HAMPDEN – The water district and consumers upset with a proposed 18 percent rate hike reached an agreement Thursday, dropping the increase to 14 percent.

Water district representatives, state utility regulators and consumers negotiated during a conference call Thursday to reduce the rate increase, which dropped revenues generated by the hike from $187,329 to $102,560, according to William Black, the deputy public advocate working the case.

Despite Thursday’s agreement, all parties have to sign off on the revised plan, which should be completed by early next week, said Cameron Torrey, general manager of the water district. The new rate is pegged to take effect April 1, but the district has yet to calculate how the change will affect individual customer water bills, he said.

Trimming the district budget was about accounting changes, not cuts, said Town Manager Susan Lessard. The town, which is 30 percent of the district’s clientele, actively participated in the negotiations.

“It’s a negotiated compromise, as opposed to a litigated nightmare,” said Lessard. “I do not believe that any litigation, or anything, would have taken this number down any further. I think it would have driven legal costs through the roof and the end result would bring little impact. They made as many changes as could be made through the PUC process.”

Water district trustees voted in October to forward a rate structure change and an 18.26 percent rate increase to the PUC, which would have taken effect Jan. 1, but ratepayers petitioned the commission to reject the proposal. The PUC did not have to submit a decision until this summer, and parties were encouraged to negotiate.

The change in accounting resulted in the rate cut. When originally creating the 2008 budget, the water district staff and trustees used the 2006 budget (since it was the most recent, fully completed year) as a base and then factored in additional costs such as a cost-of-living increase, Torrey said.

The settlement changed the base for calculating the budget to a three-year average.

Despite the settlement, however, Torrey still has concerns.

Using an average of 2005, 2006 and 2007 budget numbers does not allow for rising 2008 construction prices, or employee cost-of-living increases, he said. More than 50 percent of the cuts came from the materials and supplies and salaries and wages budget line items, he said.

As a way to save money, Torrey said the district probably would not install new fire hydrants around town this year.

As part of the negotiated agreement the water district cannot seek another rate increase for one year, Torrey said. Whether an increase will be necessary in a year to maintain the current system is to be determined, he said.

“At this point it’s too early to consider that,” Torrey said. “We’ll have to wait and see how all of this is going to play out, to see if this will allow us to maintain the system.”

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