Berkshire County — The state’s Department of Public Utilities (DPU) held a virtual hearing via Zoom on Housatonic Water Works’ proposed rate increases on Thursday, June 20.
In June 2023, the controversial company filed an application with the state’s DPU requesting a 112.7 percent overall revenue increase. At a public hearing in September 2023, residents spoke out against the proposed increase,
Back in April, the Office of the Attorney General, along with HWW, filed a proposed settlement in the rate case. If approved by the DPU, HWW customer rates would be increased by over 90 percent over a five-year span. The settlement would also include a capital project list, including a manganese filter system, an interconnection with the Great Barrington Fire District, a new water storage tank, and a main replacement.
At the June 20 hearing, Assistant Attorney General William Rose said the settlement was satisfactory and should be approved by the DPU. “In its [original petition], HWW sought an initial increase in rates of $808,808 representing an increase of 112.7 percent in [HWW’s] annual revenues,” Rose said. “On April 26, the Attorney General’s Office and HWW filed a proposed settlement agreement intended to resolve the petition for a rate increase and secure clean drinkable water for HWW’s roughly 850 ratepayers. The settlement agreement would do several important things to improve the Housatonic water system. Most importantly, it creates a clear directive and timeline for building the manganese filtration system and ending the groundwater problem that has affected so many of HWW’s customers. We understand that the Massachusetts Department of Environmental Protection has reviewed and approved the filtration system proposed by HWW. The system is projected to be in place by the end of this year, and rate increases associated with the system will not take effect until the DPU has determined that Housatonic acted prudently and did not exceed the cost specified in the settlement agreement. If the filtration system costs less than expected, including because of grant money, customers will pay less than the maximum under the settlement agreement.”
Rose said that the settlement agreement would create a timeline for the planned improvements to HWW’s water system and that under the agreement Great Barrington, Stockbridge, and West Stockbridge would all have to approve the improvement projects before they moved forward. “The settlement agreement commits HWW to pursue grants to reduce the costs to customers of all of these improvements,” Rose said. “It also guarantees that the customers, not HWW, will get the benefit of any such grants or alternative financing that can be found. Moreover, the settlement agreement gives HWW a basis to seek grants for these projects, as we understand that at least conditional approval of a given project is needed to pursue a grant.”
Rose added that the proposed settlement “creates accountability” and that it would be enforced by the Attorney General’s Office and the DPU. “[We will] ensure that it is fully implemented to the benefit of HWW’s ratepayers,” Rose said. “HWW’s ratepayers need clean water as soon as practicable, and this agreement helps them get clean water while stakeholders determine the appropriate long-term solution. The settlement agreement will bring clean water and stabilize the system of HWW’s for several years, during which time the towns and HWW can determine what they want the future to look like. Privately owned utilities like HWW are entitled to recover through rates the costs of providing service and improving their systems. Our office has examined HWW’s books, and we found that, right now, HWW is losing money to the point of deferring salaries, and it has been for several years.”
According to the Department of Public Utilities, as of press time, HWW has not filed its annual report for 2023. According to the company’s annual report for 2022, however, company President and Clerk Frederick Mercer and Treasurer James Mercer received a raise in their salaries, while the company made very little investment in its infrastructure. See the full article here.
HWW attorney Jed Nosal, who is a partner of Boston-based Womble Bond Dickinson LLP, argued that the company has not increased its rates since 2017. “The company is seeking additional revenues to cover the increases related to operations and to finance various capital improvements, rather than ask the department for approval of a much larger increase to meet these needs,” Nosal said. “The company has been transparent and did not refuse any requests for information. Throughout this process, the company has made several concessions, including reducing its overall operating costs and changing its operating regulations as requested.”
Nosal said that the company’s alternative to the proposed settlement would be “a higher initial rate increase this year and the filing of subsequent rate cases for even higher rates over that same period of time.”
“Overall, the proposed settlement will result in a just and reasonable outcome,” Rosen said. “It’s consistent with the public interest, and it should be approved by the DPU.”
However, town officials and residents from Great Barrington, Stockbridge, and West Stockbridge spoke out against the proposal during the two-hour meeting.
Great Barrington Town Counsel David Doneski, from KP Law P.C. of Boston, reiterated the town’s position that it rejects the proposed settlement. “Very simply, the settlement would be completely unfair to the citizens of the town that the Selectboard represents and unfair to the town,” Doneski said. “Is this just and reasonable for whom? Since the company’s last rate increase, which was approved in 2016, it is fair to say that the water supplied by the company to the residents of Housatonic and the level of service provided to those residents have been constant topics of concern and frustration in Great Barrington.”
