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Final Water Rate Hike Request Arguments Filed with DPU

Final legal arguments were filed this month with the state Department of Public Utilities (DPU) by the Milford Water Company – which is seeking an 83.4 percent rate hike – and by the Town of Milford and the Massachusetts Attorney General's Office – which, as intervenors, call that request "excessive." These legal briefs were the second-to-last part of a lengthy process that began last year and will end when the DPU issues its decision later this year.

Initial intervenor briefs from the Town of Milford and the Attorney General's Office were filed with the DPU last month, with the privately owned utility responding to them earlier this month. The two intervenors then filed their "reply briefs," followed by the Milford Water Company. In its reply brief, the utility says the cost of building and operating its new $22-million water treatment plant accounts for 70 percent of its requested rate increase.

In his 62-page argument on behalf of the town, Town Counsel Gerald Moody noted: "If the rate increase requested by the Company is allowed as requested, it will result in unfair and unreasonable rates being imposed on the ratepayers. This is particularly true in light of this rate increase coming less than two years from the implementation of the prior stunningly high increase in the amount of 33 percent... Many of these unfair and inequitable costs to be imposed upon the rate payers come as a result of the incredible mismanagement and essentially defective product provided by the water company to the users and rate payers of Milford over the recent years." He argued that the company did not have to build its new water treatment plant, but chose to do so over other options it could have taken.

In their 25-page legal brief, John Geary, Joseph Rogers and Christina Belew – all assistant attorneys general with the Attorney General's Office of Ratepayer Advocacy – listed 13 reasons why the rate should not be as high as requested – most of them dealing with how the Milford Water Company accounts for various types of costs.

Responding on behalf of the water company, attorney Jon Bonsall of the Boston law firm, Keegan & Werlin LLP, submitted a 63-page argument which noted that the utility had responded to 383 requests for information and 22 requests for records since the DPU began its hearing process last year. "Fundamentally, the Company, the Town and the Attorney General agree on central point – the rate request is significant. Nevertheless, the record clearly demonstrates that: (1) the construction of the new WTF [water treatment facility] was essential to the provision [of] service to the Company's customers in light of increasingly stringent federal water quality standards; (2) the construction of the new WTF tripled the Company's base and led directly to the filing of the instant petition; (3) the Company has proactively sought to control costs, both with regard to its daily operations and, particularly, with regard to the construction of the new WTF; (4) it has rigorously complied with the dictates of Department [DPU] precedent, particularly in the area of affiliate transactions; (5) the Company has been fully engaged in communicating information to its customers and important stakeholders such as the Town; and (6) despite repeated attempts by the Town to allege corporate mismanagement which has contributed to an 'essentially defective product,' the Company has established an exemplary record of addressing the challenges of managing a small water system in the face of mounting regulatory requirements related to water quality," Bonsall wrote.

Moody's 17-page reply brief stated: "the Company goes through great effort to 'spin' the MassDEP Administrative Consent Order of November 2009 (ACO) away from the documented and egregious mismanagement of the Company... Frankly, at times, it seems as if the Company is operating in some parallel universe."

The Attorney General's Office's nine-page reply brief, authored by the same three assistant attorney generals, claimed that the Milford Water Company failed to address any of the issues raised by their office.

Bonsall's 30-page reply brief states: "the construction of the new WTF was not a discretionary project undertaken to inflate the Company's rate base. As the record clearly demonstrates, it was built in order to satisfy increasingly stringent federal and state water quality standards. Moreover, the TTHM [Total Trihalomethanes] exceedances were directly and exclusively attributable to operational limitations at the previous Dilla Street Water Treatment Plant." He continued: "The Company would also note that the Town cites to events and circumstances which occurred nearly four years ago in order to justify its contentions. As the Company noted in its Initial Brief, the prevalence of Boil Water Orders as issued by MassDEP is a relatively common situation and cannot be construed as dispositive of fault."


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