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Long Island American Water Completes Aqua Acquisition

Purchase nearly doubles the utility company's customer base in New York, making it the largest of its kind.

Long Island American Water, the Lynbrook-based company that supplies water to customers in Malverne, Lynbrook, Lakeview, parts of West Hempstead and other nearby communities, became the largest investor-owned water utility in the state this week.

Its parent company, American Water Works Company, Inc., completed its acquisition Tuesday of seven water systems in New York that had been owned by Aqua America for approximately $39 million in cash and assumed debt of $23 million, reports MarketWatch.

Adding these new systems, which are located in Nassau, Washington, Westchester and Ulster counties and serve approximately 152,000 people, nearly doubles the LIAW's customer base in New York.

LIAW also sold off eight of its water systems and one wastewater system in Ohio to Aqua America in a separate transaction, for approximately $101 million in cash and $11 million in assumed debt. As a result, LIAW will be receiving net cash of approximately $60 million through the deals.

"We look forward to the opportunity of providing high quality water service to our new customers," Bill Varley, president of Long Island American Water, stated in a press release issued by the company. "We have a strong track record of making needed investments in our water systems and treatment plants to ensure reliability and we are pleased to bring that level of service to many more people who live in New York."

Jeff Sterba, president and CEO of American Water said both transactions will contribute to the company's "overall plan to operate in areas where it can best serve customers by leveraging economies of scale and [its] technological expertise."

Long Island American Water has been in with some residents in Malverne and Lynbrook, who are dissatisfied with the quality of H2O the company is providing them, saying it is discolored and stains their bathroom fixtures and laundry. They've also voiced concerns about its possible health effects, although the company has stated that its water may not be aesthetically-pleasing but it is not a health hazzard.

In March, a NYS Public Service Commission to raise rates, albeit the $5.5 million increase was lower than the amount the company originally asked for.

The Commission is also requiring LIAW to "accelerate its efforts to determine the reasons for instances where discoloration, from iron or other possible sources, persists despite the company’s filtration plants, so that additional remedies can be implemented where needed." Additionally, the utility company must collaborate more with local residents by submitting written reports "so that customers and the commission's staff can analyze and comment on whether adequate progress is being made," and "provide cost-effective means for customers to alert the company when they spot problems with their tap water."

What are your thoughts on the acquisition? Tell us in the comments section below.

Jeff May 25, 2012 at 03:10 AM
I live in west hempstead and the water is a nightmare. The water is brown and it SMELLS bad all the time. I have lived on longisland my whole life in many towns including, east meadow, bellmore, wantaugh, centereach, hampton bays, elmont and franlinsquare. I have never experienced water like this anywhere. It is absolutely disgusting. My family lives uncomfrtable and itchy. Even filtering it does not help we go through filters 3 to 4 time faster then they are supposed to last. We have a 16 year old, and we have noticed a trend in the teenagers in the area experiencing stomach problems, SERIOUS STOMACH PROBLEMS. I am extremely concerned and extremely angered by the lack of concern there have been times where the water is so bad that it looked like pond scum. My toilets and sinks are sll less then 5 years old and stained yellow. We double filter the water we drink and yet it has still ruined several coffemakers. Our water company is a disgrace, I had better water in Mexico.

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