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New Jersey American Water signed an agreement to acquire the wastewater collection system of the Borough of Somerville for $7 million, the Camden-based utility announced Feb. 13. 

The move adds about 3,800 wastewater customers to New Jersey American Water’s service area. The company already provides water service to many of these residents. 

In a November 2022 referendum, 75% of voters approved the deal. The ballot measure was also supported by a bipartisan coalition of elected officials, small business owners and community leaders. 

The deal, which is expected to close in the second half of 2023, is subject to approval from the New Jersey Board of Public Utilities. 

As part of the agreement, New Jersey American Water will invest a minimum of $9.5 million in sewer system improvements in the decade following acquisition. The company also 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. 

New Jersey American Water raised water and wastewater rates slightly in September 2022 for its current customers, a move necessitated by its investment of more than $985 million in infrastructure in treatment system and distribution upgrades since its last rate filing, the company said. 

“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,” Mark McDonough, president of New Jersey American Water, said in a statement.  

McDonough added, “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.” 

In February 2022, the company also signed an agreement to acquire the wastewater collection system of the Borough of Bound Brook for $5 million. 

“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,” Somerville Mayor Dennis Sullivan 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.”