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Water System Acquisition Information

Important Information for Taxpayers and Aquarion Water Customers in Oxford

On Wednesday May 6, 2009 at 7:00 pm the Town will hold a Special Town Meeting legally called for the purpose of determining whether the Town shall vote to “take” the “franchise, property, rights and privileges of the Oxford Water Company now or formerly held by Aquarion Water Company of Massachusetts, Inc.”  This action is proposed under the authority granted to the Town in section 9 of Chapter 193 of the Acts of 1904.  So far, the reaction to this proposal has ranged from strong support on the part of some people, to questions and some confusion from others.

This statement is my attempt to answer the questions and clear any confusion.

The Oxford Water Company was created in 1904 by the Massachusetts Legislature through Chapter 193 of the Acts of 1904.  It is interesting to read the names of the original incorporators.  Some of the names are Alfred M. Chaffee, David N. Taft, Leonard E. Thayer, all gentlemen who owned mills and factories in Oxford; all gentlemen who had a vested interest in the provision of adequate fire protection; and all gentlemen who had the means to make it happen.

Although the Legislature had acted, it was really the Town of Oxford that granted the permission or license to the Oxford Water Company to have exclusive rights (a monopoly) to operate a public water supply system within the Oxford Town boundaries.  I say this because the Act, which created the corporation known as the Oxford Water Company, did not take effect until the Town, at a Town Meeting legally called for the purpose, voted, by a 2/3 margin, to approve the legislation.  The Town did that on October 21st 1904.

The Act created a corporation to operate a public water supply system “for the purpose of supplying the town of Oxford and its inhabitants with water for the extinguishment of fires and for domestic, manufacturing and other proper purposes.”  It is clear the Act envisioned a company that would be operated like a Town Department.  There are requirements for annual reporting and the installation of pipes in locations approved by the Board of Selectmen.  And there is a provision for the Town to “take,” at any time the franchise, property, rights and privileges of that corporation on payment of the actual cost thereof, and make the operation of the public water supply system a Department of the Town in reality.

Our records show that over the years there were several times that Town Meeting considered taking the water supply system but the most significant vote, the vote that has resulted in any action was the vote taken in 1977.  After the vote in 1977, the Town went to court to obtain definition for the term “actual cost”.  That action resulted in a decision from the Supreme Judicial Court in 1984 that “actual cost” means the historic value of the system LESS the value of any contributed plant (the pipes that developers have put in the ground).  The SJC also determined that the reference to “eminent domain” in the 1904 legislation was analogous to but not the same as the eminent domain law (G.L. c. 79) that took effect in 1918.  Under a conventional eminent domain taking the Town would have to pay the “market value” of the system.  Under the 1904 Act the Town can take the franchise, property, rights and privileges of the Oxford Water Company either by a friendly purchase or a forced purchase, and we only pay the “actual cost”.

This is an important point because some people don’t like the idea of eminent domain and think that, like the Town of Grafton, we will have to pay much more than we think.  Voters need to keep in mind what the original incorporators knew: once an Oxford Town Meeting approved the special Act, another Oxford Town Meeting could take over the system, provided the owners were compensated in accordance with the Act.  This is exactly what the Town is proposing to do.

After the 1984 court case, the Town went a step further and in 1987 Town Meeting appropriated money for a feasibility study.  The study was completed and then nothing else happened.  Why not?  I believe that the marginal benefit of Town ownership was not worth the effort, that other needs took precedence, and that we had no way to insulate the taxpayers from the cost of operation.  The enterprise account (user supported) authority was not granted by the legislature until 1990.  So we ended up with what I characterize as a “truce” with the then owners of the water company.  And that truce was respected by both sides for several years.  In fact, when the then owners of the water company built a treatment plant in the Town of Hingham, they only charged the Hingham system users even though they had consolidated their Massachusetts operations.  

The Town has worked with water company owners over the years with the recognition that they do not make money on extensions or the provision of fire protection (they only make money on the water they sell).  We have promoted water main extensions through our TIF agreements with industries on Old Webster Road.  The Town obtained the grants to build the water storage tank in North Oxford that resulted in Jevic Transportation coming to town.  And the Town pursued special legislation and created the water enterprise to allow the construction of the Sutton Avenue water storage tank that resulted in the location of Home Depot and soon Market Basket at the Oxford Crossing site.  These projects have resulted in increased tax revenue WITHOUT cost to the taxpayer.  These things happened while the owners of the water company worked cooperatively and respectfully with the Town.  But that all changed.

The current owners of the water company have made changes to the senior management staff and, in so doing, have lost the “corporate” memory.  So although they had retained the people who operate and maintain the Oxford water supply system on a day-to-day basis, the new management level people (the people who make the big decisions) don’t have the experience that matters.  When the Water Company submitted its rate increase request in 2008, it proposed and has now received approval to charge all their customers, not just the Millbury customers, for the new $5 million treatment plant in Millbury.  This is the reason for the 33% to 35% increase proposed for Oxford customers.  

After very careful consideration we have determined that the Town can make the purchase of the Oxford Water Company “franchise, property, rights and privileges”; fully insulate the taxpayers from cost of operation since we now have an enterprise account; and do it all with user rates less than those recently approved by the DPU for the current owners of the Oxford Water Company.  This will result in a major savings to Oxford ratepayers, an important result in these tough economic times.

We know we can do this because a private company is in business to make a profit and provide a return to its investors.  And because private companies make a profit they have to pay corporate income taxes.  That means that Oxford water customers are not only contributing to the cost of operating the Millbury system, they are paying the corporate income taxes and dividends to the company’s owners/investors.  When the Town owns and operates the water system, all of the money received will stay in the water enterprise account to pay for the debt (at a much lower interest rate than any private company can get), the operation, the maintenance and the repair of the water system.  And any surplus will be reinvested in the system here in Oxford to make improvements needed here.

Joseph M. Zeneski
Town Manager


Town of Oxford, 325 Main Street, Oxford MA 01540
Hours: M-F 9:00 AM - 4:30 PM

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