November 25, 2019 by Carol Britton Meyer
Hingham's acquisition of the water system serving our town, Hull, and part of Cohasset is a complex process involving many team players.
"This is not something we do every day," Selectman Mary Power told the Hingham Anchor recently.
A benefit of the town purchasing the system, she said, "is that all major decisions will be made locally at public meetings that will be open to citizens of all three towns. The town operating and owning the water system means we are responsible to every ratepayer."
There's been a high level of cooperation with Aquarion Water Company, "and we're in touch with them at least twice a week," Power said. "There's a shared commitment to a smooth transition. It's a big team effort, and getting bigger every day. We have all the ingredients for making the transition a success. "
The transition, which is still in the “good husbandry” stage (Aquarion’s obligation to provide service while the details of of the purchase are being worked out), is expected to occur no earlier than April 1, 2020, according to the timeline contained in the Water System Operator Request for Proposal (RFP).
Experts have been hired to assist with the transition and the many details involved. "This is a complicated [process], with a lot of moving pieces," said Water Transition and Evaluation Committee Chairman Jim Taylor. "We're involved in helping to move the transition forward in support of the water commissioners [the Hingham Selectmen]."
Public input
The committee -- comprised of Taylor, Scott Cyr, Dick Norman, David von Loesecke, and Joe Welch -- meets regularly. The meetings are posted on the town website and are also recorded by Harbor Media for future online viewing. While all of the meetings have been and will continue to be public, Taylor said, there will be even more opportunities for public updates and input as town officials and the committee have more information to share about the transition timing and "what ratepayers can expect."
The committee is assisting with many aspects of the transition, including involvement with the water superintendent search; the development of a business plan and rules and regulations under new ownership required by the Department of Environmental Protection; communications with the three towns and their citizens; the naming process for the "new" water company; the upcoming cost of service and capital studies and water system governance evaluation; and complicated post-transition efforts. Numerous public meetings associated with many of these issues will be held -- open to residents of all three towns.
"We've met with the DEP twice, and they were satisfied with where we are at with the [transition] plan [so far]," Power said. "The DEP is part of our team in making sure that all ratepayers have access to clean, safe drinking water. The DEP is in an oversight and gatekeeper role as to when the Town of Hingham will be ready [to take full control of the water system]."
Rules and regulations
Taylor said that the rules and regulations include details on how customers will interface with the water system so that “everybody will have a clear understanding of who is responsible for the various aspects of their service. They are presently being reviewed and discussed during our meetings and once completed there will be a formal public hearing prior to their final approval by the water commissioners.”
Power said the rules and regulations will be "a living document that can be modified as we go along."
She also said the rates will stay the same for the first year or so, "until the cost of service study is completed" and that until the capital study is finished, capital projects will be prioritized according to Aquarion's existing capital plan.
"We will be able to operate the system at a lower cost," Power said. "We will spend the money differently from Aquarion. The town will put more of the money toward capital projects and paying off the debt."
Capital spending for the 2019 calendar year amounted to $3.2 million, "a majority of that invested in Hull water main replacements," Power said. She also reiterated the town's promise to prioritize capital projects according to need. "That's what we will continue to do."
Power explained that under good husbandry, Aquarion is required to keep the system running but that the buyer "has to agree to do and pay for [any work that is done]. "Town Meeting authorized $114 million dollars for the purchase, including $2.7 million for capital projects in the first year," she said.
The system will be operated as an enterprise fund. "The purchase won't affect taxpayers," Power said. "All revenue collected stays within the fund, and all the costs are paid out of it."
Taylor said the intention is for this to be “a customer-friendly, open process. There will be extensive communication with customers so that they know on Day 1 who to call to report issues, how to read their bill, and who to contact with questions.”
There have also been initial discussions regarding the planned intermunicipal agreement between Hingham and Hull and Cohasset. More details will be available early next year.
Customer Advisory Board
The CAB -- which will be established once the transition is complete -- will consist of three representatives from Hingham and one each from Hull and Cohasset. The membership composition was approved by this year's Hingham Town Meeting.
However, Power said, at the request of the Town of Hull, Hingham Town Meeting 2020 voters will be asked to approve the addition of one additional seat for Hull, bringing the total number of CAB seats to six.
The board, whose charge will be established next spring, will be involved with the rate-setting process, customer concerns, and other issues.
A Request for Proposals was issued in September for a water system operator. Responses are due back by Dec. 19. A decision is anticipated by Jan. 24 and a contract signing by Feb. 21.
"One of the RFP criteria is whether a potential operator is willing to interview current water company employees [for possible positions under the water system operator under town ownership]," Power said. "We have had discussions with the union representative and Aquarion [about this issue]."
Six companies were represented at a recent site visit to the water treatment plant "so they could get a sense of the system," Town Administrator Tom Mayo said. Out of that visit came 180 written questions from potential operators related to the acquisition, which the town will answer.
Hingham will start the water superintendent position hiring process in early 2020, with the timing geared to having the superintendent in place a month before the transition is complete. "The superintendent will be a town employee who will serve as a conduit between the town and the water system operator," Power said. "We need to have the superintendent in place before Day 1 [of the town starting to operate the system]."
The financing aspect of the purchase will also begin within that timeframe, according to Power.
Reminder: Dozens of suggestions for naming the "new" water company have already been submitted. Residents from any or all of the three towns who are interested in participating may submit their recommended names electronically in the Help Name Your Water Company Form on the Town of Hingham website, in-person at the Hingham, Hull, and Cohasset Town Clerk’s Office, or by mail to: Hingham Board of Selectmen, 210 Central St., Hingham MA 02043. Those submitting suggestions are asked to share how they came up with them. The deadline is Dec. 2.
The Big Picture
"As the town considered purchasing the water company, we knew that we would need external expertise in performing required transition and transaction activities," Power said. "The water company financial model budgeted for these costs, and the 2019 Annual Town Meeting authorized some of these expenditures."
Since this year's Town Meeting authorized the town to exercise its right to purchase the water company the town has been engaged in both transition and transaction activities.
* Transaction activities: Performing due diligence, working with Aquarion/Eversource to ensure that assets are transferred in accordance with the 1879 statute, financing the purchase, and structuring the transaction.
* Transition activities: Meeting the requirements of the Department of Environmental Protection that are required to transfer water registration rights from Aquarion to the town. These requirements include the creation of a business plan (which includes a budget and identification of a water system operator) and rules and regulations. Additional transition activities include the hiring of a water superintendent, development of intermunicipal agreements with Hull and Cohasset, and customer billing.
To assist town staff and volunteers in completing this work, the town has engaged the services of a number of experts:
* Golledge Strategies: The town engaged Golledge Strategies in 2018 as those involved with the potential acquisition developed transition plans in the lead-up to Town Meeting. Golledge Strategies is headed by Robert Golledge, a former DEP Commissioner. Golledge Strategies continues to assist the town in meeting the DEP requirements for ownership transfer.
* Environmental Partners Group: The town engaged EPG in August to provide technical assistance in the development of the water system Request for Proposals, the DEP business plan, and the Rules and Regulations (also required by the DEP). EPG is working closely with the Transition and Evaluation Committee.
* Jeffrey Nutting: A 40-year municipal executive who recently retired as town manager in Franklin, Nutting is responsible for identifying and coordinating non-technical transition activities such as customer billing, budgeting, intermunicipal agreements, and water company policies. Nutting was also engaged by the town in August.
"In addition to these resources, Power said, "Capital Markets Advisors (the Town's financial advisors for 25 years), is working with the town's finance team as they always do when the town finances large projects. Our legal team is also providing expertise."