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50% Rate Hike Seen to Pay for Water Treatment Plant

The Milford Water Company will be seeking a 50 percent rate hike this coming fall to pay for the new water treatment plant it is building at its Dilla St. campus. The amount was detailed in the privately owned utility's responses to questions from the town filed with state Department of Public Utilities (DPU) as the company seeks that agency's approval to borrow $20 million to pay for the plant's construction.

"No clear rate adjustment has been calculated at this time, but based on the projected costs of the new plant and the associated financing, the expected increase could be around 50 percent," responded Manager David Condrey to the question submitted by Town Counsel Gerald Moody.

"It will all depend on the bottom line [cost] of the plant, said Condrey when contacted by the Milford Town Crier. "It could be lower," he continued. "I'm not saying it will, but it could be." The last time the utility sought a rate hike, it was for 50 percent, but was eventually approved – under agreement with the town – by the DPU at 33 percent, Condrey reminded

"That they will seek a significant increase is not a surprise. Their new treatment plant will more than double their Rate Base," Moody said in a May 7 memo to the Board of Selectmen. "Water quality and capacity will be significantly improved and for years to come. That is obviously a good thing. The other side of the coin, however, is that the significant additional costs will be passed on to the rate payers. That is the system in which the Water Company operates under DPU supervision," Moody said.

Construction of the new water treatment plant is required to meet new regulations from the federal Environmental Protection Agency (EPA) and state Department of Environmental Protection (DEP), Condrey explained. "We were looking at options as long [ago] as 2007," Condrey said. After the 2009 "boil water" incident, the DEP included construction of the treatment plant by 2013 as part of an Administrative Consent Order (ACO) with the utility. That inclusion in the ACO "just fast-tracked it," Condrey explained.




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