Andover Townsman, Andover, MA

January 23, 2014

Towns at odds over water rates

Andover, North Reading disagree over new purchase deal

By Bill Kirk
bkirk@andovertownsman.com

---- — Andover and North Reading are locked in a fight over water rates and it doesn’t appear either side is ready to back down.

In fact, the dispute may be escalating as Andover is now mulling whether to increase the amount of money it charges to North Reading for water, which could affect their ratepayers.

Meanwhile, North Reading is threatening to defect from Andover altogether and hook up to the Massachusetts. Water Resources Authority, which would in turn have a huge financial impact on Andover’s water users.

At the heart of the matter is how much Andover is charging North Reading for its water.

Andover sells up to 1.5 million gallons of water daily to North Reading for about $3 per 100 cubic feet (748 gallons.). North Reading then turns around and sells it to its customers for nearly double that.

“We produce a product at $3, they sell it for $5.40,” Selectman Dan Kowalski said. “They are making a profit on our water.”

During a recent Board of Selectmen meeting, Kowalski and others raised the idea of establishing a municipal water rate, specifically for North Reading.

“We should charge them so they aren’t making a profit,” Kowalski said.

In fact, during their Jan. 6 meeting, the selectmen, acting in their capacity as the Water and Sewer Commission, nearly voted to establish a higher rate for North Reading.

Instead, they asked Public Works Director Chris Cronin to come up with a recommendation for their next meeting on Monday, Jan. 27. Cronin said that recommendation could be based on the amount it would cost Andover ratepayers if North Reading hooked up to the MWRA.

“It would mean a 20 percent increase in everyone’s water rate,” Cronin said. “It would go from $3 per 100 cubic feet to $3.64.”

If the average ratepayer in Andover doles out about $350 a year for water, a 20 percent increase would mean their water bill could jump to around $420 a year.

The reason is that the town would have to make up for the lost revenue from North Reading by charging local customers more to maintain the water system at its current service levels.

North Reading officials said they were surprised by the news that Andover may want to establish a municipal water rate.

“We’re not making a profit,” North Reading Water Superintendent Mark Clark said. “We have our own infrastructure costs, treatment plants, debt service, personnel. We are a municipality; we don’t operate like a private business.

“We think Andover is making a profit selling water to us. They already have the infrastructure; the only cost to Andover is a little more electricity.”

North Reading Town Administrator Greg Balukonis said the towns have held meetings on a proposed, five-year agreement, but that there is still one, outstanding issue: How will North Reading be treated if Andover gets a new water rate structure.

Last year, the two towns couldn’t agree on the wording of a new, five-year agreement basically because North Reading wanted to lock in a rate, while Andover wanted to have the flexibility of raising the rate based on the results of an ongoing rate study.

Balukonis said the two sides met Dec. 23 to discuss the agreement.

“We laid all our cards on the table on how we charged our rate,” Balukonis said. “We are not making a profit.”

He added that the town makes a “small surplus” that is retained annually by the Water Department. For 2013, the town had a surplus of $268,000, which stays in the water enterprise fund and does not become part of the general fund.

“It’s a cushion in the event of any future uncertainties,” he said. “Our rate is documented and justifiable. I’d be happy to have a conversation with the public works director or anyone else.”

Balukonis added that North Reading’s rate is “fully funded with all of our costs. It could be that Andover’s water rate is too low for all their costs.”

Andover Town Manager Reginald “Buzz” Stapczynski said he thinks the two towns will come to some kind of agreement despite “some frustration we are having.”

“We’ll come to terms, it will just take a little longer than we thought,” Stapczynski said. “We had a positive meeting with them (recently). We have everything worked out except the cost. We are just trying to nail that down.”

Further, he thinks it is unlikely that North Reading will join the MWRA anytime soon because it takes three to five years to complete all the permitting and infrastructure changes needed to tie into the regional water supplier, which gets its water from the Quabbin Reservoir.

Cronin said North Reading is in a difficult spot because it takes water from wells along the Ipswich River, one of the most stressed natural resources in the state. During the summer, the upper reaches of the river — in North Reading — often dry out completely.

Since 1991, North Reading has been getting roughly 60 percent of its water from Andover.