In a letter last week, a Hingham resident asked some very good questions about the potential purchase of the water company, so I thought I would suggest some answers, or at least some things to consider.
The first question was, “…litigation is expensive, and for what end?” The end, of course, is to control our own water distribution system just as the vast majority of Massachusetts towns already do. Only a small handful of towns, including ours, are served by a private water company which makes decisions about how to manage and repair (or not) our water infrastructure, completely out of the control of our town. Controlling the system that serves us (or doesn’t serve us, as is now sometimes the case) is a worthy goal.
The next question was, “What will the citizens of Hingham gain if the town is successful in this purchase?” Beyond controlling the maintenance of our own water system, we will also control the rates. We already have, and have had for years, rates among the highest in the Commonwealth. This isn’t surprising, since in addition to providing water and maintaining the system, a private water company must also find money in its budget to reward its shareholders.
In fact, it is the duty of a private company to put the needs of its owners first, before providing water or maintaining our system. This became extremely clear when, shortly after a series of main breaks in the Union Street area, Aquarion told the Board of Selectmen that the amount which Aquarion budgets for system maintenance is not determined by reviewing the needs of the system and considering their urgency, but by a percentage of the return on investment. Having a water company which determines what to repair, and when, based on the need for repair, and not on an artificial budget number, seems like a worthy goal to me.
In addition to control over maintenance and rates, another thing Hingham would gain from this purchase are the funds that currently go to shareholders. The portion of our rates that go to the pockets of private owners, which up until recently were foreign entities, would instead stay with us and could be available for maintenance, rather than for private profit. Or those funds could be used to reduce rates, if that was appropriate. Control over that money seems like a big win to me.
Another question asked was, “Is Hingham equipped to run a water company?” The very large majority of towns in Massachusetts run their water company, so why this might be beyond our ability escapes me. But if you still wonder if we’re equipped to run our own utility, it’s good to remember that we already do, of course. The Hingham Municipal Light Plant has been delivering our electricity for more than a hundred years under local governance. I have been here for over thirty of them, and I have never yet heard anyone complain about the service we get from our municipal light plant – not once. Aquarion Water? That’s another story. While inheriting a system that needs work is different from building it ourselves from scratch, as we did with the electric company, we have demonstrated experience to manage it well.
(If you’re worried about the cost of the very old water system falling on the ratepayers, it helps to remember that it already does. Every dime spent on maintenance comes out of the rates, and that will always be true, no matter who owns it. We already pay for the maintenance, we might as well control it too!)
The big question of course, and the one that should concern us the most, is the price. The letter-writer’s “understanding is that the takeover of the water company would cost the town $100 million.” Actually, we don’t know what the price would be. The purpose of the current litigation is to determine that.
Since we don’t yet know the price, obviously we can’t know yet whether we will be willing to pay it. But if one is not following the process closely, one may not be aware that the goal of the committee studying the purchase is to finance the acquisition through water rates, without increasing them. How is that possible? This is another potential use of the shareholders’ earnings which we will no longer pay to shareholders: financing the purchase of the water company, even including the litigation we have undergone, without raising the rates or calling on town resources. This is a possibility, and not out of reach – it all depends on the price, which we don’t yet know.
So, is it a good idea to buy the water company so we can control maintenance and rates, keep ratepayers’ funds in town rather than send them away for private profit, and get the kind of service from our water utility that we get from the light plant? Would it be a good idea to have a water company whose loyalty is not to private investors, but only to the ratepayers – the way the light plant works? Seems like a win to me. Whether this goal can be financed through water rates at the current level, without raising them, remains to be seen. It all depends on the price, which we are all anxiously awaiting. But even if we have to pay something more to acquire the company, the powerful benefits may be worth some extra expenditure. Again, depends on the price.
The letter-writer ends by opining that “the town should be free from the litigation to focus its attention on the needs of its constituents.” In my humble opinion, there is no project the town has undertaken in the last ten years which is more central to our needs than control over our water treatment and distribution, which is taken for granted almost everywhere else in Massachusetts. I thank the Board of Selectmen and the Advisory Committee, who have had Town Meeting’s support all along, for staying the course and keeping this possibility on the table.
Laura Burn lives at 96 Hersey St.