Liberty Utilities' three-year rate hike approved by the state last year could have been even higher for most Nassau customers if the company had received approval for an additional surcharge it sought to fund a nearly $4 million incentive compensation plan, according to regulatory filings.
The state Public Service Commission, which approved the larger hike that will result in cumulative bill increases for Liberty's westernmost residential customers of nearly 60% over three years, ultimately rejected the bonus plan. Liberty on Wednesday said it won't pursue it.
As part of the overall rate hike approved by the PSC last September, Liberty had sought to recover a total of $3.88 million over two years starting this spring to cover the costs of the incentive compensation plan for nonunion employees of the New York Water division in its service areas 1 and 2, from Lynbrook to Merrick. For customers in service area 1, it would have been a hike of another 1.2% and 1.18% over the two years, to collect more than $2.62 million.
As Newsday reported last week, Liberty's residential customers in service area 1saw first-year bill increases of 27% starting last September. Compounding the impact on bills this summer, the Sept. 1, 2024, increase was followed by another at 15% on April 1 for residential customers in that area, bringing the cumulative increase for the two-year period to 42%. By the end of the third year the hike will hit 59.2%.
One ratepayer who was hit hard by the increases wasn't happy to hear about the attempted pay plan.
The additional compensation charges "would have been unconscionable given the impact on customers and how substantial the increase was in the first place," said Baldwin Harbor ratepayer Steven Faske, whose monthly bill climbed to $399 this summer. "Under no circumstances would one expect there to be an incremental increase above what was an already substantial increase to reward the executives of the company."
Customers in service area 2 in and around Merrick would have been hit with surcharges of 1.47% and 1.48% during the two-year rate hike, to recoup $1.25 million for the plan, according to state filings.
Most documents filed by Liberty to justify the proposed compensation plan were redacted, at the request of the company's law firm, Harris Beach Murtha.
Pamela Bellings, a spokeswoman for Liberty New York Water, said the company "is not pursuing this request" and added that employee pay levels "would not have increased had the request been approved."
Liberty in its filings noted that among the conditions of its purchase of New York American Water in 2021 was that it maintain employee compensation levels from the prior owner for at least two years. The company won PSC approval to fund its union compensation plan, but not the plan for nonunion employees.
In responding to a PSC request as it reviewed the potential surcharge, Liberty provided to regulators a series of documents, including a compensation study, descriptions of its corporate programs that support the plan, and "a listing of Total Incentive Compensation Plan Payments."
Asked Wednesday if Liberty would disclose the pay levels of its top executives on Long Island, Bellings said, "As a policy, Liberty does not provide confidential documents. Public information is in the PSC filings."
In its May 15 order, the PSC noted that for a utility to recover compensation plan costs, the utility must demonstrate "either that its incentive compensation programs produce quantifiable benefits for ratepayers that outweigh their cost, or that its overall compensation is reasonable and that the incentive program supports the provision of safe and adequate service."
In the end, the PSC found information provided by Liberty to justify the surcharge "fails to demonstrate that its incentive compensation program supports the company's provision of safe and adequate service with no potential to adversely affect ratepayer interests."