by Ginger Costen
OXFORD - In the 1980s and 1990s, private water companies pushed to buy or manage municipal systems at the same time the costs of maintaining these systems were rising because of age, which made sales attractive to small communities across America. Now faced with sky-rocketing rate increases, these small towns are struggling to regain control of their privately owned water systems.
Locally, Oxford is one of those towns with their water system currently being owned by the Aquarion Water Company of Massachusetts. In the public water supply business since 1857, Aquarion, based in Bridgeport, Connecticut, is the largest investor-owned water utility in New England and is among the ten largest in the United States.
While Oxford continues with legal action, Aquarion defends its rate increases, stating it has had to spend money to improve the infrastructure and as a private company it is entitled to recover those costs. John Walsh, Aquarion's Vice President of Operations for Massachusetts and Connecticut, said Oxford's rates have risen only about 3.4 percent annually since the system was purchased in 2002.
On October 21, 1904, the Town of Oxford granted permission to the Oxford Water Co. to exclusively operate a public water supply system within town boundaries. Although there were several times since 1904 that the town considered taking back the water system, it wasn’t until 1977 that they took formal action.
Following a lengthy series of court decisions and town meeting appropriations, Oxford Town Manager Joseph Zeneski said they’re now at a point that he’ll have an article for the May Town Meeting requesting additional funds to approve the purchase back from Aquarion.
Zeneski also said Oxford’s decision is about providing full service and the best rates.
In the Act of 1904 it states that the corporation must supply the town of Oxford and its inhabitants with water for the extinguishment of fires and for domestic, manufacturing, and other proper purposes. “However,” adds Zeneski, “Aquarion is not supplying all those needs as we [Oxford] supply our own water for fire extinguishment and manufacturing.”
Since the Massachusetts Department of Public Utilities (DPU) allowed Aquarian to consolidate all of its five Massachusetts communities, Oxford’s rates have significantly increased. “I think the towns should pay varying rates because the water for Hingham, Oxford, Millbury, Hull and North Cohasset all come from different sources and Oxford is unfairly subsidizing the needs in other towns. In nine years our rates have increased 49 percent,” he said. “And part of that increase is illegal as Aquarion is passing on the costs of having to go to court and defend our legal actions.”
According to a 2012 report by Food and Water Watch, a group that supports public control of water systems, the privatization trend is waning. Using Environmental Protection Agency data, the group estimated that between October 2007 and October 2011 the number of Americans served by privately owned systems fell 16 percent, while the number served by public ones rose eight percent.
"Communities large and small are increasingly seeking to maintain or revert back to public control of their water systems," said Seth Gladstone, spokesman for the group. Privatization raises costs because of the profits companies must make, while removing the company allows local communities to have more oversight of their systems.
Conversely, Michael Deane, Executive Director of the National Association of Water Companies said, “Although some of the towns attempting to take over their water systems have received a lot of attention, other cash-strapped ones are still turning to private companies.” According to Deane private community water systems served about 42 million Americans in 2012 while public systems served some 300 million.
Citing a lack of support from both the state DPU and the Attorney General’s office, Zeneski is frustrated with the very state departments that are supposed to be helping the residents of Oxford. “Aquarion doesn’t want to lose this cash cow and their lobbyist is busy making the rounds at Beacon Hill,” said Zeneski. “Jennie Caissie, the Governor's Councilor representing the Massachusetts' 7th District, called me the other day to tell me they were asking her for help to change our minds and Martha Coakley won’t help enforce the Acts of 1904 that state the company must provide annual reports and work directly with the Board of Selectmen.”
A takeover isn’t getting any easier for Oxford, for although the Worcester Superior Court ruled in December that the town could purchase Aquarion, according to Zeneski the company is reluctant to provide key information or support documentation so the two sides can agree upon a price.
“We are pleased with the December ruling by Justice Daniel Wrenn,” said John Walsh.
The ruling stated that Oxford could purchase its water system back from Aquarion for $8.12 million as opposed to the $6.7 million that was previously offered. Aquarion’s web site does not mention the ongoing legal actions and states only that they are hoping to continue providing and improving service to the Oxford community.
The additional funds that will be requested at the May Town Meeting are for the court ruling as well as the proposed list of assets as submitted by Aquarion. Zeneski has yet to have an exact amount but is estimating a final figure of $9.2 million selling price instead of the $6.7 million that was previously approved.
It appears that the two sides may still be oceans apart as to what will be a fair market value for the assets.
Ginger Costen can be reached at email@example.com