Doneski listed the various concerns and complaints made by residents over the years regarding HWW water. “The water from the tap is brown, and people are fearful about drinking the company’s water,” Doneski said. “There are questions on whether the company’s water complies with water quality requirements of the Department of Environmental Protection, including the presence of chemicals or other substances in the water, damage to home appliances such as washing machines and dishwashers from brown and discolored water. It is a financial hardship for customers to pay water-use fees, and [the town] requests that no water rates be increased until water quality has improved.”
Doneski added that HWW has never disputed the water quality problems its customers have been enduring for years. “[These problems] have been formally acknowledged by the Department of Environmental Protection’s conditional permit approval for the company’s proposed construction and implementation of the manganese filtration system in March,” Doneski said. “The task is then how to allow for improvement without placing an unbearable burden on the ratepayers. It is both essential and reasonable to look for alternatives that will shift some of the cost burden from customers to the company. For years, the customers have been deprived of the water quality they are entitled to under the laws and regulations of the Commonwealth. It is not fair to give the company revenues and a rate of return on its rate base that does not account for the diminished product customers have been living with for so long. The DPU should set a revenue requirement that is based on a lower rate of return over a given period of time that allows for a longer phase-in period that will give the customers a more reasonable period of adjustment and at least some measure of rate relief.”
Stockbridge Select Board member Patrick White told members of the DPU that “[Housatonic] is a community under siege who [has seen] housing, food, electricity, and now water costs all contributing to costs of living that are becoming unsustainable.”
“This is what happens when owners care more about profit than people,” White said. “[HWW] avoids the routine investment infrastructure that would modernize the system to provide water that is reliable, clear, clean, and odor free. This company did not do that. It took an order by the MassDEP to force it to act. We must recognize this is a pattern of behavior, not an isolated incident. And so we find ourselves in the untenable position where the bill is finally coming due in this rate case, which only deals with the first two of multiple phases of improvements to compel the company to clean up its act.”
A Housatonic resident, who only identified herself as “Maureen,” said she would not give her last name at the public hearing because she found it “very intimidating.” Despite this, representatives from the DPU allowed her comments. “[HWW] has had multiple increases over multiple years with promised improvements that they never have done,” Maureen said. “I feel that it is very threatening that their attorney has stated that if the towns don’t agree with the current settlement, then the rates will be even higher to cover litigation costs. [Company President Mercer] is very ignorant and very pompous and does not care about the customers. I find it appalling and disgusting that they have been able to get away with this for quite a long time. It truly is a public-health crisis when we cannot have clean, drinkable water.”
Sharing in the outrage were members of the Great Barrington Selectboard. “As far as giving money and to help fix this, I think it’s quite un-American,” Great Barrington Selectboard member Garfield Reed said. “When you’re getting your car fixed, you don’t pay before. If you do, it’s only a certain amount and you don’t pay everything. To have to pay something before it’s fixed just isn’t the way it should be done. This isn’t the way almost every business in the country is run, and so I find it quite offensive to think that we need to pay before our work is done.”
“This is a travesty,” said Great Barrington Selectboard Vice Chair Leigh Davis. “We have folks in Housatonic that have been paying for water that they can’t drink. When they turn on the bathtub, it’s brown water. When they try to brush their teeth, it’s brown water. Businesses are unable and unwilling to move to Great Barrington [because of HWW,] and that’s affecting our economic development and the selling of houses. [HWW customers] haven’t had any other option of where to go with this water, or they have to step up and pay for private water. So from the get-go, they’re losing. To throw a rate increase on top of the hundreds and thousands of dollars in emotional turmoil. To ask to throw an increase such as this on top of [customers] is something that is just unimaginable.”
Great Barrington Selectboard Chair Stephen Bannon pleaded for the members of the DPU to have empathy for HWW customers. “I realize you’re a regulatory body and have a job to do, but realize in Housatonic there are mothers and fathers, grandmothers, grandfathers, infants, all trying to live with substandard conditions,” Bannon said. “I would ask you to really consider what it would be like if you were in their shoes, if you had to spend a day, a week, or a month, living where you never know if there’s going to be clean water. Maybe worse, you don’t know if the water is safe, even when it looks clean. What if you were asked to pay an exorbitant amount of money for a product that wasn’t even sufficient to live with? We’ve heard all the arguments, and they’ve all been very good, but put yourself in the place of the citizens of Housatonic, and I ask you to consider rejecting this large increase and try to help them through this terrible time.”
The DPU has not formally announced when it will make its decision on HWW’s rate-increase request; however, DPU representatives have previously said that a decision would be made before August.
