By Amy McKeever, firstname.lastname@example.org
After reviewing the town’s financial analysis of what rate savings would look like under town ownership of its water supplier, consultants found that it would be less than originally anticipated, but still provide savings to rate payers.
Hingham residents would see savings in water rates under town ownership of its water supplier according to a financial analysis review conducted by the Board of Selectmen.
Financial consultants hired by the town expressed their findings at a meeting Thursday night. The findings [embedded below] came after consultants reviewed the boards financial analysis. They compare costs under town and Aquarion Water Company ownership.
The consultants found that the town model, updated in July to show more than $100 million in savings over three years under town ownership, had some errors; instead, there would be $50 million in savings.
“Municipal ownership does eliminate some costs, that’s a fact,” Jim Dondero, Managing Director of Valuation Services at Andersen Tax said.
The potential for the town to buy the portion of Aquarion that serves Hingham, Hull and a section of Cohasset has been in discussion since 2012. In 1879 when the water company was created, Hingham put in a statute that the town has the right to buy it at any time. If 2/3 of residents vote in favor of it, the owner is then required to sell the company.
The $49,768,00 in savings under town ownership is due to differences in interest rates, the need for equity returns, debt leverage and cost structure, Dondero said.
In its own financial analysis, Aquarion said the 30-year cost for the town would be $40 million higher than Aquarion rates.
Andersen Tax studied the town’s assumption of Aquarion rates, which they found reasonable; the town’s assumption of the town’s rates, which they found reasonable; and Aquarion’s assumption of Aquarion rates, which they found were biased to lower rate increases.
“There’s a concern there,” Dondero said.
He also said in the year 2049, annual rate savings under town ownership would increase by $7.4 million a year because the town will have paid off the purchase of the water company.
Aquarion originally advocated for an independent third-party review of the financial analysis, but the town decided to hire their own consultants for the job. After Thursday night’s meeting the water Company was still in favor of the third-party review.
“Tonight the financial expert hired by the town explained that there were nearly $90 Million in errors in the town’s model,” Vice President of Operations for Aquarion, John Walsh said in a statement. “Aquarion once again calls on the town officials to agree to an independent third-party financial review so that our customers receive the transparency they deserve and can be confident that there are no other critical errors in the town’s model.”