[172 NJSuper Page 372] This is a motion for summary judgment seeking to compel the Borough of Manville which owns and operates a water supply
system to charge the same rates to out-of-town users as it charges its own residents. Out-of-town users pay about double the rates charged to Manville residents.
The out-of-town users claim that N.J.S.A. 40:62-85.2 (enacted February 8, 1979) requires defendant to charge everyone the same rates. Manville contends that the water rates are determined by an existing contract and the Legislature cannot constitutionally impair its obligations.
Manville supplies water not only to its own residents but also to two residential developments in the adjoining Township of Hillsborough. Several decades ago Manville contracted with building contractors, the predecessors in title to plaintiffs' land, to supply water to the Hillsborough developments for a term of 25 years. One contract was entered into on January 1, 1956 and covered a development commonly known as Village Green. The other contract was entered into on December 28, 1960 and covered a development commonly known as Green Hills. The former contract will expire December 31, 1981 and the latter December 27, 1985.
Both contracts provide that the water rates "may, at the option of the Borough, be revised from year to year on the basis of operating costs, provided, however, that said rate shall not at any time be less than the rate of seventy (70 cents) cents per thousand gallons."
In addition, every Hillsborough homeowner is required to pay Manville a water connection deposit of $25, which bears no interest and "will not be assignable by the depositor". The deposit may be used to pay for any delinquency, maintenance charges, or damage committed by the user.
N.J.S.A. 40:62-85.2 exempts a municipal water system from the jurisdiction and control of the Board of Public Utilities if "the sale of water outside of its boundaries does not exceed 25% of its total water revenue" and it supplies "water to 1,000 or less billed customers" outside of its boundaries. Manville is exempt since both conditions exist. The focus of this dispute is on that
portion of the statute which directs that when such exemption exists
Hillsborough residents have always paid a substantially higher charge for their water than have Manville residents. For instance, during the first year of each contract Manville residents were charged 35 cents a thousand gallons of water, while Hillsborough residents were charged 70 cents a thousand, or 100% more.
Manville now has a graduated rate schedule with different rates for senior citizens and nonsenior citizens. And the rate disparity continues. For instance, on the first 6,000 gallons used, Hillsborough senior citizens are charged 130% more than Manville senior citizens (58 cents as against $1.36 a thousand), and Hillsborough nonsenior citizens are charged 80% more than those of Manville (75 cents as against $1.36 a thousand).
Plaintiffs say that since a municipality is a creature of the state its policy must yield to that of the State as expressed in the statute. Manville argues that it has a firm and binding contract with plaintiffs and the State may not constitutionally impair the obligations of such contract. As to the deposit requirement, it notes that Manville may impose a lien through its tax office upon Manville users who attempt to avoid their obligation to pay for water or who damage water ...