Unraveling Providence Water no sure bet for Providence solvency issues

After the confirmation of attorney Charles Ruggerio to the Narraganset Bay Commission (NBC), the Senate Committee on Environment and Agriculture began the “coincidental” hearing on Senate Bill 2803, which would allowed NBC to acquire water treatment facilities, (like the Scituate Reservoir) as well as wastewater facilities (like sewage treatment plants.) In the NBC position paper, as well as in the

Published on May 3, 2018
By Steve Ahlquist

After the confirmation of attorney Charles Ruggerio to the Narraganset Bay Commission (NBC), the Senate Committee on Environment and Agriculture began the “coincidental” hearing on Senate Bill 2803, which would allowed NBC to acquire water treatment facilities, (like the Scituate Reservoir) as well as wastewater facilities (like sewage treatment plants.)

In the NBC position paper, as well as in the testimony of NBC Chair Vincent Mesolilla, it was carefully pointed out that the legislation is “generic in nature and is not specific to a particular water treatment facility. It is merely enabling legislation and is a first step should discussion with any city, town, board or district develop.”

Of course, this is disingenuous. The legislation is being introduced with the Providence Water Supply Board specifically in mind, and is being supported by Providence Mayor Jorge Elorza because he wants to “monetize” Providence water to plug a large hole in the City’s pension fund. Other legislation is intended to build on this beginning.

Elorza has said that if the water is not sold off, the City of Providence will face bankruptcy in 10-12 years, and that to prevent this, there is no Plan B.

That said, no one seemed eager to pass the legislation as currently written. For instance, the Audubon Society of Rhode Island, in written testimony and in the in-person testimony of Senior Director of Policy Meg Kerr, “In principal supports creating a regional water authority” and has no concerns about expanding NBC mission in that regard.

“However, we does not support the bill’s stipulation that the costs related to the acquisition, merger or consolidation would not be under the oversight of the [Rhode Island] Public Utilities Commission [RIPUC].”

John Simmons, representing both the Rhode Island Public Expenditures Council (RIPEC) and the Rhode Island Business Coalition was also worried about the lack of RIPUC oversight, expressing concern that “the ratepayer is not represented in any merger or acquisition transactions that may occur” between NBC and whatever city, town, board or district they are in discussions with.

In written testimony to the committee, which the RIPUC kept from the public until the meeting began, RIPUC Deputy Chief of Legal Services Cynthia Wilson-Frias wrote that the “impact of the bill will likely lead to increased rates of NBC and/or the acquired water utilities while removing assurances that the additional revenues shall benefit all ratepayers.”

Wilson-Frias continues:

“Notably, it is in the last sentence [of the bill] that a critical change is made: “Any change in the sewer or water use fees, charges and assessments shall be subject to the approval of the public utilities commission, excluding costs related to the acquisition, merger or consolidation.” Currently, if NBC acquires or merges other wastewater treatment facilities into its own, all rates are still subject to PUC ratemaking authority. Such authority ensures the merger or acquisition still results in just and reasonable rates for all ratepayers. That protection is specifically removed for all future transactions.”

In his testimony before the Senate Committee, NBC Chair Vincent Mesolella elides these considerations. He says the bill simply expands NBC’s authority to include water treatment facilities as well as wastewater treatment facilities.

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On WPRO, Mesolella told Gene Valicenti “that he thinks the commission could produce $300 million for this long-sought acquisition “without causing a rate increase.”

“I don’t think our board would be averse to paying more if it would not impact rates,″ Mesolella added.

RIPUC’s Wilson-Frias writes, “The PUC is unsure how NBC could reasonably expect to purchase a $300 million asset absent a rate increase of some kind.”

RIPUC holds the position that “while the City of Providence owns the Providence Water system, the PUC has found that it is the ratepayers, and the not Providence taxpayers, who have paid for this system. Where ratepayers have already paid for the assets of the system, the effect of this legislation would be to make them pay twice for the same assets.”

If it is the ratepayers, not the City of Providence that owns the Scituate Reservoir and attached lands, then “monetizing” Providence water to the benefit of Providence may be impossible. We may need to get on creating a Plan B.

The Audubon Society is also concerned about the critically important watershed lands surrounding Rhode Island’s water supplies. “These lands need to remain protected after any merger or acquisition,” says Kerr in their written testimony.

“Several strategies for permanent protection of the Reservoir and buffer lands have been suggested including having the drinking water reservoir, water supply buffer lands, well fields and other lands that were acquired for water supply protection conveyed to a third party conservation organization that hold a perpetual covenant, reservation and restriction… providing that the property shall be held and managed in perpetuity for drinking water supply and protection of drinking water and not further developed for other purposes.”

This, unfortunately, gets at another issue. Scituate Town Council President John Mahoney wants to be part of the process. The Scituate Reservoir occupies the center of the town, and the town receives 20 percent of its funding from the Providence Water Supply Board. The Town is currently in the middle of negotiating those their tax agreement with Providence Water, but under regionalization, it is not a sure thing that Scituate will continue to receive such monies.

Scituate Town Council Vice President Michael Payette maintains that if the Providence Water Board Authority cannot sell the land surrounding the Scituate Reservoir. “They would have to give it back to… the Town of Scituate.”

Presently, with the departure of Senator Nicholas Kettle, Scituate has no representation in the Rhode Island State Senate.

More complexity: Senator Susan Sosnowski, who chairs the Senate Environment and Agriculture Committee, is also leading a Special Legislative Commission to Study the Rhode Island Water Resources (WRB) and Water Supply. That committee is examining the possibility of establishing statewide oversight of water.

Pamela Marchand, executive director and chief engineer for the Bristol County Water Authority was hit hard by Senator William Connolly, who objected to Marchand’s use of the word “companion bill” and seemed obstinately opposed to the idea that future bills are contingent upon Senate bill 2803. Connolly’s interrogation of Marchand was at times antagonistic.

Connolly is currently defending the Town of Johnston which has made a deal with Invenergy to sell the water needed to cool its proposed $1 billion fracked gas and diesel oil burning power plant aimed at the pristine forests of north west Rhode Island.

See also: Senate committee approves Charles Ruggerio for Narragansett Bay Commission

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