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Colonial Water Company Rates In Dover Could Increase 28 Percent Next Year

The rate increase could mean close to a 100% raise in the past four years.

The Colonial Water Company of Dover is seeking a 28 percent increase in their prices in 2012, after its predecessor the Dover Water Company received a 68 percent rise in their prices in 2008.

On Monday, June 27 there was a public meeting at the Dover Town House presided over by the Massachusetts Department of Public Utilities. According to Dover resident R. Alan Fryer, over 80 residents came to the meeting to voice their opinion on the price hike.  

In an interview with Dover-Sherborn Patch, Fryer said he believes, “it was pretty outrageous.” He said it’s part of public record that the Dover Water Company, received a 68 percent rate increase in 2008. If Colonial receives their increase, Dover customers will see close to a 100 percent rate increase in the past four years starting Feb. 1 of 2012.

Fryer said Colonial showed no indication that the cost of running the business has increased.

In their application to the DPU, Donald Vaughn CEO of Colonial’s parent company New England Service Company did cite several updates to the system and new technology as one of the reasons for the increase.

Vaughn also said, that in the Dover Water Company’s records that they had been losing money in recent years. Vaughn stated that revenue was less than anticipated after the rate increase.

Fryer’s question was, “Why didn’t they look at Dover Water’s books?” 

“The rates already being charged are astronomical as compared to what other towns pay,” said Fryer.  

According to the consulting engineer and environmental specialist firm Tighe and Bond, the water rate survey average cost per home for Dover in 2010 was $1120 a year. The average per home cost for the state of Massachusetts in 2010 was $470, according to Tighe and Bond.

In a statement to Dover-Sherborn Patch, Vaughn said “before any rate adjustment takes place, the DPU will thoroughly examine our financial records and assess the need for an increase.”

He added, “Relative to the revenue point, the company fell far short of realizing its DPU allowed revenues in the last rate decision.” Vaughn said, “that, coupled with certain increased operating expenses and plant investment, have been the main drivers.”

Old Scratch July 21, 2011 at 07:12 PM
The history of rate setting by the Dover Water Company (its successor, the Colonial Water Company) is replete with examples of financial transactions within the company and between the company and its owners that were less than "arms-length" and which the Comm. of Mass. DPU has in the past found to be improper. The initial example was brought to light in 1978 in an action brought before the DPU by a group led by Ray Revers and Roger Markhus, as the Dover Water Co. users, and which investigation showed a number of transactions that the DPU at the time ruled were improper and should not have been included in the calculations of the expenses of the company. These primarily related to monies paid over to family members and accounted for in manners that the DPU found to be erroneous. A similar pattern was disclosed in 2008 in DPU 07-63-B [http://www.env.state.ma.us/dpu/docs/water/07-63/53008dpuord.pdf] wherein the DPU ruled that certain loans between the family and the company were again not at arms-length and terms of certain loans were improper.
Old Scratch July 21, 2011 at 07:13 PM
However, the major issue that has been the cause of so much dispute in the 1978 case and thereafter is the question of the method for calculating the appropriate rates, whether based on return on capital or based on operating expenses. The biggest difficulty when considering return on capital is that much of the book value of the company's original asset base was in fact contributed by developers of housing projects. So the question arose in those past hearings as to whether it was appropriate to use a return on capital and if so on what basis of capital. The second problem, of the calculation based on operating expenses, goes to the native inefficiency of a small water company with less than 600 users [in 1978 it was 300] and with not one integrated plant but in fact a number of separate well sources and separate plants. This makes comparisons to other small companies rates exceedingly difficult. As a matter of clarification, one needs to know that the Intervenor in the Comm. of Mass. DPU hearing in 2008 was also Mr. Fryer and that Mr. Fryer is unrelated to the family, Fryer, who had owned the Dover Water Co.
Old Scratch July 21, 2011 at 07:13 PM
It would be nice if the comment block were larger than 638 characters!
Will E July 31, 2011 at 09:36 PM
The average water bill for Dover compared to the state seems high, but is there any information on usage? Were Dover residents using a lot more for their irrigation systems? Also, is there any plan to provide sufficient water pressure for fire suppression? (Currently most hydrants in Dover are not usable by the Fire Department).
Old Scratch August 01, 2011 at 03:42 PM
Will E, please read my earlier comments that explain why inherently the tariff structure for the Colonial Water Co. must be higher than the tariffs of similar sized but unified plant water companies. Further, smaller companies, that is companies with so few customers, are certainly going to see higher costs than larger for-profit companies, and absolutely more than municipal companies [excluding sewage fees within rates of municipals].
Old Scratch August 01, 2011 at 03:50 PM
Will E, As for your question about the hydrants, they are good only as lawn ornaments and dog-attractive objects. The piping for the hydrants is neither high pressure nor segregated from the domestic water supply. Putting one of Dover's pumper/tankers on the hydrant would almost immediately drain all house lines within the area and generate such turbulence as cause serious sediment problems in all domestic supply lines. But the worst problem is that the water supply would be insufficient to satisfy the pumper requirements to operate the fire lines. Put it another way, it was an unnecessary cost to have ever installed them the way they were.
P June 18, 2013 at 06:58 PM
BTW, Colonial Water company is no longer giving option to take quarterly rates. Even though their published rate has a quarterly column. Essentially, if you are moving from quarterly to monthly, your effective rates go up by the fact that volatility in usage results in us paying more. Ask a high school student to explain this.

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