New Jersey American Water announced Monday it has signed an agreement to acquire the wastewater collection system of the borough of Somerville for $7 million.
The municipally owned system serves approximately 3,800 customers, most of whom already receive water service from New Jersey American Water. The agreement follows a voter referendum that took place in November 2022, which passed in a landslide fashion with 75% of the voters approving the sale of the system to New Jersey American Water. The ballot measure was supported by a bipartisan coalition of elected officials, small business owners and community leaders in Somerville.
As part of the acquisition agreement, and subject to approval from the New Jersey Board of Public Utilities, New Jersey American Water will invest a minimum of $9.5 million in sewer system improvements in the 10 years following completion of the acquisition. In addition, New Jersey American Water will implement a rate plan that will hold current sewer rates for two years following closing, then increase rates no more than 3% annually for the next three years, and then no more than 4% annually for the following two years.
Somerville Mayor Dennis Sullivan was thrilled by the deal.
“New Jersey American Water has the expertise, equipment, manpower and financial capability needed to maintain and improve this important part of our town’s aging infrastructure,” he said. “With private ownership of the system, the borough will eliminate the need for significant rate increases going forward, and borrowing money for future improvements will end. Somerville will then be able to fund other needed projects, the sewer system will be maintained and improved on a consistent basis, and sewer rates will remain stable.”
New Jersey American Water President Mark McDonough said the company is working with the borough to help ensure a smooth transition for customers. The company anticipates completing the acquisition in the second half of 2023, pending approval from the BPU.
“I want to thank the elected officials and residents of Somerville for entrusting us to manage and improve their sewer utility and help protect the town and the environment from the many risks associated with running a sewer collection system,” he said.
“Providing water and wastewater service is all we do, and as Somerville’s longtime water company, we are deeply committed to making the needed improvements to provide the community with sewer service that is as safe, reliable and affordable as the water service we provide.”