Bar Harbor residents debate management of water utility

BAR HARBOR – On the streets, in offices and across the dinner table, many residents are weighing a big question as they await a Nov. 29 special town meeting vote to determine the future of the Bar Harbor Water Co.

Is the town capable of managing a water utility?

“You should look very carefully at jumping into this – I have grave reservations,” said resident Elizabeth Hughes at a town warrant committee meeting earlier this week.

Hughes, a former member of the Maine Public Utilities Commission, cited the thousands of complex state and federal regulations that make management of a water utility distinctive.

Advertisements placed in several local papers last week with Bar Harbor Water Co. money raised doubts about the town’s ability to run the company as a financially and environmentally sound entity.

Tales of water rate increases, questionable legality, tax hikes and lawsuits are flying the length of Main Street, town councilors say.

“I don’t want people thinking we’re the bullies with the big club, and we’re going to hit them on the head to get what we want,” said Councilor Andre Valenti. “We’re using eminent domain to acquire something that’s already for sale.”

Acting on a feasibility study’s recommendation that Bar Harbor possesses the necessary legal and financial means, town councilors voted last month to proceed with a forcible purchase of Bar Harbor Water Co. through eminent domain to keep the utility in local hands – and to halt a merger between the water company and a national utility conglomerate called Philadelphia Suburban Co.

The Nov. 29 community vote is the town’s final step in its acquisition.

But first, the town must prove that management by town employees and not by Consumers Maine Water Co., the Rockport-based local unit of Philadelphia Suburban, is in the community’s best interest.

Last month, engineers from Portland-based Stratex Strategic Consulting and Sansoucy Associates, a New Hampshire firm that specializes in appraising utilities, were retained to help Town Attorney Lee Bragg, Town Manager Dana Reed and Public Works Director Chip Reeves determine whether Bar Harbor Water Co. is a sound investment.

The 126-year-old company’s facilities and finances are in a state of disrepair, according to the report written by Robert G. Gerber of Stratex.

Recent testing showed that the company was in compliance with state and federal drinking water standards. However, the company meets the Safe Drinking Water Act requirements through a temporary state waiver.

A new filtration plant – at an additional estimated cost of $2 million – may be needed within the next decade to remain in compliance.

Gerber calls the physical system “antiquated” and writes that a number of the water mains need cleaning or replacement and that several line replacements, a booster station and a new standpipe will be necessary to provide the Hulls Cove area with sufficient water volume and pressure for fire suppression.

A minimum of $1.5 million must be spent for capital improvements over the next five years to keep the system operating within regulatory standards, Stratex said.

In the report, consultants found the water company’s net value to be just over $4 million – as opposed to the $2.7 million value cited by Consumers Maine President Judy Hayes at a recent public meeting.

The figure was composed of the company’s physical assets of $4,396,580, minus its liabilities – $107,500 in environmental mitigation and repairs to the Eagle Lake Dam. An additional $250,000 was deducted to account for a complication that may result from the takeover.

Under eminent domain, the town of Bar Harbor may only lay claim to the water company’s physical assets – its pipes, physical plant, hydrants and water rights, Bragg said.

Private property, such as the accounting and billing records, must be acquired by other means, adding to the total cost, he said. And without such information, the town risks violating the federal Safe Drinking Water Act and becoming liable for state fines during the transition period, according to the study.

Despite the problems, the study says, Bar Harbor can run the water company over five years and bring it up to standard with a total rate increase of 23 percent and no increase to local property taxes. A bond of $4.6 million for the purchase and renovation, at 5.5 percent interest, would be repaid by the water company over 29 years, according to the feasibility study budget.

Hayes, of Consumers Maine, has stated that her company’s merger would result in a rate increase of 15 percent, with only $1 million invested for capital improvements. Any additional rate increases would be tied to further system renovations and additions.

But the feasibility study cites substantial rate increases in several of the communities where Consumers Maine has located – most notably, a 75 percent rate increase that brought Greenville to the 90th percentile of water rates statewide. Ninetieth means only 10 percent of water utilities in Maine have higher rates.

In fact, seven of Consumers Maine’s nine divisions in Maine have rates above the 50th percentile. Bar Harbor Water Co. rates reach only the 18th percentile statewide.

“We wondered why is a for-profit entity wanting to come in and take over a dilapidated system in our town,” Councilor Tom Burton said Monday. “When we started investigating the costs to people on their other systems, we felt we had to act.”

Residents who want to review the feasibility study may find copies at Jesup Memorial Library and in the town office.