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Rate Hike May Be Needed When Buying Water Company

The "due diligence" efforts by the Board of Selectmen and Finance Director Zachary Taylor into whether the town can afford to buy the Milford Water Company has led to what these officials are calling a "restructuring" or "rebalancing" of the original financial plan that will be revealed at a public forum scheduled to be held by the board at 6 p.m. on Monday, September 11, most likely in the Milford High School auditorium. Town Meeting Members will vote on the acquisition at a September 26 Special Town Meeting.

The Town Crier has learned that – contrary to what was said at a public forum in June – some amount of initial rate hike will be needed if the town buys the privately held utility. The initial assumption that the town – which plans to borrow $65 million over a 30-year period to purchase the utility – could also borrow money twice during that period to pay for capital improvements needed to maintain the water infrastructure was called into question by a financial consultant hired by the town.

Between now and the September 11 forum, the financial consultant and town officials will be re-calculating all previous financial assumptions to determine what percentage rate hike the town would have to put into place to have enough funds available for water system maintenance. At the June forum, residents were told that the only rate hikes that would happen if the town purchased the Milford Water Company would be annual hikes of about 2.5 percent. The water company is now before the state Department of Public Utilities (DPU) seeking an almost 30 percent rate hike.

At May's Annual Town Meeting, $400,000 was approved for town officials to have consultants validate initial assumptions about purchasing the water company. Known in mergers and acquisition as performing "due diligence," the town's consultants began exploring every aspect of the proposed transaction – which lead to them questioning the assumption about additional bonding for capital repairs.

The "due diligence" also led the town to have a wealth of knowledge about the utility. "The Town of Milford knows the Milford Water Company better than the Milford Water Company," Selectmen Chairman William Kingkade told the Town Crier.

His board met with the hired consultants on August 16 for an update. After that meeting, Kingkade said his board had scheduled the Special Town Meeting to begin at 7 p.m. on September 26 in Upper Town Hall.


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