Great Barrington resident requests Department of Public Utilities to reject Housatonic Water Works rate increase

Editor’s note: The following was written by Great Barrington resident Sharon Gregory and submitted to the Department of Public Utilities as comments on Housatonic Water Works request for a rate increase. Gregory submitted her comments to The Berkshire Edge and requested for it to be published as a Letter To The Editor.

To the editor:

SUMMARY: Great Barrington, a town of 7,000 people, suffers from having two small water companies which are independent of the towns they serve. The first one is Great Barrington Fire District, which uses the Town for its billing services through an antiquated statute. There is no associated Town governance or budgetary oversight. The second is a private water company that lacks employees, produces troublesome water quality, and has not invested in its infrastructure adequately. It proposes outrageous rate increases to fund any capital expenditures that addresses longstanding water quality issues. I have identified structural and underlying causes that have produced this untenable situation for Great Barrington water users and suggested remedies. Rather than narrowly defining the problem as a “rate case,” I ask the AG and DPU offices to address this intractable situation at its core. It takes strong policy oversight to avoid setting this as a potential, troublesome precedent, especially in an era of tremendous water insecurity.

THE SITUATION AND RECOMMENDATION

Great Barrington’s public water supply is provided by two water companies, neither of which are overseen by local governments. The reasons? Housatonic Water Works (HWW) is a private company with little oversight and enforcement on the part of the State. Example: Despite egregious profit-taking at the expense of public good, the issues with the company are being inappropriately addressed as a negotiated “rate case.”

The second water supplier, the Great Barrington Fire District (GBFD), is independent of the Town. An antiquated statute allows it to use Great Barrington’s taxing authority to collect taxes, but for all other matters, the Town has no control. GBFD sets its own rate at its users’ annual Town meeting with only a 15-person meeting quorum. Thus, only 8 members are needed to determine all operating and capital expenditures for approximately 1,700 households. This year, the assessment increased by 57%, but it was buried in Great Barrington’s real estate tax bill, so an additional assessment of $1.59 per thousand (from $1.01) was a mere notation.

It would be monumental mistake not to address this intractable situation. If the Attorney General’s office in combination with the MA DPU does not address these issues, there will be no consumer protection. The “can” will then be “kicked further down the road” despite five years of protests. It would be a terrible precedent to set in Massachusetts.

The way forward is to reject any rate increase for HWW and to address the systemic issues outright. This situation cannot be narrowly defined as a rate case to preserve the profitability of HWW. First, a straight-forward amendment is needed to correct the GBFD structural issues. Second, the acquisition of HWW into a restructured GBFD should be supported by the AG and DPU. Why? If HWW does not take full responsibility to correct its problems, it deserves to go into “bankruptcy”, instead of being assured more profits. This transaction should be negotiated by the AG. HWW should cede control to the Town of Great Barrington as a public utility. A merger lawyer should represent Great Barrington.

What other levers do the AG and DPU offices have? The State is now mandating its water companies to have a “back-up” source. This requires both companies to incur expensive inter-connections and to pass the cost onto their water users.

Yet, according to the state’s “local mandate law”: If the state does not provide local governments with proper funding to meet the requirements of new laws or regulation, it may be considered an “unfunded local mandate.” Both water companies can refuse to comply unless state  funds are forthcoming to cover the mandate. If this amounts to roughly $2-4 million, these funds could be applied toward the consolidation of two companies and their systems. Doing so would provide the necessary back-up water sources for each other. Further, with a metering system that identifies the “two divisions” of water users, a central management and billing system becomes a closer operational possibility.

Why this recommendation?

1. Two small water companies do not have the economic scale to produce clean public water at an affordable price as currently organized. It’s a double-whammy for users.
2. The water company’s combined executives’ salaries and benefits exceed $300,000; the companies perform duplicative functions, billing, reporting, maintenance, etc. These factors feed into gross inefficiencies, necessitating higher water rates for its users.
3. There is no local governance/authority to monitor the management/mismanagement of safe water regulations nor the profit-taking at the expense of its public utility users. Both water companies are virtually autonomous.
4. At a higher level, there is no State agency that is properly funded or staffed to oversee small private utilities; thus all issues are reduced to being “rate cases”.
5. There is no funding for proper, independent regular testing at the local level, so again, real issues are skirted. It’s “the fox guarding the hen house.”
6. The current situation is prime evidence of structural deficiencies which harm the public, facilitated by insufficient oversight.
7. These deficiencies perpetuate the condition Great Barrington faces despite numerous studies, complaints and outstanding violations.

To assist our governing agencies, I have sent numerous studies to the MA Governor, MA AG, MA DPU, MA DEP, Town Governments of users (Great Barrington, Stockbridge & West Stockbridge Select Boards and Health Boards) over several years. I have worked with Patrick White, a Select Board member of Stockbridge, and I am confident he understands this dilemma. Associated materials include:

1. The October 19, 2018, Berkshire Edge article reporting on the HWW water problems
2. My public call-out: https://theberkshireedge.com/housatonic-water-works-private-gains-should-not-outweigh-public-good/ November 2020
3. The MA DEP report of November 2020, issuing a “conditional” status of HWW regarding the “Annual Sanitation Study” from their July to October 2020 visits.
4. My analysis of HWW’s financial statements for the past 7 years (using data on the DPU website), 2022
5. My study of recent private water companies purchased by their municipalities, 2022
6. A public petition to Governor Baker and AG Maura Healy containing 2,100 signatures of supporters demanding that the State address the HWW issues, June 2022. It was written with Denise Forbes of Housatonic.

I ask all those involved to please address these issues effectively unless it is simply the Governor who must make the decision.

Sharon Gregory
Former chair of the Great Barrington Finance Committee
Great Barrington

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