per customer per year.

The Longer Answer Is:

From testimony to the New York State Public Service Commission on 3-8-2010 by Michael J. Pointing, United Water New York Vice-President and General Manger.

 “The Haverstraw Water Supply Project is currently estimated to cost approximately $140 million when completed.”  “This is significant and should be considered in relation to the overall customer cost upon completion of the facility which could easily approach $270 to $300 per customer per year.  The equivalent of a phase-in through incremental surcharges will lessen the rate shock that would otherwise exist.”  

(See: Michael Pointing PSC Testimony 3-8-2010 Page 36 Line 23 through Page 38 Line 2)

United Water’s proposed Hudson River Desalination Plant will cost United Water’s 70,000 Rockland customers an additional $19 million to $21 million per year according to Mr. Pointing’s estimates.

In October 2009 United Water produced a PowerPoint presentation regarding the proposed Hudson River Desalination Plant.  In that presentation the annual revenue requirement was estimated to be $25.1 million.  ( See United Water PowerPoint; Orlando, Florida 10-13-2009 slide 8 )

The annual revenue requirement of $25.1 million is equivalent to a cost of approximately $360 per customer per year.

The actual additional cost could be at least $34 million per year or $485 per customer per year. (See: Annual Cost To Customers Of Hudson River Desalination)

The Escalating Cost of The Haverstraw Water Supply Project

On 1-15-2007 United Water filed with the NYSPSC a description for a long-term major water supply project for Rockland County now known as the Haverstraw Water Supply Project. The estimated cost of the project was $98 million. ( See: United Water New York Long Term Water Supply Project 1-15-2007 Pg. 8 )

On 1-12-2010 the Clarkstown Town Board hosted a town board workshop on United Water’s proposal to desalinate and treat water from the Hudson River for Rockland’s drinking water. When asked how much the project would cost when completed?  Michael J. Pointing, United Water New York Vice-President and General Manger responded, $116.5 million.

On 3-8-2010 in testimony submitted to the NYSPSC Michael J. Pointing stated, “The Haverstraw Water Supply Project is currently estimated to cost approximately $140 million when completed.” ( See: Michael Pointing PSC Testimony 3-8-2010 Page 36 Line 23 through Page 37 Line 2 )

 In only 38-months the estimated cost of constructing The Haverstraw Water Supply Project increased by $42 million, nearly 43 percent.

 The North Rockland “Ratable” Myth

In its Haverstraw Water Supply Project Executive Summary United Water argues, “The Proposed Project is expected to generate a substantial increase in property tax revenues (primarily to the North Rockland community) from the improvement of the Project Sites.” and that “As a result, the Proposed Project is expected to have a net positive effect on the local and regional economies of Rockland County and New York State.”

Estimated annual real estate tax revenues to the North Rockland community are:

$2,649,470             upon completion of its first phase, in 2016,

$3,483,860             at the conclusion of its second phase, in 2021, and

$5,580,455             in year 2030, when the Proposed Project is fully built out

( See: Haverstraw Water Supply Project Executive Summary Socioeconomics Page S-6 )

The Haverstraw Water Supply Project Executive Summary does not mention the higher water rates, which will be paid by North Rockland residents as a result of this project. However, United Water expects that water rate increases could easily approach $270 to $300 per customer per year.  As noted above the cost estimates for this project have increased rapidly.  The actual additional cost could be at least $485 per customer per year.

The Haverstraw Water Supply Project will have an adverse effect on the North Rockland economy.  Approximately 12,000 of United Water’s 70,000 Rockland customers reside in the North Rockland area.

Estimated increase in the annual cost of water to the North Rockland community:

At $270 per customer per year             $3,240,000

At $300 per customer per year            $3,600,000

At $385 per customer per year            $4,620,000

At $485 per customer per year            $5,820,000

 

The North Rockland community will only profit from The Haverstraw Water Supply Project if real estate tax revenues exceed the increase in the cost of water to North Rockland customers.

Based on current estimates the aggregate tax revenue will exceed the aggregate increase in the cost of water to North Rockland customers in the year:

2030 at an increased cost for water of $270 per customer per year

2032 at an increased cost for water of $300 per customer per year

2050 at an increased cost for water of $385 per customer per year

Never at an increased cost for water of $485 per customer per year

( See: North Rockland Real Estate Tax Revenue Compared To Cost and Annual Cost To Customers Of Hudson River Desalination )

 

Bob Dillon

One Comment

  1. The NEW price tag on the Desalination facility is listed in the DEIS as upwards to $178,000,000. This number increases constantly, and ONLY reflects the base cost to build the plant.

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