Phil Lemnios, Hull Town Manager, was the guest speaker at a meeting of the Hingham Water Supply committee. We thought his insights on his exposure to several methods of water operations was noteworthy. Lemnios said he could see an inter-municipal water agreement as best benefiting all involved towns.
APRIL 12, 2012 A posted meeting of the Hingham Water Supply Committee (Committee) was held on Thursday, April 12, 2012 in the East hearing room, 210 Central St., Hingham, MA.
MEMBERS PRESENT Sam Mullen, Chairman
Kirk Shilts, Secretary
Tom Burbank, Member
James Connelly, Member
Maureen Doran, Member
Roger Sullivan, Member
OFFICIALS PRESENT Harry Hibbard, V.P. Massachusetts Operations, Aquarion Water Co. (Aquarion)
Clinton Sanko, Aquarion Water Co.
Joe Cronin, Aquarion Water Co.
Philip Lemnios, Hull Town Manager
AGENDA Mr. Mullen reviewed the posted agenda with the Committee.
Thereafter, the agenda was established as posted.
HULL TOWN MANAGER:
PHILIP LEMNIOS Mr. Lemnios discussed his municipal experience with the towns of Attleboro, Natick and Hull that included first-hand knowledge working, with a municipal; a quasi-public regional; and a privately run water supply system.
Mr. Lemnios said Hull has their municipal electric and sewer utilities under private contractual operations and views the purchase of Aquarion as an additional opportunity to save Hull money. He said municipal utilities typically operate on lower margins than private utilities. He believed Aquarion is not efficient at cost management.
Mr. Lemnios said the residents of Hull are frustrated with Aquarion’s service and rising costs. He recognized the responsibility for Hull to input toward the purchase of Aquarion, if Hingham residents eventually decide to move forward on any future acquisition. He believed the taxpayers of Hull have an appetite to allocate money for this endeavor.
Mr. Lemnios envisioned how Hull would be a minority partner within a tri-town municipal water district involving Hull, Cohasset and Hingham. He gave the analogy of the new regional dispatch center as an example and model for intermunicipal cooperation and resultant cost savings. He said each town’s cost toward operating the dispatch center is proportional to the call volume frequency from each town.
Mr. Lemnios said municipal utility rates are typically lower than private utilities because a municipality has no investor profit, component retained earnings are usually maximized at 1-2% and private utilities often short capitol investments. He added that municipal utility rate changes also go through a public oversight format.
Mr. Lemnios discussed the Hull desalinization study from about six years ago. He said the study was driven by the town’s dissatisfaction with Aquarion and the potential cost benefits from having their own water supply mechanism. He said the study primarily dealt with the unique permitting and engineering aspects of desalinization in addition to studying Hull’s existing water infrastructure. The cost of the study was $265,000. He said the town did not follow through with the project because of the significant permitting difficulties tied to the complexities and novelty of the desalinization process.
Mr. Lemnios described the advantages of privatizing employee municipal operations as Hull has done, which generally ensures adequate staffing. He also said customer service through a town-owned utility has advantages over a private company, because an aggrieved resident has the ability to appear before the utility’s governance board and ability to ask and receive abatements. Mr. Lemnios agreed that the state DPU process for private utilities also protects customer rights through an extensive oversight mechanism.
Mr. Lemnios believed the absent frequency of towns selling their utilities to private owners suggests that total privatization is not cost efficient or desirable. The example of the Town of Grafton water system was nevertheless mentioned as one such example.
CATHERINE SALISBURY: Ms. Salisbury discussed her chairmanship of the WSC twenty-seven-years ago when the Town last conducted a study of the Hingham Water Co. She said the 1984 study was performed by the engineering firm Whitman & Howard and cost the town $50,000. She added the Town did not have the position of Town Administrator back then and that town governance was less integrated than it is now.
Ms. Salisbury said the Water Co. was locally owned at the time of the 1984 study. She reported the tremendous cooperation the Water Co. provided toward completing the town study.
Ms. Salisbury said the principle focus of the WSC in 1984 was in regards to adequacy and water quality including the issue of trihalomethanes in our drinking water. She mentioned the WSC establishing two groundwater protection zones, the Hingham Groundwater Overlay District and the Accord Pond Protection Overlay District. She noted the state Water Management Act, including the mandates & protections it contains, did not come into being until later (1987).
Ms. Salisbury reported how the WSC actively participated in rate cases before the state DPU as an advocate for the Town. She found it interesting that the fire hydrant fee the water co. assessed the Town seemed to surprisingly match the taxes paid by the Water Co. to the Town.
Ms. Salisbury said the price (acquisition) component of the 1984 study was not the focus of the 1984 study although it was determined to be $6.1 million. The study’s principal finding was a recommendation the Water Co., or the Town, build a water treatment plant to address known water quality problems. The cost for building a treatment plant was estimated at $10 million. She mentioned that the completed plant cost significantly more than originally estimated.
Ms. Salisbury said the town’s signature financial discussion during the mid 1980′s centered on whether to purchase the South Shore Country Club property. The WSC did not advance or suggest the Town consider purchasing the Water Co. and the 1985 Town Meeting never addressed the topic.
Ms. Salisbury offered her personal thoughts on whether the town should currently purchase the Water Co. (Aquarion). She said she did not believe the cost of water was a significant expense or factor to consider. She was unsure if the Town possessed the ability to efficiently run the treatment plant. She highlighted the good relationship the WSC has had, and continues to have, with the Water Co. (Aquarion). Should a purchase eventually occur, she thought water should be sold in bulk to Hull as opposed to Hingham serving individual Hull customers.
AQUARION UPDATE: Mr. Hibbard reported the, April 10th forum at the Hingham Middle School was informative albeit not well attended. He said information presented at the meeting is available online at www.hinghamwaterfacts.com.
Mr. Hibbard said Aquarion is most concerned by the wording of the Selectmen’s feasibility study Article authorizing litigation. He said there is a big difference between simply obtaining documents and obtaining a “price”.
Mr. Hibbard discussed how water systems originated and evolved from what were initially fire suppression protection systems rather than drinking water supplies.
Mr. Hibbard said Aquarion interprets the “not to exceed 10%” interest clause within the Water Co. 1879 charter to mean actually 10%. He mentioned a 1938 court decision that rejected an attempt to change the 10% interest figure down to 5%.
Mr. Hibbard discussed the recently released 2011 rate case ruling by the state DPU. He said the DPU cited Aquarion’s need to improve communications between the company and its customers. He believed this stemmed from an allegation that Aquarion had not properly maintained its infrastructure which 3-years ago resulted in a Rockland St. water main break and also the “combative” nature of Aquarion’s customer dissatisfaction.
COMMITTEE MEMBER COMMENT:
PAUL CAPPERS Mr. Burbank reviewed a prepared statement from Mr. Cappers regarding his investigation comparing water rates between Aquarion and the Town of Braintree. An opinion was expressed on how difficult it can be to make such comparisons due to the apples-to-oranges nature of different systems with completely different capitol needs.
SCHEDULE The next quarterly meeting of the Committee is tentatively scheduled for Wednesday, June, 27, 2012 at 7:30pm.
ADJOURNMENT The April 12, 2012 meeting of the Hingham Water Supply Committee meeting adjourned at 9:20PM.
Kirk Shilts, D.C.
Hingham Water Supply Committee