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Hingham to request $500,000 feasibility study on buying water infrastructure from Aquarion

Posted by Jessica Bartlett  March 16, 2012 01:03 PM

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Hingham officials are hoping to get a half-million-dollar feasibility study approved at Town Meeting next month to analyze whether the town should look into purchasing its water infrastructure from Aquarion Water Co.

Both the Board of Selectmen (with Selectman John Riley abstaining from the vote) and the Advisory Committee voted in favor of the warrant article at their meetings Thursday night, which would take $500,000 from the town’s reserves to review the measure.

The study would look at the operational, financial, and legal issues involved in purchasing the town's water infrastructure from the national company. The funding will have to be approved at Town Meeting so that the town can open bidding on severfal areas of analysis.

Selectman Bruce Rabuffo said it isn’t clear how much of the funding might be spent, but the recommendation is enough to cover an analysis of what the infrastructure looks like, an analysis of the impact on the town’s finances, a look at potential cost of the purchase, and any legal expenses related to the acquisition.

Rabuffo said he was told by Harry Hibbard, Aquarion's vice president of operations in Massachusetts, on Thursday that should Hingham try to acquire the assets from Aquarion, it wouldn’t be easy.

“The legal issues is we have a lot of information already, but we don’t know if Aquarion is going to fight us, talk with us, we don’t know that, though their representative said [at the selectmen’s meeting] on faith that it would be a hostile takeover,” Rabuffo said. “But we’ve had discussions in the past with previous owners and they have been most cooperative with coming to a mutual agreement.”

Currently, the town of Oxford is in litigation with Aquarion in a similar effort to buy back its water infrastructure.

Hibbard said that although Oxford is a very different case than Hingham, they should be an example of how long a process this could be.

"The $500,000 is a lot of money, and if the town decides to follow this path, it will be a long, costly, and divisive endeavor," Hibbard said. "It’s a slippery slope. The more the invest, the harder it is to turn back."

Hibbard affirmed that Aquarion viewed the feasibility study as antagonistic.

"They want to forcibly take our company from us, but also they have gone ahead and pursued this path without even giving us a phone call to discuss it. And that seems like a hostile act," Hibbard said.

Despite the way it may seem, Rabuffo said the town is not going into the study with any preconceived notions.

“There are three issues as to why we’re looking at this: One. Control of a viable resource -- our water. Two. The series of rate increases that we’ve had, and three. the level of service delivery of late, particularly in certain sections of the town,” Rabuffo said. “I haven’t predetermined the answer, I can only say our dealings of late do not reinforce with them that they have our best interests at heart.”

The latest proposed rate increase – 18.72 percent to begin this April - has been a bone of contention since Aquarion announced its late last year. The company has said it not only needs to account for capital investments and raising costs, there is a 10.5 percent return on equity requirement for the shareholders.

Coupled with complaints of service problems and delayed repairs of water main breaks, Hingham has been ready to part ways for some time.

If the town were to break off from the company, Hull, northern Cohasset, and parts of Norwell could also join.

“We have had initial talks with them… every town has its own issues,” Rabuffo said. “For example, does Cohasset want to join that on their own, buy off and separate from us? Hull has some issues in terms of ownership and development – what’s the best structure for them to have? They don’t know and I don’t know. … We need information of what the infrastructure looks like, the pipes and treatment plant. So that will be a part of the study.”

Hibbard said it was his understanding that the infrastructure, if it was to be purchased, could not be done so in parts, as all of the town's charters are connected.

Hingham also has to figure out how a recently approved Community Preservation Committee acquisition of five acres surrounding Accord Pond, one of Hingham's public water supplies, would fit into the discussion.

Additionally, the acquisition of the water infrastructure might make the setup of a proposed water treatment plant for the South Shore Industrial Park easier. Currently, the town is undergoing discussions with Aquarion on how to set up the proposed facility.

“It will all be part of discussion,” Rabuffo said.

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