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Aquarion and Hingham disagree amicably over terms of water-system purchase

Posted by Jessica Bartlett  July 12, 2012 03:21 PM

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After months of analysis, Aquarion Water Co. officials announced Wednesday night that the full price for the water system in Hingham, Hull, and parts of Cohasset would be $184 million.

One of three options, the numbers affirm the high cost that Aquarion has been suggesting since Hingham residents voted in April to look at purchasing the water infrastructure from Aquarion.

Another option announced at a public meeting on Wednesday was having Hingham purchase the water distribution system for $84.3 million and take over the water treatment plant by eminent domain, which would cost $60.8 million. The resulting total price would be $145.1 million.

The town could also purchase the corporate infrastructure and instead of purchasing the water treatment plant, pay the lease through 2035.

“Under this option, customers would still pay the same surcharge on their bills for the water treatment plant plus the extra cost to pay for the distribution system. The lease payments from 2013 through 2035 total approximately $97 million,” Aquarion officials said in a release.

Aquarion agreed to analyze the price of the infrastructure after Hingham voted at Town Meeting to authorize a $320,000 feasibility study on the purchase.

Although the town is still working on its own cost estimates, already there is disagreement about the price.

According to a handout by Jon Asher, a member of the committee studying the purchase, the town’s anticipated price is between $21 million and $56 million, depending if the town purchases or leases the water treatment plant.

The disagreement stems from whether Aquarion’s annual returns on investment should be included in the cost or subtracted from it.

“What if those excess returns were to be considered as dividends to the water company’s various corporate owners? Is our preliminary assessment accurate that such an approach might potentially reduce the acquisition price of the water company?” Asher said in a release.

Although Hingham officials disagree on the price, the two parties do agree on some important points, Asher said.

“In the early going, there was some pushback from Aquarion that the company wasn’t for sale, and [Aquarion attorney] Joe Conner repeated Wednesday that they don’t want to sell the company, but they acknowledge that the town has the right to acquire it,” Asher said.

Both parties also agree that the language in the 1879 Town Charter, which stipulates how the town may go about buying the infrastructure, is key.

“But at that point we start digressing, and our positions start moving apart in terms of the intent of that language,” Asher said.

Additionally, the willingness of Aquarion to work with the town is encouraging, town officials said.

“We have a disagreement with them over some of the calculations -- considerable disagreements. But nobody yelled, screamed, ranted or raved on Wednesday. They put their case forward and we basically said we just got the data, we haven’t got a chance to analyze it, but we have some questions,” Selectman Bruce Rabuffo said. “Their president had said to me on Tuesday that he expected we would have questions and he expected this to be an iterative process.”

With luck, that communication and respect will allow Hingham to avoid litigation as it goes through this process, Asher said.

“Neither of us wants to engage in extended and expensive litigation, so how do we arrive at a mutually satisfactory outcome here?” Asher said.

“I personally believe that there are probably some exceptions, but I think Town Meeting supported this study and potential expenditure of a significant amount of money, not because we wanted to acquire the water company, but they wanted lower and less frequent rate increases and better service," Asher said, adding that the hope is to "achieve those outcomes without engaging in litigation.''

Although the town is working with the water company to determine the process, Asher said it was still important for the town to hire outside experts and make the case for a lower price

“The only way we’re going to have any position of strength is to show Aquarion we’re serious, that we have the capability to take things into court and possibly win, but that neither of us wants to do it that way,” he said.

Aquarion officials weren’t immediately available for comment Thursday. However, in a release, Harry Hibbard, Aquarion's vice president of operations for Massachusetts, agreed that the goal was to work with the town.

“Although our desire is to continue as the owner and operator of the Hingham water system, we have worked diligently and cooperated with the Town by voluntarily providing these comprehensive reports,” Hibbard said. “We appreciate the members of the Water Company Acquisition Study Committee and Selectmen of the Town of Hingham being patient throughout this process.”

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