Why My Water Bill Is So High

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ISSUED: 9/1/2022

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This document, updated September 1, 2022, provides an FAQ from the Ocean City Utility Advisory Commission regarding water and wastewater services and billing by the New Jersey-American Water Company (NJAWC). It clarifies how water rates are determined, detailing components such as fixed service charges, water consumption charges, and the Purchased Water Adjustment Clause (PWAC) surcharge. The FAQ explains the separate line items for Wastewater Service Charge and the Purchased Wastewater Treatment Adjustment Clause (PSTAC) surcharge, which became effective January 1, 2021, and are pass-through costs for collection and treatment. The document outlines the methodologies for calculating these charges, particularly emphasizing that annual wastewater costs are based on the prior year's summer quarter (July, August, September) water usage and are billed equally over 12 months. It also addresses common customer questions, such as why charges apply even when a property is not utilized. For inquiries related to water or wastewater services, customers are advised to contact NJAWC’s Customer Service Center directly.

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--- Document: Why My Water Bill Is So High Document ---
THE OCEAN CITY 
 
 UTILITY ADVISORY   
COMMISSION  
OCEAN CITY, NEW JERSEY 
Updated: September 1, 2022  
 
FAQ’S ABOUT YOUR WATER & WASTEWATER SERVICES 
Starting on January 1, 2021, each customer began seeing a separate line item for the Wastewater Service Charge 
and the Purchased Wastewater Treatment Adjustment Clause surcharge (“PSTAC charge”) labeled as “Purchased 
Wastewater Surcharge”. The Wastewater Service Charge covers NJAWC’s expenses to collect wastewater, 
maintain the collection system, pay local, state and federal taxes, and invest in the aging infrastructure of the 
wastewater collection system. The PSTAC charge represents the costs the Company pays to the CMCMUA to treat 
and dispose of the sewage generated within Ocean City. Like the PWAC, the PSTAC charge is a pass-through of 
actual costs. Prior to January 1, 2021, the Wastewater Service Charge and PSTAC charge were combined as 
the Wastewater Service Charge line item on a customer’s bill. The Purchased Wastewater surcharge line 
item is not a new charge. Please see the FAQ’s below for more information.    
 
 
I have a problem or question about my water or wastewater services, whom should I 
call? 
 
New Jersey-American Water Company (“NJAWC” or the “Company”) works diligently to provide accurate monthly 
billings for their services. If you have questions related to either your water or wastewater services, please contact 
NJAWC’s Customer Service Center directly @ 1-(800)-272-1325 during the operating hours of 7:00 AM - 7:00 PM.  
 
I called New Jersey American Water Company about my water and wastewater service, 
and they told me to call the City. Why? 
 
We have worked diligently with the management of NJAWC on this issue, and they have informed us that they have 
instructed their Customer Service Center (CSC) representatives to answer questions from Ocean City customers 
and not to refer them back to the City itself. If a customer service representative mistakenly tells you to call the City 
about your concern, please simply ask them if you may speak with a supervisor.  
 
How is my water rate determined?  
 
The cost of delivering high-quality, reliable water service that meets or surpasses local, state and federal laws and 
regulations depends on two key factors, Capital Investments (Infrastructure) and Operation and Maintenance 
(O&M) Expenses.  
 
The calculation of the water rate uses these factors to determine the cost the Company can charge its customers.  
 
The rates charged by the Company go through an extensive review process and are approved by the New Jersey 
Board of Public Utilities (BPU). Before the Company can change its rates, public hearings are held at which time 
the public and City representatives are afforded an opportunity to speak on the proposed changes in rates or 
services. 
Additional information can be found on the NJBPU website @ https://www.nj.gov/bpu/. 


 
Key Factor Terms: 
 
Capital Investments - New and replacement infrastructure investments in the water supply system. 
 
Operation and Maintenance - Expenses associated with operating and maintaining the water supply 
system. 
o 
Power Costs to pump the water from its source in the ground to the homes and businesses within 
the NJAWC service area or community. 
o 
Staffing costs, including compensation and benefits, for its service technicians, water quality 
specialists, meter readers, administrative personnel and others who help run the water utility on a 
day-to-day basis.  
 
 
What are the main components of my water bill? 
 
 
Fixed Service Charge: The fixed service rate is based on the size of the meter that was installed at the service 
address. For residential customers who have a 5/8” meter, the fixed service charge is $19.85 per month. 
 
 
Water Charge: The water charge is based on the water consumed (used) in between meter readings. The rate 
per 100 gallons is $0.77752 for all water used. 
 
