Hurricane Sandy leaves New Jersey with $2.6B tab for water infrastructure

Hurricane Sandy damaged more than 100 facilities supplying drinking water to residents and sewage treatment plants, leaving the state with an unexpected $2.6 billion bill to repair, rebuild, and make the systems more resilient, according to state officials.

How the state goes about meeting that challenge remains to be seen, although the New Jersey Department of Environmental Protection is hoping to leverage federal funds approved by Congress in the wake of Sandy to help address those problems.

Making those systems more resilient to future storms is among the agency’s top priorities, one the department is expected to wrestle with over the next few months, but with few clear answers emerging just yet.

“Our challenges are staggering,” conceded state Department of Environmental Protection Commissioner Bob Martin at an annual meeting of the New Jersey Clean Water Council yesterday in the agency’s headquarters in Trenton. The hearing focused on adapting the state’s water infrastructure to the “new normal,” a phrase given currency in the wake of a series of extreme storms.

The costs incurred by the superstorm occurred during a period of massive underinvestment in the state’s infrastructure to provide clean drinking water and to reduce pollution flowing into New Jersey waterways from wastewater treatment plants — a problem even before Sandy.

New Jersey needs to spend $45 billion over the next two decades to repair its drinking water infrastructure and sewage treatment plants, according to Michele Siekerka, an assistant commissioner for the DEP in water resource management. That means investing $8 billion in its drinking water infrastructure and another $37 billion in wastewater treatment.

By Martin’s account, Sandy underscored the vulnerabilities of New Jersey’s infrastructure. The Passaic Valley Sewerage Commission, the fifth-largest wastewater treatment plant in the nation, was completely flooded by the superstorm. As a result, hundreds of millions of gallons of raw sewage flowed into state waterways, Martin noted.

Even now, more than five months after the storm devastated New Jersey, there are at least 11 municipalities dealing with water issues, according to Martin.

Many of the facilities had their own backup generating units, but they lacked enough fuel to cope with outages that stretched far beyond the one-day interruptions that had been anticipated.

The range of problems raises a number of issues that the DEP is trying to work through, such as using regional depots to make sure the facilities have enough fuel to get through extended outages that, in some cases, lasted nearly two weeks.

Who will foot the bill has yet to be decided, but Siekerka, in response to a question, made it clear new sources of funding are unlikely to be proposed. “This governor has said no new taxes and no unfunded mandates,” she said.

Still, Siekerka acknowledged the magnitude of the problem. “The numbers are staggering. It’s quite a daunting task to get it together,” she said.

With Congress approving $600 million in funds to deal with the problems (since reduced to $570 million because of the cuts forced by the sequester), New Jersey stands to gain about 40 percent of that money, Siekerka said.

If so, it could leverage the money with other funds in the state’s Environmental Infrastructure Trust program, to provide up to $3 billion in improvements to both wastewater and drinking water facilities, officials said.

“Our biggest challenge is fiscal,” Siekerka told the council. “Where is the money going to come from?”

Under the DEP’s present plans, the $2.6 billion would be allocated to 370 different projects: $342 million in recovery; $553 million in repairs; and $1.7 billion in building resiliency into the systems.

In the public hearing, lobbyists for the water systems and sewage treatment plants urged the state to ensure their companies earn a sufficient return to make the required investments. Last year, the New Jersey Board of Public Utilities approved a measure to allow a new surcharge on water bills to enable utilities to earn a faster return on their investments in their infrastructure.

“It is essential that rates fund both capital projects and continuing operations,” said Dennis Ciemminecki, a consultant representing the New Jersey section of the American Water Works Association.

Peggy Gallos, executive director of the Association of Environmental Authorities of New Jersey, a trade group representing both water companies and wastewater facilities, urged the surcharge be imposed on sewage treatment customers as a way of funding upgrades.

Still, Gallos noted some facilities weathered the storm without difficulties. She noted two sewage treatment plants in North Jersey managed to operate throughout the storm’s duration, because each is supplied electricity by a cogeneration facility, which provides both electricity and heat simultaneously.

That technology is increasingly being embraced by the New Jersey Board of Public Utilities, which is conducting its own review on how to make the power grid more resilient.

Like the DEP, it too, faces enormous expenses in hardening the power grid to withstand future extreme storms. Public Service Electric & Gas, alone, wants to spend nearly $4 billion to upgrade its power grid.

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NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.