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New Jersey blaim your increasing water rates on the subprime crisis.

January 23rd, 2008 · No Comments · New Jersey

So my water rates are probably going up to the tune of 1 to 23%. I am a lucky customer of New Jersey American Water. NJAM submitted a request to the State Board of Public Utilities to increase their rates by 23%. Over the last 9 years their rates have increased by 30%. Just last year a 13.5% rate increase was approved and now they are back for more. I wanted to know why, so we did some digging and this is what we found out: 

New Jersey American Water is a subsidiary of American Water Works Company, Inc. American Water Works submitted a S-1 to the Securities and Exchange Commission in October 2007 in an effort to go public. The credit and housing crisis nipped this effort in the bud because the current market is not a time to IPO for the purpose of raising capital. So part of the reason your rates are going up is the sub-prime crisis. Why do they need to raise money? The most likely reason is to pay off some of its $5.8 Billion dollars of debt. According to the S-1 American Water Works filed, they allowed affiliates to make purchases in 2001 and 2003, which combined resulted in the company overpaying for the two acquisitions by $2.9 Billion dollars. This company paid $365 million dollars in interest on its debt in 2006. They also say that one of their strengths is securing appropriate rates of return on their investment and they secure this by rate increases for customers. This is a company facing financial crisis and they need money. New Jersey should have thought of this before selling public utilities to private companies. It is too late for your water but not too late for your toll roads. You can read the S-I by clicking here.

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