Stender introduces assembly bill to force water utilities to pay damages

Walter O'Brien | By Walter O'Brien | The Somerset Reporter
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on December 23, 2012 at 5:26 PM, updated December 24, 2012 at 9:53 AM
scotch-plains-water-main-break.jpg A Scotch Plains water main break in July 2012  

The state legislature will consider a bill forcing water utilities to reimburse taxpayers for certain damages caused by utility failures.

Assemblywoman Linda Stender (D-22) introduced Assembly Bill A3443 into the New Jersey legislature which would require water utilities to cover costs related to flooding damage under certain circumstances, including a water main break or leak. The bill is identical to Senate bill S2377 introduced on Monday.

The bill would cover damages from events such July's New Jersey American Water 48-inch water main break in Scotch Plains that caused widespread damage in Stender's district and had water restrictions placed on 17 towns including Green Brook, Warren, Watchung and North Plainfield in Somerset County, as reported by the Suburban News.

Many residents near the broken main were subject to thousands of dollars in home damage, for which the utility and some insurance companies claimed they were not responsible, leaving homeowners responsible for the costs of repairs, according to Stender.

“I find it outrageous that a homeowner would be responsible to pay to repair the damage caused by a water main break.” Stender said. “They did not cause the break, they pay their bill, the cost of repairing should be bore by the water companies.”

The bill would force water utilities to cover damages unless the failure was related to a major catostrophic event, such as a natural disaster or weather event, in which a state or federal declaration of state of emergency or disaster had occurred, or if the property is not located in a FEMA Special Flood Hazard area and is not subject to federal flood insurance purchase requirements.

The bill would allow the homeowner to be compensated for damages including the cost of restoration, or repair, income lost, a reduction in property value, and other related losses.

"It doesn't make any sense to me," Assemblyman Upendra Chivukula (D-17), deputy assembly speaker, told "Is the bill trying to make the water utilities into insurance companies? I don't see how they can do all those functions."

Chivukula asked if the flood is inside a taxpayer's home and they own the pipes, how can they ask someone else to pay for something they own.

"If the damage gets into the house and mediation costs a lot of money, who is going to pay for that, other taxpayers?" Chivukula said. "Will there be any deductibles?"

He said that the bill should probably tell the utilities to set up an insurance subsidy, but then shareholders would have to cover the costs. He also questioned if the utilities would try to recoup their costs by going before the BPU for rate increases.

Assemblyman Jack M. Ciattarelli (R-16) told that he supports the spirit of the proposed legislation in that utiliities should reimburse homeowners for personal losses caused to their property by the utility.

"On the surface its seems like a very reasonable bill," Ciattarelli said. "I do want to complete my due diligence to see if there are any circumstances where they could not be responsible, including reaching out to utilities to hear their position."

“I am hoping to alleviate future conflicts due to accidental incidents,” added Stender. “While many of our pipelines are well-maintained, our infrastructure is getting older. Residents should not have to face the shock of being responsible for a flood caused by an outside source.”