American Water appears to have negotiated a sweet deal to sell its regulated water systems in the state of New York, despite Governor Kathy Hochul signing legislation this month to create water authorities with the power to acquire the assets by eminent domain. A joint proposal submitted to the New York Public Service Commission in late October outlines an agreement among American Water, the buyer of the systems (Liberty Utilities), and local municipal bodies, whereby the assets would be transferred to Liberty in their entirety, albeit with a number of caveats. Key among these are a rate freeze until IST April 2023, an agreement not to pass on the goodwill associated with the transaction on to customers, and a commitment by Liberty to pay customers a $23.5 million "positive benefit adjustment" to write off historical surcharges. Most relevantly, however, the document sets out a timetable for the potential municipalisation of portions of the assets - starting immediately after the deal has closed.
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