Why Are Ocean City Water and Sewer Bills So High?

The Cape May County Municipal Utilities Authority sewerage plant on the bayside at 45th Street in Ocean City.

Ocean City property owners — including second homeowners who use little or no water during the offseason — have long been frustrated by water and sewer bills that seem exorbitant.

Ocean City’s Utility Advisory Commission — a volunteer group charged with advising City Council on issues related to public utilities — compiled the following “Frequently Asked Questions” (FAQ) to help owners understand their bills and some of the factors that go into setting rates. As owners know, the problem is not new, but the working FAQ document has been updated for 2015.

Fewer than 20,000 property owners in Ocean City are paying for a sewerage system that was built in 1979 to handle a peak summer crowd of 175,000 people. The new plant was built at a time when the limited capacity of the old facility led to summer beach and bay closings, according to Commission member Joe Clark. About 68 percent of sewer payments go to the Cape May County Muncipal Utilities Authority for running, maintaining and updating the plant, which serves only Ocean City.

Ocean City is also one of only three towns in which New Jersey American Water Company owns the sewer lines. The high cost of maintaining a system capable of handling peak summer usage is passed on to users.

Year-round sewer service charges are determined by the volume of (incoming) clean water used at any address during July, August and September. An additional sewer usage charge is based the volume of the current month's clean water usage.

The following FAQ feature is expected to be updated again soon with information on the process for water and sewer bills and rebates after a property transaction settlement.

I have a problem with my water or sewer bill, whom should I call?

New Jersey American Water Company makes every attempt to provide accurate monthly billings for their services. If you have questions related to either your water or sewer bill charges, please contact New Jersey American Water’s Customer Service Center directly at 1-800-652-6987 between the hours of 7 a.m. and 7:00 p.m.

I called New Jersey American Water Company about my water and sewer bill, and they told me to call the city. Why?

We have worked diligently with the management of the New Jersey American Water Company on this issue, and they have informed us that they have instructed their Customer Service Center representatives to answer questions from Ocean City customers and not to refer them back to the city itself. If a customer service representative mistakenly tells you to call the city about your concern, please ask them if you may speak with a supervisor. Unfortunately, this system is not always sure-fire and there are occasional glitches that occur with misinformed service representatives at the water company directing your inquiries in the wrong direction back to the city.

How is my water rate determined?

The cost of delivering high-quality, reliable water depends on a number of key factors, including the following:

• Required capital investments and the expense of operating and maintaining the city water supply system.
• Electricity utilized to pump the water from its source in the ground to the homes and businesses within the community.
• Standards of quality and quantity, pressures and service set by federal and state officials as well as New Jersey American Water Company’s standards to protect the health and welfare of their customers.
• Staffing costs, including salaries and benefits, for its service technicians, water quality specialists, meter readers, administrative personnel and others who help run the water utility on a day-to-day basis.

Note: The rates charged by the New Jersey American Water Company are annually reviewed and approved by the New Jersey Board of Public Utilities (NJBPU). Traditionally, public hearings are held in Ocean City after petitions have been filed with the NJBPU for any rate increases or decreases. At that time the public & City representatives are afforded an opportunity to speak on the proposed changes in rates. Additional information can be found on the New Jersey Board of Public Utilities website @ http://www.state.nj.us/bpu/

What are the main components of my water bill?

• Fixed Service Charge: The purpose of the monthly service charge is to recover the full cost of providing meter reading and billing services, as well as the capital costs for providing the meter and related service lines. The rate is based on the size of the meter that was installed at the billing address. For residential customers who have a 5/8” meter, the service charge is $10.60 per month.

• Volumetric Charge: Based on your water consumption or $5.9405 per 1,000 gallons since the last meter reading. These costs are related to operating and maintaining the source of supply, treatment and transmission facilities, as well as other general operating expenses.

• Purchased Water Adjustment Clause (PWAC): The current PWAC rate $0.4525 per 1,000 gallons. New Jersey American Water Company purchases water from a number of water service providers to supplement its own surface water and groundwater supplies. While they take steps to minimize the amount of water purchased, these supplies are critical to providing a reliable source of water supply for their customers. The PWAC enables New Jersey American Water to recover the costs related to purchasing water from other water suppliers and to supplement their own ground and surface water supplies. The PWAC is reset on an annual basis (generally in August) and is adjusted to reflect current costs. Because the NJ American Water Company is regulated water utility, they are required to file with the New Jersey Board of Public Utilities (NJBPU) each time they wish to increase the PWAC to recover costs associated with the water supply. Subsequently, the NJBPU performs a thorough review of the petition and after various required public hearings either denies, changes the amount proposed or approves the fee increase.

Why does New Jersey American Water Company charge for sewer service in Ocean City?

New Jersey American Water Company owns and maintains the waste collection system, pumping stations and pipelines that are utilized to collect sewage from homes and businesses in the city. The sewage is transferred to the Cape May County Municipal Utilities Authority (CMCMUA) sewage treatment plant located at 45^th Street & West Avenue in Ocean City. The CMCMUA owns and maintains the treatment plant, pumps and pipes necessary to treat and dispose of the collected and treated sewage. Approximately 68 percent of your sewer payment covers the costs New Jersey American Water Company pays to the CMCMUA to treat and dispose of the sewage generated within Ocean City. Each municipality using the CMCMUA plant is required to pay for the volume they send to be processed. The remaining 32% percent covers New Jersey American Water’s expenses to collect sewage; maintenance of the collection system; pay local, state and federal taxes and to invest in the aging infrastructure of the waste collection system.