 
Purchased Water Adjustment Clause (PWAC) Surcharge: The current PWAC rate is $0.04606 per 100 
gallons. NJAWC purchases water from a number of water purveyors to supplement its own surface water and 
groundwater supplies. These supplies are critical to providing a reliable source of water supply for the 
Company’s customers. The PWAC surcharge is a pass-through surcharge, which enables NJAWC to recover 
its cost of purchasing water from other water purveyors. The PWAC rate changes on an annual basis (generally 
in April). Since NJAWC is a regulated water utility, they are required to file for permission from the BPU each 
time they wish to change the PWAC rate to recover costs associated with the purchased water supply. 
Subsequently, the BPU performs a thorough review of the request/petition and after required public hearings 
can either deny, modify or approve the fee increase/decrease.  
 
 
Why does NJAWC charge for wastewater service in Ocean City? 
 
NJAWC owns and maintains the wastewater collection system, pipelines and pump stations that are utilized to 
collect wastewater from homes and businesses in Ocean City. The wastewater collected is then transferred to the 
Cape May County Municipal Utilities Authority (CMCMUA) Sewage Treatment Facility located at 45th Street & West 
Avenue in Ocean City. The CMCMUA owns and maintains the treatment plant, pumps and pipes necessary to treat 
and dispose of the collected and treated sewage. Instead of customers receiving a separate bill from the CMCMUA 
for the cost of treating the sewage, NJAWC bills the customers on its monthly invoice for the sewage sent to 
CMCMUA. Each municipality that sends wastewater to the CMCMUA plant is required to pay for the volume they 
send to be processed. All the wastewater collected from Ocean City is sent to be processed at the CMCMUA facility. 
Thus, all Ocean City customers bear a portion of the cost to operate the CMCMUA facility and to process the 
sewage on an annual basis.  
 
Starting on January 1, 2021, each customer will see a separate line item for the Wastewater Service Charge and 
the Purchased Wastewater Treatment Adjustment Clause surcharge (“PSTAC charge”) labeled as “Purchased 
Wastewater Surcharge”. The Wastewater Service Charge covers NJAWC’s expenses to collect wastewater, 
maintain the collection system, pay local, state and federal taxes, and invest in the aging infrastructure of the 
wastewater collection system. The PSTAC charge represents the costs the Company pays to the CMCMUA to treat 
and dispose of the sewage generated within Ocean City. Like the PWAC, the PSTAC charge is a pass-through of 
actual costs. 
 
 
 
 


What are the current Wastewater rates in Ocean City? 
 
 
Wastewater Service Charge: The Wastewater Service Charge for a customer is determined every January 1 
for the year based on the water usage for the prior July, August & September meter readings ("Summer Quarter 
Consumption") but in no event will a customer be billed for less than 7,480 gallons per year for wastewater 
service. The current service charge is $1.35 per 100 gallons of water usage billed at the property during the 
prior year’s summer quarter (July, August & September), but not less than 7,480 gallons, or $100.98 per 
year. This charge is then divided by 12 and is billed equally over the period of January through December 
each calendar year. 
 
 
Sewer Usage Charge: In addition to the above monthly Wastewater Service Charge there is a volumetric 
charge of $0.23250 per 100 gallons based on the water consumed for the current month based on the meter 
readings. 
 
 
Purchased Wastewater Treatment Adjustment Clause (PSTAC) Surcharge: Like the PWAC, the PSTAC 
charge is a pass-through charge based on actual wastewater treatment costs. The PSTAC charge reflects 
the costs that NJAWC pays to the CMCMUA for treating and disposing of wastewater collected in Ocean City. 
Each year, the PSTAC charge changes (generally in April) and may increase or decrease depending on the 
amount of wastewater NJAWC sends to the treatment plant and the CMCMUA’s costs associated with treatment 
and disposal. The current PSTAC charge is $3.26814 per 100 gallons of water used at the property during the 
prior year’s summer quarter (July, August & September), but not less than 7,480 gallons, or $244.46 per 
year. This PSTAC charge is then divided by 12 and billed monthly from January through December each 
calendar year.  
 
 
What is the purpose of the Purchased Wastewater Treatment Adjustment Clause 
(PSTAC) Surcharge? 
 
As mentioned above the PSTAC surcharge is a pass-through charge which enables the Company to recover the 
expense it pays to the CMCMUA for the treatment and disposal of the wastewater. Each year the PSTAC charge 
is reset in January and may increase or decrease depending on your prior year summer quarter consumption. 
The total PSTAC charge is shown as a separate line item on your bill.  
 
