State utility regulators have approved higher utility rates for New Jersey American Water customers, but many households will temporarily experience lower monthly expenses thanks to an offsetting credit generated from chemical contamination lawsuits.
The regulatory ruling, delivered by the New Jersey Board of Public Utilities, authorizes the private water provider to implement new base rates while concurrently launching a dedicated credit program funded through PFAS litigation settlements.
Under the newly established PFAS Litigation Universal Surcredit, commonly referred to as the PLUS mechanism, qualifying residential water customers will receive a standard monthly credit of $9.88 applied directly to their utility bills. The credit is scheduled to run for a duration of 12 months, commencing in September 2026.
According to state filings, the PLUS program accounts for the distribution of more than $79 million in legal settlement proceeds and accumulated interest stemming from actions against manufacturers of per- and polyfluoroalkyl substances, widely known as PFAS chemicals.
The practical impact of these concurrent financial adjustments means that standard residential water consumers will see a net reduction in their monthly statements. A typical household consuming roughly 5,700 gallons of water per month will face a base rate increase of approximately $4, but after applying the $9.88 monthly PLUS credit, the customer will realize an average net savings of nearly $6 each month.
The financial breakdown differs slightly for households utilizing other utility services. Customers who subscribe solely to residential wastewater collection will experience a rate increase of about $4 per month without the water-specific credit.
Meanwhile, customers who receive combined water and sewer services from the utility will see their rates rise by an estimated $8 per month in total. Even with the larger rate hike, the $9.88 monthly PLUS credit will exceed the added cost, resulting in an average net reduction of approximately $2 per month over the coming 12-month timeframe.
Utility officials noted that individual bill outcomes will vary across the state depending on specific geographic locations, overall monthly water usage, and the precise category of service provided to each property. The adjusted tariffs officially go into effect on Sept. 15.
The underlying base rate increase will provide New Jersey American Water with an estimated $68 million in additional annual revenue. This revenue will support an extensive capital improvement plan exceeding $1.4 billion aimed at overhauling critical treatment, transmission, and distribution networks statewide.
As part of the planned infrastructure upgrades, the utility intends to rehabilitate or replace nearly 120 miles of aging water mains. The capital program also allocates funding to accelerate the replacement of legacy lead service lines throughout the company's regional footprint.
Additionally, substantial investments are slated for upgrading filtration and treatment processes at facilities such as the Raritan-Millstone Water Treatment plant in Bridgewater. These technical upgrades are designed to eliminate PFAS and other emerging contaminants, bolstering water quality and distribution reliability for residential homes, businesses, schools, and medical facilities.
Mark McDonough, president of New Jersey American Water, emphasized that the regulatory determination allows the utility to execute essential modernizations across its infrastructure while actively cushioning the cost impact on consumers. McDonough stated that the capital strategy balances reliability and quality projects with household affordability.
Regarding the legal funds, McDonough explained that the PLUS system offers an open and transparent structure to reimburse settlement proceeds to ratepayers. The credit will be presented as an explicit line item labeled "PLUS" on monthly billing statements so consumers can clearly track the return of litigation monies.
Company representatives indicated that any additional PFAS-related settlements secured in future legal proceedings will be distributed to eligible customers as one-time bill credits once verified and approved by the Board of Public Utilities.
Alongside the newly approved rate adjustments, New Jersey American Water is continuing to offer multiple affordability initiatives for financially vulnerable households, including budget billing arrangements and flexible payment plans.
The utility is also collaborating with the New Jersey Department of Community Affairs to assess enrollment mechanisms for its Universal Affordability Tariff. This initiative includes exploring automatic enrollment pathways for qualifying customers who are already registered to receive specific state energy assistance benefits.
McDonough highlighted the critical nature of potable water services and urged individuals facing economic difficulties to review available support initiatives. He encouraged customers encountering hardships to reach out to the utility to explore relief alternatives before falling into payment arrears.
Headquartered in the state, New Jersey American Water maintains a workforce of more than 875 employees and supplies drinking water and wastewater services to approximately 3 million residents across New Jersey.
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