Water rate hike trimmed in agreement

The Maine Public Utilities Commission (PUC) is expected next week to approve an agreement that trims back on the proposed water rate increase for the Passamaquoddy Water District (PWD), from a 22.4% jump in revenue to a 19.3% increase. Under a stipulation agreed upon by the PWD, the Public Advocate and the City of Eastport, the new rates will be in effect from January 1, 2008, and residential customers who are billed quarterly will see the full increase in their April bills.

Although the PUC on December 20 had approved a five-month suspension of the rate change from January 1, the extension of the first three-month suspension from October 1 was issued to ensure sufficient time to finish processing the case.

Under the agreement, the minimum rate for residential customers will change from $79.50 a quarter to $93.60 a quarter, or a 17.7% increase. The PWD had originally proposed a 20.8% increase, to $96 a quarter. Commercial and industrial customers with larger meters will pay more than residential customers. For seasonal customers, the minimum rate is four times the minimum rate for year-round customers and will increase from $318 per season to $374.40.

For public fire protection, the City of Eastport will pay 23.2% more, with the rate for 118 hydrants increasing from $170,423 to $209,845. Under the original proposal, the increase would have been to $215,229, or a 26.3% increase.

Eastport City Manager George Finch says the increase still creates "a significant burden for the ratepayer and in particular the city in terms of fees for hydrants." The increased cost to the city will be about $42,500, a little less than the proposed increase, which would have amounted to an additional $48,500. The total city appropriation for the PWD will increase from $187,000 to $230,000, or 10.2% of the total appropriation from local property taxes. Although some have suggested that the city should have the fire hydrants removed, Finch points out that would simply move the cost onto the individual ratepayers.

The city manager is disturbed, not because of the water district's need for additional funding, but because the rate increase proposal was being worked on last year at the same time the city was working on its budget and the property revaluation and city officials were not told that the water rate increase was being considered.

"The lesson learned in this is the city, as a member of the Passamaquoddy Water District, as are Pleasant Point and Perry, must play a more significant role in understanding and working with the district to ensure a safe, clean and affordable water supply and delivery system," he states. "While we did feel that such a relationship existed with our relocation of the water tower, funding for the water line to the Boat School, provision of a facility site for their equipment and storage and working to improve the current distribution system, the failure to get advanced notification of such an increase is unacceptable, and communications of such events must be made in advance."

Under the agreement, the annual revenue requirement for the PWD will be $750,000, or $18,953 less than the amount of the proposed revenue increase. The district had sought an additional $140,556 in annual revenue, having experienced a $49,126 loss in 2006 and expecting a greater loss in 2007. Operating expenses to meet the requirements of the Safe Drinking Water Act have been increasing, while revenue has been decreasing, with the loss of industrial and commercial customers and the increase in the number of seasonal customers.

PWD Manager Nancy Seeley comments, "This will help us cover our expenses. This will work for us." She adds, "Basically, this should help us through, barring any surprises or major catastrophes like line breaks."

The PWD had submitted its rate filing in July and held a public hearing in Eastport on August 20. At the hearing, a number of customers spoke in opposition to the increase, and some commented about the water quality. In August and September the PUC received two sets of customer petitions, with a sufficient number of signatures, requesting that the PUC investigate the water district's proposed rates. The PUC advisory staff, the Public Advocate, the PWD and the City of Eastport then held on November 14 a technical conference in Augusta, at which PWD representatives responded to questions about the rate increase. During a December 4 conference call, the parties negotiated the settlement terms of the agreement.