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Public Water Supplies, Rates, and Capacity Development Program

July 17, 2000


To All Affected Parties:

It has come to the attention of the Department of Public Service that local planning boards, realtors, land developers and home builders may be unaware of the potential impact of New York State's Capacity Development Program, developed as a result of the federal Safe Drinking Water Act. In particular, I would like to bring to your attention that new investor-owned (private) water systems1 commencing operation after October 1, 1999 may have to charge rates that are far above what other systems are charging. For instance, annual water bills for new, private water systems may be in the neighborhood of $1,200 per year or higher, depending upon construction and operating costs.

The goal of the State's Capacity Development Program is to ensure that all new and existing water systems (both municipal and private) will be able to supply safe and adequate water, now and into the future. Various agencies, under coordination of the New York State Department of Health, have roles under the program. Ensuring the financial viability of new investor-owned systems is within the purview of the PSC.

Under Public Service Law, all private water companies are required to file their rates for service with the PSC 120 days before they begin serving customers. Moreover, construction of a water system or extension of an existing system may not take place until a copy of the Department of Environmental Conservation order, approving construction, is filed with the PSC. Violation of these requirements might subject a water system's owner to substantial penalties.2 Most developers that install private water systems for their subdivisions have their business plans in place long before they have contact with the PSC. Since this new program and resulting rates may affect their business plans, it is imperative that developers and others know about this new program as soon as possible. Bringing this matter to the attention of all new developers of investor-owned systems will benefit everyone.

If there are any questions regarding this matter and the Public Service Commission's regulation of investor-owned water systems you may contact Mr. Jack Agansky of the Water Rates Section of the Department of Public Service at (518) 486-2432. Other questions on New York State's Capacity Development Program and its effects on public and private water systems can be directed to Mr. Charles Amento of the Department of Health at (518) 402-7712.

Thank you for your attention to this matter.


Arthur Gordon
Chief, Water Rates Section
Office of Gas and Water


1 A private water system, subject to the jurisdiction of the New York State Public Service Commission (PSC), includes any privately owned system except where water is distributed solely on or through private property solely for the use of the distributor or its tenants and not for sale to others.

2 Pursuant to Public Service Law section 25(2), penalties for violation of these provisions may result in penalties up to $100,000 per offense, with each day of violation constituting a separate offense.