Aquarion Is Not Offering Holyoke a Good Deal

By Mara Dodge

77 Lyman St.

Holyoke

534-3779

Holyoke Citizens for Open Government formed in response to growing concerns about the proposed privatization of Holyoke’s Waste Water Treatment Plant (WWTP) by Aquarion Corp., a subsidiary of the Kelda Group, a British multinational corporation. We are concerned that neither citizens nor city councilors have been given sufficient time to analyze a 700+ page contract, just released the day before Thanksgiving. Initially citizens were given to Nov. 1 to comment, even though a draft contract was not even ready at that time.

We are concerned that this contract will be binding on the city for 20 years. Getting out of the contract carries a $9.2 million dollar penalty. Aquarion, the sole bidder, is primarily a water company. It has not operated a WWTP for longer than 2 years.

We are concerned that the purported savings don’t appear to add up. Initially we were told we could anticipate a 20-30% savings by having a private company run our Waste Water Treatment Plant (WWTP). Then when only one company bid on the project, we were told that a 5% savings was acceptable. Yet we have not been presented with convincing evidence that Aquarion will save the city money.

We are concerned that the engineering firm hired by the DPW, Malcom Pirnie and Associates, was discredited by the Mass. Inspector General for grossly overstating savings to Lynn, MA when it embarked on a similar privatization scheme in 2001. Lynn lost millions of dollars on this contract. The IG’s report concluded that Lynn “paid more than $3 million to privatization consultants to assist with these procurements; unfortunately, this expensive investment in expertise has not protected the ratepayers from a bad deal.” (Publication No. 18289) We are concerned that the DPW did not conduct its own optimization study to fairly and accurately determine how much it would cost the city to do the required CSO upgrades and continue operating the WWTP by itself.

We are concerned that even under the contract the City of Holyoke is still legally responsible in the event of many “uncontrollable circumstances.” Thus, if environmental laws or “prudent engineering” standards are strengthened, the city, not Aquarion is responsible for paying for any upgrades to meet these new standards (or else the company has the right to terminate contract services). Inflation and unusual weather are also defined as “uncontrollable circumstances” that the company is not liable for. Why should Aquarion escape responsibility for weather that is not “reasonably forecasted”? Moreover, Aquarion only assumes a repair and replacement obligation of up to $100,000 per year. In addition, the city must also pay for all “major changes,” defined as anything over $5,000. As a result, the city may continue to incur significant additional costs. We fear that the purported $7 million savings over 20 years may end up being no savings at all.

We are equally concerned that the Connecticut River be cleaned up. However, we can not endorse a rate hike until we are convinced that Aquarion offers the best solution. We are concerned that the Connecticut River Watershed Council, the principal nonprofit environmental advocate for the river, has publicly opposed the contract. Their independent analysis concludes that privatization “could have the effect of depleting the city’s [financial] resources faster than if the city continued to run its own treatment plant, and thereby puts the river at even greater risk than under the status quo.” They are also concerned that Aquarion would be allowed to receive up to 40,000 gallons per month of trucked-in sewage from outside Holyoke, a substantial increase from current levels, which could result in increased effluent discharge into the river. The EPA will not fine Holyoke as long as we are in the process of resolving the CSO overflow problem.

We are concerned that private corporations sometimes cut corners to make money. Their final responsibility is to their shareholders, and not necessarily to the river or the residents of Holyoke. Aquarion has only agreed to operate an office in Holyoke for two years. RH White, the construction firm Aquarion will use to build the new facility, is a notorious anti-union contractor. DPW workers are divided over the deal they are being offered.

We are concerned that we may have no way of holding Aquarion or its parent corporation accountable. Kelda is currently not a signatory to the contract. Going after Aquarion, a management company with few U.S. assets, would be difficult. Going after a foreign multinational corporation would be even harder. A “letter of credit” is a complex document. Holyoke can’t simply walk down to a bank and pick up a check if Aquarion fails to perform. Would Holyoke have to go to an international court to collect against a foreign corporation?

Holyoke Citizens for Open Government includes community residents and five city councilors who have grave reservations about the contract. Deciding whether or not to accept the deal that Aquarion has offered is a major decision for the city to make. We are asking for more time for genuine public input, discussion, and debate. What we decide today will affect Holyoke’s future for the next 20 years.

Note: Holyoke Citizens for Open Government meets Mondays. For info contact Lillian Santiago 427-7764, Jonathan Bates 303-0740, or John Gurvitch 536-4103.

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