Why was the bill redesigned for the wastewater line items? 
 
Understanding the calculation of the Ocean City wastewater rate has been a challenge for both the Company and 
our customers.  Because this is a pass-through charge, displaying the PSTAC as a separate line item in the Other 
section on the customer’s bill allows customers to understand how much of their wastewater bill is for the pass-
through PSTAC charge, and be aware of their summer quarter consumption usage.  
 
Why is this year’s Wastewater Service Charge and PSTAC charge based on last year’s 
summer quarter (July, August & September) usage? 
 
The CMCMUA built the 45th Street Wastewater Treatment Facility in the mid 1970's to handle the tremendous peak 
flows Ocean City generates during the summer months and to handle the future growth and development of the 
community. The CMCMUA develops its annual user charge based on the previous year’s sewage flows to the 
wastewater treatment facility during the summer quarter (July, August & September). Thus, NJAWC calculates the 
passed-through PSTAC charge on the same basis. NJAWC also utilizes the same methodology to calculate its 
Wastewater Service Charge, billing customers in the current year based on the prior year’s summer consumption. 
In both cases, the use of the prior year’s usage allows these charges to be billed equally over a 12-month period. 
 
 
 
 


Why am I being billed for wastewater services when I am not there or utilizing the 
property? 
 
Wastewater services are billed to all customers regardless of the volume of water utilized that month. You may only 
be a seasonal resident and do not utilize the water service or experience any water volume use during certain 
months of the year, but you are still responsible for the wastewater services monthly. The annual Wastewater 
Service Charge and PSTAC charge are based on the water usage billed during the prior summer quarter 
(July, August and September) and covers the costs associated in providing reliable wastewater service to the 
community.  
 
NJAWC is sensitive to the impact on its customers if the full amount of wastewater service used was due only once 
a year. The Company realizes that such a charge could be burdensome to some customers. Thus, in the mid 
1970's, both the City and the Company agreed on a equitable billing plan that would permit the payments to be 
spread out equally over a 12-month period, so that customers are billed 1/12th of this charge each month throughout 
the calendar year.  
 
For the average property owner, it is more advantageous to have the payments spread out equally. This affords the 
customer an opportunity to budget the cost over the entire calendar year. In a way, it is a type of budget billing plan, 
similar to what is currently offered by other public utilities for the services that they provide. The difference is that 
the entire Ocean City customer base is on the budget plan, which was negotiated on your behalf by City 
representatives at the time the new processing plant was built in the mid 1970's.  
 
It is imperative that customers remain conscious of their intended water use during the summer quarter (July, 
August and September). Overly high water usage during this time period will dramatically affect your wastewater 
service bills in the coming calendar year.  
 
THE SEWER SERVICE CHARGE CALCULATIONS  
1. To calculate your sewer service charge, add up your total water usage recorded during the prior summer quarter 
(July, August & September). If that total is less than 7,480 gallons, then the minimum service charge of 
$100.98 per year or $8.42 per month and the PSTAC charge of $244.46 per year or $20.37 per month will 
be billed to your account for the monthly bill of $28.79 for the Service Charge and PSTAC charge. 
 
2. If your total water usage recorded during the prior summer quarter (July, August & September) is greater 
than 7,480 gallons, then you must multiply the total water used by the rate of $1.35 (service) and $3.26814 
(PSTAC charge) per 100 gallons.  
 
3. Divide the amount determined in (2) above by 12 for your monthly sewer service charge.  
 
Sample of the Ocean City Sewer Charge Calculations  
July 
     90  (CGL)  
August      80  (CGL)  
         + September 70 
(CGL)  
          
 
    240  (CGL for the summer quarter)  
 
Service Charge - 240 x $1.35 (rate per 100 gallons) = $324.00 annual or $324.00 / 12 months = $27.00 
per month  
 
 
PSTAC Charge - 240 x $3.26814 (rate per 100 gallons) = $784.35 annual or $784.35 / 12 months = $65.36 
per month 
 
In addition to the monthly Service Charge and PSTAC charge, above of $92.36 ($27.00 + $65.36, respectively), 
the customer will be billed the actual volume charge on the current month’s water usage at $0.23250 per 100 
gallons. Therefore, if the customer’s water usage for the current month is 5,520 gallons, then the customer will 
be billed $12.83 (55.2 x $0.23250), in addition to the $92.36 in the above sample for a total monthly sewer bill 
of $105.19.