Residents in these 3 N.J. towns to vote on the future of their water supplies

Voters in three municipalities will decide whether to sell their aging, debt-ridden water systems to the private sector and enjoy some immediate tax relief or hold onto them and avoid the potential for steep rate hikes under corporate ownership.
Public referendums are on the ballot in Gloucester Township, Manalapan and South Orange, where New Jersey-American Water and Veolia Water are bidding to take over municipal water systems. The questions are:
Gloucester Township: A $143 million bid by New Jersey-American Water Company for the wastewater system.
The Village of South Orange: A $19.7 million bid by New Jersey-American for the water utility.
Manalapan Township: A $4 million bid by Veolia Water for the water utility.
Elected officials in all three towns are pushing for privatization, eager to unload old, leaky water systems, retire debt and offer tax relief to residents. The debate over privatization appears to be most intense in Gloucester Township, where officials are promising to a five-year municipal tax freeze and Camden-based New Jersey-American Water has spent over $800,000 on a media campaign to convince residents to sell, a published report said.
To protect residents, each referendum contains a rate stabilization agreement designed to strictly limit rate increases in the first five years after the sale. Under these agreements, rates are frozen in the first two years after the sale and are capped at a cumulative 9% over five years.
But one environmental group, NJ Food & Water Watch, is warning that rate stabilization agreements do not offer iron-clad consumer protection. The NJ Board of Public Utilities governs rate increases and can reject rate stabilization agreements, as it did earlier this year in Allendale in Bergen County.
“Food & Water Watch has been studying this issue for years, and we’ve come to one conclusion: Privatization is a bad deal for New Jersey families,” said Sam DiFalco, the North Jersey organizer for Food and Water Watch. “We urge voters to keep their precious water resource in public hands.”
In 2021, Allendale voters approved a referendum to sell the borough water utility to Suez Water {now Veolia] $18 million. Included in the question on the ballot was a 10-year rate stabilization plan that called for no rate increase in 2022, 0.5% in 2023, and no increase in 2024. The cumulative increase over the 10-year period was 16%.
But in June, the BPU rejected the Allendale agreement and instead granted Veolia a 12.25% price hike that was applied to all of it customers statewide. Allendale Mayor Amy Wilczynski said the borough is pursuing a breach of contract claims against Veolia.
“The rate structure was a major selling point in the voter referendum to residents,” she stated in a text. “We believe Veolia must uphold this agreement.”
Veolia spokeswoman Debra Vial said the company did not violate the agreement. During the sale and referendum process, Veolia made it clear to Allendale officials and residents that rates are subject to the approval by the NJ Board of Public Utilities, she said.
“In our recent rate filing, we asked that Allendale rates follow the proposed rate schedule,” Vial said. “Many of the terms as requested by Allendale during the bid process were accepted while others, such as the proposed rates, were not.”
She added that Veolia was legally obligated to impose the rates set by the BPU. “We understand rate increases impact customers; we live and raise our families in these communities, too. We will continue to advocate for Allendale.”
Veolia has pledged to spend $30 million to improve Manalapan’s water system, which has about 2,500 lines and serves the southern part of the community. New Jersey-American Water has promised to fund $50 million in improvements in South Orange.
Collum said the village expects New Jersey-American to abide by the rate stabilization plan outlined in the referendum, which calls for no rate increases in the first two years, followed by annual 3% rate hikes in the next three years.
“Any deviation from that will constitute a breach of contract and subject to penalties,” the mayor stated in a text. “But more importantly, after working closely and collaboratively with New Jersey-American Water for the past eight years as our water supplier and operator, there is no reason to believe they will not honor our agreement’s terms if the community approves the sale.”
New Jersey-American Water spokeswoman Denise V. Free said the company will abide by the rate stabilization agreements in South Orange and Gloucester Township.
“Upon a successful referendum in South Orange, we are committed to honoring the rate stabilization plan,” she said. “We also included a rate stabilization plan in our acquisition proposal in Gloucester Township and intend to abide by that plan in accordance with our agreement with the township.”
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Richard Cowen may be reached at [email protected].