Consultant Proposes Sharply Higher Rates For Water, Sewer Use

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The price of drinking water in Verona could rise by as much as 28% this year if Verona adopts a rate increase plan proposed to the Town Council on Monday night. Sewer charges could go up by 6%.

The rate proposals made by NewGen Strategies & Solutions were intended to show how Verona could raise funds needed to shore up both the financial and physical condition of its water and sewer utilities. While the hit this year could be substantial, the increases could be more modest in future years. NewGen estimated that the average quarterly residential water/sewer bill would rise from $238.92 in fiscal 2024 to $299.50 in fiscal 2028. The average commercial water/sewer bill would rise from $514.20 in fiscal 2024 to $745.53 in fiscal 2028. (While the firm used the word “fiscal” to describe the time frame, Verona’s fiscal year is actually a calendar year from January 1 to December 31.)

The Council still has to approve the rates, which means that any increases will not be on the February water billing. Verona bills again in May, August and November, and those quarters would be at the higher rate. The Council could also impose surcharges for larger accounts or those that contribute more substances requiring treatment.

A water utility is supposed to operate under an independent, balanced budget. But Verona is facing steeply higher operating costs as it tries to update aging infrastructure and remediate two town wells that failed to meet state standards for toxic chemicals known as PFAS. Those wells were taken offline in 2021 and Verona has had to buy all of its water from the Passaic Valley Water Commission (PVWC), which means that we are already paying more for our water than we would have paid if we were using our wells. One well could be back on line this year, but the other will not be ready until mid-2025.

Rather than have the Council extrapolate from PVWC rates and remediation estimates to set new rates, Councilwoman Cynthia Holland called for a full-blown study to explore how the water utility could meet its current obligations, as well any growth or capital improvements.

The result was a series of rate scenarios presented by NewGen on Monday, as well as a recommendation for a higher fund balance to handle unforeseen expenses. “We want to keep your rates as low as possible over time,” said Eric Callocchia, a partner at the firm. “And that means constantly reinvesting in your assets.”

Verona originally thought it would cost $1 million to put new filtration systems on our two wellheads, one on Linn Drive near the Community Center and the other across Fairview Avenue from Verona High School. (The well water is normally pumped into holding tanks like the one above on the Hilltop and mixed into PVWC water.) But supply chain disruptions caused by the pandemic, combined with rising demand for remediation across the U.S., pushed the price tag higher. The upgrades are now pegged at $6.78 million, which would be offset by $3 million in loan forgiveness and other revenues.

Verona also faces a $1 million bill to upgrade a pumping station located where the road leading up to the Claridge condominiums intersects with Pompton Avenue. That is being financed through the New Jersey Infrastructure Bank (I-Bank). In addition, Verona must make a raft of improvements to its wastewater treatment plant, at a cost of more than $7 million.

Councilman Alex Roman noted that, even if they go higher, Verona’s rates would be in the middle of those in Essex County. But higher rates might not be the only option. He asked Callocchia about how other utilities are surviving with lower rates and whether some form of regionalization would be in order. “Before we invest a lot of money into an existing wastewater treatment plant that’s very aged, are there options other than doing that?” Roman asked. “Does it make economic sense?” Callocchia wasn’t able to answer that question, but it may come up in future Council discussions.

You can read the report by NewGen Strategies & Solutions here.

You can watch NewGen’s presentation on the Council’s YouTube channel:

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Virginia Citrano
Virginia Citranohttps://myveronanj.com
Virginia Citrano grew up in Verona. She moved away to write and edit for The Wall Street Journal’s European edition, Institutional Investor, Crain’s New York Business and Forbes.com. Since returning to Verona, she has volunteered for school, civic and religious groups, served nine years on the Verona Environmental Commission and is now part of Sustainable Verona. She co-founded MyVeronaNJ in 2009. You can reach Virginia at [email protected].

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