Water Supply Committee
MARCH 28, 2012 A posted meeting of the Hingham Water Supply Committee (Committee) was held on Wednesday, March 28, 2012 in the North Central hearing room, 210 Central St., Hingham, MA.
The meeting was called to order by Mr. Mullen at 7:30PM.
MEMBERS PRESENT Sam Mullen, Chairman
Kirk Shilts, Secretary
Tom Burbank, Member
Paul Cappers, Member
Maureen Doran, Member
Roger Sullivan, Member
OFFICIALS PRESENT Harry Hibbard, V.P. Massachusetts Operations, Aquarion Water Co. (Aquarion)
Clinton Sanko, Aquarion Water Co.
John Walsh, Aquarion Water Co.
Peter DeCaprio, Chairman, Cohasset Water Commission
Ted Alexiades, Hingham Town Administrator
AGENDA Mr. Mullen reviewed the posted agenda with the Committee.
Thereafter, the agenda was established as posted.
HINGHAM BOARD OF SELECTMEN: Mr. Alexiades presented to the Committee on behalf of the Hingham Board of Selectmen to discuss their proposed Warrant Article to conduct a feasibility study about acquiring the rights and assets of the Hingham Water Co., currently owned by Aquarion. Town Special Counsel Atty. Kerry Ryan accompanied Mr. Alexiades.
Mr. Alexiades said the motivation behind the study was precipitated by the current rate increase.
Mr. Alexiades said the Article seeks $500,000 to complete an acquisition study within one-year. He believed the study is needed to make an informed decision about the financials (management structure & infrastructure) surrounding Hingham’s current water service. He added the largest cost component of the study is potential litigation; and the degree of litigation will depend upon the level of cooperation that Aquarion provides.
Mr. Alexiades stated the town last studied acquisition in 1985 and $55,000 was appropriated for this purpose. He also said the Hingham Municipal Light Plant commissioned its own $20,000 study a few years ago to determine how the Light Plant could potentially purchase and operate the Water Co. He added that copies of both studies are available in the Selectmen’s office.
Mr. Alexiades believed the study would be expected to address Mr. Sullivan’s concern related to the state DEP approving the multi-town aspect to any eventual purchase of the Water Co. by the Town.
Atty. Ryan discussed the Town of Oxford acquisition suit. He said Oxford involves an ‘eminent domain’ action with compensation based on ‘fair market value’. With Hingham, the statute allows the town to purchase the Water Co. assets ‘outright’ with compensation based on ‘original costs’. He mentioned that that an adversarial tone has developed between Oxford and Aquarion.
Mr. Alexiades believed that there are a number of benefits to be obtained by acquiring the Water Co and it would be worth conducting the study to determine whether those benefits were likely to be obtained. He said the process of acquisition would not be a ‘take over’, but rather moving forward on the town’s statutory right.
COHASSET WATER COMMISSION: Mr. DeCaprio presented to the Committee to discuss water-supply related issues in the town of Cohasset. He presented as a member of the Cohasset Water Commission and not on behalf of the Commission.
Mr. DeCaprio stated his belief that all municipal services within Cohasset, including water service, should be outsourced to larger corporate or regional entities due to the town’s limited economy of scale. He thought the same would be true for most small towns including possibly Hingham.
Mr. DeCaprio said the task of operating a water system is complex, due in large part to extensive regulatory oversight. He said it was a ‘disaster’ when Cohasset town employees ran the water system. Engineering deficiencies within their system and poor management decisions required the town to bail out the water department a few years ago, which resulted in a 30% rate increase. Cohasset customers currently see annual cost increases of about 4.5%. He said Cohasset presently has the most expensive water in the state. He mentioned the “Tighe & Bond” study as a good guide for comparing water rates.
Mr. DeCaprio said operating the Cohasset system is presently contracted to American Water Co., whose contract is about to expire. Cohasset Town Meeting will soon discuss four proposals for awarding and/or extending the next contract. He said the commission’s goal is to build a 10% return into the concession contract and allow the operator to assume all benefit/risks.
Mr. DeCaprio said the Cohasset system has a $4.7 million revenue base from approximately 2,300 customers. He estimated the value of the Cohasset system at $36 million based on the simple financial equation of 9x cash flow.
Mr. DeCaprio said Aquarion serves 316 Cohasset households. These same homes also have Hull municipal sewer service. He added Cohasset would like to purchase these 316 customers from Aquarion and already has a service connection to this portion of Aquarion’s system.
In discussing Cohasset’s often-maligned water quality, Mr. DeCaprio said constant movement of water within the pipes is a key to improving quality and requires circular interconnections. He said dead-end runs are the most problematic. He also identified the difference between a predominately surface water source like Cohasset and the more pristine well water source that most towns, including Hingham, utilize.
Mr. DeCaprio said Cohasset has the potential extra capacity to supply 300,000g/d for out-of-basin use, and an extra 1,000,000g/d capacity for in-basin use. He added that Scituate is within the same watershed basin as Cohasset.
AQUARION UPDATE: Atty. Hibbard mentioned that Aquarion has scheduled a community outreach on Tuesday, April 10th at the Hingham Middle School to assess customer concerns.
Atty. Hibbard confirmed that Aquarion was kept in the dark regarding Oxford’s intent to file suit. He said a large percentage of the Oxford litigation centers on determining matters relative to costs as well as the natural defensive reaction from being unexpectedly pulled into court action.
Atty. Hibbard stated that Aquarion was currently polling their customers on the proposed feasibility study issue and its cost to the community. Ms. Doran stated her household was polled, which she herself participated. She thought the poll was somewhat “heavy-handed” by its questions that seemed to frame a pre-determined perspective.
Atty. Hibbard reiterated that even though his company did not see the need for the proposed feasibility study, Aquarion would continue to cooperate with the town and offer all financial information that is available.
Atty. Hibbard believed that the state DPU would likely issue their decision on Aquarion’s current rate case at the end of this week.
• COMMITTEE MEMBERSHIP Dr. Shilts discussed the matter of committee member attendance. He mentioned that a particular member has been chronically absent for seven of the last eight meetings dating back to 2008 and asked if anyone knew why.
Thereafter, Atty. Mullen will contact committee member Connelly to discuss his absenteeism and committee responsibilities.
MINUTES The Committee reviewed the meeting minutes of January 25, 2012.
Thereafter, a Motion was made by Mr. Burbank and Seconded by Ms. Doran and it was VOTED (unanimous);
To approve the meeting minutes of January 25, 2012 as drafted.
SCHEDULE The next meeting of the Committee is tentatively scheduled for Wednesday, April 18, 2012 at 7:00pm.
ADJOURNMENT The March 28, 2012 meeting of the Hingham Water Supply Committee meeting adjourned at 9:48PM.