Hingham, Hull, and Cohasset can expect to see a reduction in their water rates after the towns’ water supplier announced that it will refinance some of its debt.
According to a press release issued by Aquarion Water Co., the organization is refinancing the $30 million debt for its Hingham Water Treatment Plant, which was built in 1995.
The action will save the company approximately $800,000 a year, and all of the savings will be passed on to the customer, Aquarion officials said.
As a result, the 7,835 customers in Hingham, 4,580 customers in Hull, and 325 customers in Cohasset can expect to see a 7 to 9 percent decrease in their annual water rates, a savings that would be approximately $60 a year for the average customer bill.
“As prudent businesspeople, we continue to look for ways to do what’s best for our customers, while reviewing all facets of our operations for savings opportunities,” said Aquarion President and CEO Charles V. Firlotte in a release. “Given the volatility of the market and with interest rates at their lowest levels, now seemed like the most appropriate time to examine our financing options and restructure the debt.”
John Walsh, vice president of operations for Massachusetts, said the company has been looking into this for some time.
"We’ve been watching the interest rates for over a yr and we feel that this is the time to lock in a new lower interest rate," he said. "Once we finalize the refinancing, we’ll go back to the Department of Public Utilities to establish new lower rates, and we will do that as quickly as possible. Then the DPU will rule on the propsed rates."
Aquarion expects the refinancing to be completed by early October.
From there, "we will immediately seek approval from the Department of Public Utilities to reduce rates. We’re hopeful our customers will see new lower rates by this December."
According to Hingham Selectman Bruce Rabuffo, it isn't surprising that the company took a look at its debt.
“Our financial analysis uncovered the fact that the current interest they were paying was in excess of 7 percent. In this day of low interest rates, that surprised us, but that all tied back to the decision to build a treatment plant,” Rabuffo said. “It doesn’t surprise me that they are [refinancing]. It could be a sign as they get heir costs under control.”
Hingham officials have been examining Aquarion's operations as it considers whether to purchase the water infrastructure from the company. Rabuffo was hesitant to say if the decision to refinance the debt, and subsequently reduce water rates, was related to the potential purchase.
Moving forward, however, reducing costs is a good move for a company that wants to keep its customers on board, Rabuffo said.
“Anything that contains their costs is a step in the right direction, assuming the ratepayer gets the benefit. Certainly some of the actions they have taken of late would express for me why they are not for sale. They think they can do a good job, so we will see,” Rabuffo said.