It’s official: Suez tapped to run water department


After months of negotiations, the Town of Kearny has concluded a deal for Suez Water (formerly United) to take over the operation of and billing for its water utility.

Since Richard Ferraioli retired as water superintendent in March, the town has been in a bind because it was left with no one certified as a licensed water system operator so it retained the then-United Water to run the utility temporarily pending a search for a permanent operator.

Under an emergency 90-day contract, United pocketed about $45,000 to run the water system and issue state-required water quality reports – over and above the $344,000 a year it was already getting for handling billing and collections.

After a month’s extension, the town’s governing body voted last Tuesday, June 28, to enter into a five-year contract with Suez, starting July 1, 2016, and running through June 30, 2021, subject to approval by the state Board of Public Utilities and state Local Finance Board.

Kearny becomes the fourth Hudson County community – following Jersey City, Hoboken and Bayonne – to outsource the operation of its water system to Suez, a global firm, while maintaining the right to set its own water rates, according to company spokesman Rich Hennig.

Additionally, Suez owns and runs municipal water systems (“franchises”) in the North Hudson communities of Union City, Weehawken, West New York, North Bergen, Guttenberg and Secaucus where water rates are governed by the state, Hennig said.

Under its contract, Kearny is to pay Suez an annual fee which, for the first year, is listed at $1,808,206 but can be raised each successive year based on percentages tied to labor costs, the CPI and customer growth.

As part of that fee, an “annual maintenance cap” of at least $550,000 must be set aside “to provide for necessary predictive, preventative, routine and minor corrective maintenance and repair.”

The town can be additionally charged for maintenance costs exceeding the cap, capital improvements and certain “non-routine services” triggered by more than 50 water main break repairs and/or more than 50 valve repairs/replacements per year.

Town Administrator Michael Martello characterized the costs involved as “comparable” to what the town has been paying to run the municipal water utility.

Among its obligations under the contract, Suez has agreed to:

  • “Be on call” 24/7 “for emergencies.”
  • Hire three of the six Kearny water utility employees (senior clerk Russ Murray, and water repairers David Yogg and Arthur Bakarich).
  • Read customer water meters, bill and collect water fees for the town’s 8,300 accounts, keep track of all delinquent accounts in arrears for more than 30 days and accounts due refunds, provide a lock box for customers, respond to customer complaints and report all water-related emergencies to the town.
  • Maintain and update water system mapping and perform utility mark-outs as required.
  • Maintain, paint and exercise the town’s 710 fire hydrants.
  • Inspect new and replacement water service connections.
  • Develop and implement a valve exercising program.

Martello said that under the agreement, Kearny will retain control over setting the town’s water rate structure.

Under the old system, the town’s water utility employees were subject to being called out for service at all times of the day and night, said Mayor Alberto Santos. “We’re hoping to get prompt service from Suez.”

Suez personnel will be permitted to occupy the existing water utility offices at Laurel Ave. and Elm St.

As for the remaining three water utility employees, they will remain with Kearny as municipal workers but in different roles, as provided by resolutions approved by the mayor and council last week.

Theodore “Ted” Ferraioli (Richard’s brother) and James Francis Neubig are being transferred to the Public Works Department: Ferraioli, who served as assistant water superintendent, will be taking a $35,000 pay cut to work under the title assistant public works superintendent at a salary of $90,207 while Neubig will be working as senior recreation maintenance worker under his current pay scale.

Paula Cavalier, listed as a keyboarding clerk in the water utility, is being rehired as confidential assistant in administration at her current salary of $67,370. The governing body voted last Tuesday to create the new job title, which is exempt from Civil Service provisions. Martello said the position was needed to help ease the transition in administration next year when several key employees are expected to retire.

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