What are the current sewer rates for wastewater in Ocean City? 

• Sewer Service Charge (including PSTAC): NJ American Water Company provides sewer (wastewater) services in Ocean City, the Adelphia section of Howell Township and Lakewood Township only. All other communities in the State of New Jersey are either with another water company or have their own municipal water authority. Like the PWAC, the Purchased Sewerage Treatment Adjustment Clause (PSTAC) is a pass-through charge for the sewage treatment costs. The PSTAC reflects the costs that NJAWC pays to the CMCMUA for treating & disposing of wastewater in areas such as Ocean City, where they operate and maintain the sewer pipelines and collection system. Each year, the PSTAC is reset and may increase or decrease depending on many different factors, including the amount of wastewater sent to the sewage treatment plant and the authorities’ costs associated with treating & disposing of the sewage. The current charge is $35.1121 per 1,000 gallons of water usage billed at the property during the prior year’s summer quarter (July, August & September), but not less than $262.64 per year. This sewer service charge is then divided by 12 and is billed equally over the period of January through December each calendar year. The sewer service charge includes the PSTAC charge. The PSTAC rate is $24.0083 per 1,000 gallons, which is included in the above Sewer Service Charge. The total PSTAC charge represents approximately 68% percent of the overall Sewer Service Charge. The service charge includes the capital investment in the wastewater collection system pipelines and service lines and the majority of the costs for the operation and maintenance of those systems within the City.

• Volume Charge: In addition to the above monthly Sewer Service Charge there is a charge of $1.8698 per 1000 gallons ($1.39861 per 100 cubic feet) of water consumed for the current month. This is based on the amount of water utilized since your last meter reading and represents all of the costs not included in the sewer service charge.

 

What is the purpose of the PSTAC?

The PSTAC reflects the costs that New Jersey American Water Company pays to the CMCMUA for the treatment and disposal of the wastewater. Each year the PSTAC is reset and may increase or decrease depending on many different factors, including the amount of wastewater sent to the sewage treatment plant and the CMCMUA costs associated with treating and disposing of the sewage. The current rate is $24.0083 per 1,000 gallons. The total PSTAC fee is included within the Sewer Service Charge on your bill. The PSTAC currently represents approximately 68 percent of the Sewer Service Charge.

Why is this year’s sewer service charge based on last year’s summer quarter (July, August & September) usage?

The CMCMUA designed and built the 45^th Street Waste Treatment Plant in the mid-1970s to handle the tremendous peak flows Ocean City generates during the summer months. The CMCMUA develops its annual user charge based on the previous year’s sewage flows to the treatment plant during the summer quarter (July, August & September). New Jersey American Water Company utilizes the same methodology as the CMCMUA, where they bill their customers in the current year based on the prior year’s summer consumption. This approach attempts to match the charges from the CMCMUA with the revenues received from its Ocean City customers. Their Sewer Service Charge is structured on the same basis, and ensures that everyone will share proportionately in the CMCMUA’s actual costs of owning, maintaining and operating their Ocean City Waste Treatment Facility.

Why am I being billed for sewer services when I am not there or utilizing the property?

Sewer service charges are billed to all customers regardless of the volume of water utilized that month. You may only be a seasonal resident and do not utilize the water service or experience any water volume during certain months of the year, but you are still being billed for the sewer service charges monthly. The annual Sewer Service Charge is based on the water usage billed during the prior summer quarter (July, August & September) and covers the fixed costs associated to provide the sewer service. New Jersey American Water Company realizes that this annual charge could be burdensome to some customers, if full payment were to be required on a once a year basis. Thus the City and the water company agreed on a billing plan that would spread the payments out equally over a 12-month period, so that customers are billed 1/12^th of this charge each month throughout the calendar year. The Sewer Service Charge represents New Jersey American Water Company’s fixed costs to operate and maintain the waste collection system and the actual cost to collect the sewage, as well as the fee billed by the CMCMUA to treat, and dispose of the sewage. Over the years there has been much controversy concerning these set charges and how they are billed out annually. What must be understood is that in the end the water company will be entitled to recover their actual cost and that the charges will remain the same no matter if they are billed in one lump sum or spread out in 12 equal payments. For the average property owner it appears to be more desirous to have the payments spread out equally and to afford them the opportunity to budget the cost over the entire year. In a way, it is a type of budget plan, similar to what is currently being offered by other public utilities for the services that they provide. The only difference is that the entire City is on the same plan and that it was negotiated on your behalf by City representatives at the time the new processing plant was built in the mid 1970's.

The Sewer Service Charge Calculations for the Calendar Year 2015

1. Add up your total monthly water usage recorded during the prior summer quarter (July, August and September). If that total is less than 48 thousand gallons the minimum service charge of $262.64 or $21.89 per month will be billed to your account.

2. Multiply the total water used by the rate per 1,000 gallons.

3. Divide that figure by 12 for your monthly service charge.

[table caption="Sample Sewer Charge Calculation" width="450" colwidth="50|50" colalign="left|left"] Month,Usage (in thousand gallons) July,10 August,12 September,9 Total, 31 (thousand gallons for summer quarter) [/table]

31 x $35.1121 (rate per 1,000 gallons) = $1,088.48 $1,088.48 / 12 months = $90.71 per month (Revised: UAC01/1/2015)