IBO: Drilling for Natural Gas in the Catskills Could Lead to Higher Water Bills in the City

The City's Independent Budget Office has a new report out on the impact drilling for natural gas in the Catskill/Delaware watershed would have on water rates, mainly because of the need for another filtration plant. The plant currently under construction in Van Cortlandt Park is only for filtering water from the Croton watershed -- the source for only about 10% of the City's water.

The State is considering allowing private companies to begin drilling for natural gas in upstate New York, while the City is shelling out more than $630 million between now and 2017 on "filtration avoidance" by protecting the Cat/Del watershed, where 90% of our water comes from. If the companies are allowed to drill, they will utilize a procedure known as hydraulic fracturing that would likely lead to contamination in the watershed and the need for another, even larger filtration plant.


Three main points from the report are:

1. If a filtration plant were built, IBO projects that water rates would increase a cumulative 171.1 percent over the 10-year construction period, compared to a projected increase of 148.1 percent in the same period if the plant were not built.
2. Building a filtration plant is expected to increase the average single-family homeowner’s annual water bill by $367 more than the increase we would expect to see if the city were not required to filter the Catskills/Delaware watershed.
3. In 2008 and 2009, the city’s Department of Environment Protection committed $337.7 million to protect the Catskill watershed and avoid the need to build a filtration plant, and plans to commit an additional $292.4 million in 2010–2017.

The IBO used DEP's cost estimate of a second filtration plant of $10 billion. Even though DEP's estimate is higher than the Mayor's office or the State's, we know what has happened with the cost of the current filtration plant.

The following chart from the IBO report illustrates projected water rate increases for single family homeowners with or without a Cat/Del Filtration Plant. What is incredible here is the size of DEP's existing capital plan, the debt service for which makes up the vast majority of DEP's expenses. Even without this second massive filtration plant, water rates are predicted to quadruple in 15 years.


Keep in mind that the average annual water bill for a single family homeowner was $571 just four years ago. That means with another filtration plant, rates could go up 600% in twenty years.