Bill to Privatize Providence Water Raises Objections

Mayor says money needed to pay down pension liability

By TIM FAULKNER/ecoRI News staff

PROVIDENCE — Drawing comparisons to Flint, Mich., and other cities that have suffered from privatizing public water systems, environmentalists oppose the latest legislative effort to monetize the Providence Water Supply Board and its source, the Scituate Reservoir.

The Conservation Law Foundation, The Nature Conservancy, the Rhode Island Land Trust Council and Audubon Society of Rhode Island all raised doubts about changing ownership of the state’s largest public water source. Without protection, the move threatens open-space land buffers and risks polluting the watershed and public drinking water, according to opponents of the idea.

Mayor Jorge Elorza recently made the annual mayoral Statehouse plea to monetize the city's public water system and real estate worth some $400 million — all to pay down Providence's unfunded pension liability.

“What is clear, Providence owns a significant asset here,” Elorza said during a May 29 Senate hearing.

But opponents say the bill (S2838) doesn't prevent the sale of land that buffers the reservoir. The loss of the natural filter system could mean polluted water for the public, like what has happened in Flint, Indianapolis, Pittsburgh and Atlanta.

“The legislation doesn't contain protection for the land or the watershed,” said Amy Moses, director of Conservation Law Foundation Rhode Island.

Sheila Dormody of The Nature Conservancy suggested that the General Assembly hold off on any decisions until the Rhode Island Water Resources Board releases recommendations from a municipal water study commission.

Otherwise, Dormody liked that the legislation offers the potential to merge operations of drinking water, stormwater and sewage treatment, called integrated water management. In Rhode Island that single entity might be the Narragansett Bay Commission, the largest storm and wastewater treatment operator in the state.

“There are significant opportunities for cost savings but also for more substantial environmental benefits by doing all of those things together,” Dormody said.

Others objected to removing the state Public Utilities Commission from oversight of the transaction and future rate increases.

Sen. Paul Jabour, D-Providence, and other senators expressed favoritism toward the concept. Jabour called the Providence Water Supply Board “one of the few remaining assets that the city has” to pay down the city’s pension shortfall.

Elorza estimated that the $1 billion pension obligation is about 30 percent funded. He insisted that the bill doesn't privatize the Scituate Reservoir.

“It simply authorizes a transaction,” Elorza said.

Opponents of the legislation fear that ratepayers would be forced to pay the cost Providence received for relinquishing the water system. Elorza noted that the bill capped a rate hike to no more than the total of increases during the past five years.

Elorza insisted that only management of the system would change, not the ownership of land. That management would have public oversight and be run by a fully regulated public utility to assure water quality and rate stability.

“None of this would be happening if Providence were not teetering on the edge of bankruptcy,” Elorza said.

The Senate bill was held for further study. A House bill was heard by the Finance Committee on June 6 and was held for study.