PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

The Commission is considering the petition of New York American Water, Inc. (NYAW) for permission to reconcile its property tax expense for the Village of Sea Cliff to account for a past over valuation of its real property.

Reconciliation of property taxes.

To consider NYAW's request to reconcile property taxes.

The Commission is considering the petition of New York American Water, Inc. (NYAW) for permission to reconcile its property tax expense for the Village of Sea Cliff to account for a past over valuation of its real property. The petition states that due to errors by the Company, its real property in Sea Cliff was overvalued for past years, which led to NYAW paying, and collecting from ratepayers, more property tax than properly required. Since discovering the over-collection, NYAW has cancelled one surcharge (RAC/PTR Surcharge) intended to recover excess property tax expenses, and reduced a second surcharge (Incremental Property Tax Surcharge) to reflect the accurate level of taxes. NYAW states that it calculates past over-collections from ratepayers at $1,723,499, without interest. The Company proposes to use this amount owed ratepayers to offset existing regulatory assets, amounts the Commission has authorized the Company to collect from ratepayers: $865,067 from property tax deferrals in past years, and $1,160,215 owed under the cancelled RAC/PTR Surcharge. This would leave a regulatory asset balance of $301,783. The Company proposes to use this amount to offset future RAC/PTR credits. Under current property tax amounts built into NYAW’s rates, the Company anticipates a probable over-collection of $2,861,486 over the course of its current four-year rate plan. To accelerate the return of this money to ratepayers, the Company has reduced its Incremental Property Tax Surcharge, which would return $2 million. The whole amount is not used because of uncertainty of future tax assessments to ratepayers over the rate plan. The Company proposes than any remaining money owed ratepayers be refunded through the annual RAC/PTR filing process, which allows the company to recover revenue shortfalls in the prior year. The full text of the petition may be reviewed online at the Department of Public Service web page: www.dps.ny.gov. The Commission may adopt, reject or modify, in whole or in part, the relief proposed and may resolve related matters.

John Pitucci, Public Service Commission, 3 Empire State Plaza, Albany, New York 12223-1350, (518) 486-2655, email: [email protected]

Kathleen H. Burgess, Secretary, Public Service Commission, 3 Empire State Plaza, Albany, New York 12223-1350, (518) 474-6530, email: [email protected]

60 days after publication of this notice.