Water Rate Information

Effective August 19, 2009, the New Jersey Board of Public Utilities approved a change in New Jersey American Water’s purchased water and purchased sewer treatment adjustment clause charges.

Purchased Water Adjustment Clause (PWAC)
New Jersey American Water purchases water from a number of water service providers to supplement its own surface water and groundwater supplies. While we take steps to minimize the amount of water we purchase, these supplies are critical to providing a reliable source of water supply for our customers. The PWAC is considered a direct pass-through charge, which enables the company to recover the costs related to purchasing water from other water suppliers to supplement our own ground and surface water supplies.

The rates we are charged by other water service providers increase periodically to reflect their increased costs to produce and/or deliver the water they sell to us. However, please be aware that the company challenges all increases, attends public hearings and submits numerous interrogatories requesting support for such increased costs. As a result, the PWAC is reset on an annual basis and is adjusted to reflect current costs. Because we are a regulated water utility, we filed with the New Jersey Board of Public Utilities (NJBPU) to increase the PWAC to recover our costs on April 7, 2009. The NJBPU, after a thorough review made its determination and, effective August 19, New Jersey American Water’s PWAC will increase from $0.3675 to $0.4078 to per thousand gallons – or approximately $0.28 per month for the average residential customer using 7,000 gallons per month. The total PWAC is reflected in a separate charge on your water bill, called “PWAC.”

Purchased Sewerage Treatment Adjustment Clause (PSTAC)
New Jersey American Water provides sewer (wastewater) services in Ocean City, the Adelphia section of Howell Township and Lakewood Township. Like the PWAC, the PSTAC is a pass-through charge for sewage treatment costs. The PSTAC reflects the costs that the company pays to regional wastewater treatment authorities for treating wastewater in areas where we operate and maintain the sewer pipelines or collection system. Each year, the PSTAC is reset and may increase or decrease depending on different factors, including amount of wastewater sent to the sewage treatment plants and the authorities’ costs associated with treating the sewage. The NJBPU approved the following changes to the PSTAC, effective August 19,2009, for the PSTAC year April 1, 2009 through March 31, 2010:

• Lakewood Township: Effective August 19, the PSTAC will increase from $3.4037 to $4.5813 per thousand gallons, which results in an increase of $7.07 per month for the average residential customer.
• Ocean City: Effective August 19, the PSTAC will increase from $19.3047 to $21.0781 per thousand gallons, which results in an increase of $2.96 per month for the average residential customer.
• Adelphia section of Howell Township: Effective August 19, the PSTAC will decrease from $4.8398 to $4.4661 per thousand gallons, which results in a decrease of $1.50 per month for the average residential customer.

The fiscal year for the PWAC and PSTAC runs from April 1 through March 31. Depending on when the company files for the rate change and when the adjusted rates are approved by the NJBPU, the recovery of any increases or decreases in the PWAC and/or PSTAC costs may need to be compressed into the remaining months of the PWAC or PSTAC fiscal year. For example, in April 2009, New Jersey American Water filed its request with the NJBPU for the changes in PWAC and PSTAC, to be effective April 1, 2009 through March 31, 2010. The new rates were approved by the NJBPU effective August 19, 2009. That means the company has not been recovering the increase in costs associated with the PWAC and PSTAC from April 1 through August 18, 2009. As a result, the total increase in costs for the entire fiscal year must be recovered between August 19, 2009 and March 31, 2010.

Prior to this, the last time the NJBPU approved a change in the company’s PWAC and PSTAC was October 23, 2008. For Lakewood sewer service customers, the PSTAC changes last occurred or March 30, 2007.