Northfield resident explores potential for water company merger

  • The Grandin Reservoir, off Louisiana Road in northeastern Northfield, provides water for the East Northfield Water Co. Staff File Photo/PAUL FRANZ

Staff Writer
Published: 11/12/2019 6:34:07 PM

NORTHFIELD — As the threat of significantly increased water rates looms for customers of the East Northfield Water Co., residents are taking matters into their own hands by researching a potential company merger that could eliminate unnecessary future expenses.

A group of Northfield residents have been gathering at Dickinson Memorial Library on a semi-regular basis to research possible ways to curb the proposed rate increases. Among this group is Jeff Shander, who has 40 years of experience as a consulting engineer, including studying wastewater systems and developing underground utility designs.

Though Shander has been researching a possible merger of the East Northfield Water Co. with a public entity — like the Northfield Water District or Northfield Sewer District — company President John Alden said part of the challenge is getting the finances to make a merger viable.

As a private entity, the East Northfield Water Co. is not eligible for government funding. Alden said the company and the recently established Ad Hoc Water Committee will work toward forming a new entity that would be eligible for such grants and funding.

If the East Northfield Water Co. were to restructure as a non-profit company and combine with either the sewer or water district, the combined company would have a broader customer base and eliminate overlapping expenses and efforts.

The water company petitioned for an approximate 150 percent rate increase in May, proposed to cover the $900,000 in losses it has incurred since rates were last set in 2012. If the rate hike is approved by the state Department of Public Utilities (DPU), customers could see a 73.6 percent increase, effective April 1, 2020; followed by a compounded 42.4 percent increase, effective April 1, 2021.

According to Shander’s research, the company could eliminate approximately $150,000 in yearly non-operating costs associated with rate hike legal fees and consultants, taxes and shareholder’s return on investment through a merger. The restructuring to a non-profit status alone eliminates the need for the second proposed rate hike.

Part of Shander’s plan also accounts for a scenario where the East Northfield Water Co. would be willing to write off its cited debt as a financial loss, as part of the restructuring. However, Alden said this is not up to him, as the debt belongs to the Northfield Mount Hermon School — the water company’s greatest shareholder.

“I’m not sure where the school stands on that issue,” Alden said.

According to NMH Associate Head of School Charles Tierney, Head of School Brian Hargrove speaks on behalf of NMH, but he is away from campus and will not return until after Wednesday. The school’s Chief Financial Officer Mary McEneany could not be reached for comment.

The proposed restructuring would include transferring $500,000 in under-appreciated assets to the new non-profit entity and would eliminate $850,000 in debt owed to NMH. Shander said discussions with East Northfield Water Co. executives suggest NMH may be open to such a restructuring. The benefit to NMH is that the school would cleanly exit the business of supplying water services and refocus solely on educational services.

Furthermore, Shander proposed spending $150,000 to $300,000 to drill two new wells with sufficient capacity to meet the demand for the East Northfield Water Co.’s customer base — which he said could be paid for with part of the savings associated with the elimination of $150,000 in non-operating expenses, if the project was financed over a five-to-10-year period. This would eliminate the need for a $3 to $5 million filtration plant for the reservoir, should it remain a water source.

Shander said a multi-year transition period that includes continued support from current East Northfield Water Co. operations personnel is part of the proposed plan.

A DPU audit of the East Northfield Water Co., which would be required before it could be sold, has been requested. If the companies were to merge into one entity, it would become a public company owned by its customers and users, and could provide a better economy of scale based on its customer size.

Furthermore, while the exact figures aren’t known, the Ad Hoc Water Committee anticipates a chance for customer and financial growth for the East Northfield Water Co. or the merged entity as The Moody Center and Thomas Aquinas College — which recently moved into the Northfield campus — both continue to expand.

Zack DeLuca can be reached at zdeluca@recorder.com or 413-772-0261, ext. 264.




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