Dartmouth may relinquish its current stake in Hanover water utilities, which are currently owned by a private utility, as part of a new effort to municipalize the town's water system. Town water rates would not change under the proposed plan, which would likely save the town more than $100,000 annually, according to a Town of Hanover press release.
Currently, the town's water system is owned by Hanover Water Works Company, which is run by the town through a private contract and employs public workers. Dartmouth, the water system's largest user, owns 52.8 percent of the company.
Under the new proposal, Hanover Water Works would turn its "hard assets," including three reservoirs and its water infrastructure, over to Hanover's Public Works Department. The College would receive $1 in return for the transfer. A restructured Hanover Water Works Company, to be owned equally by the town and the College, would retain control of the remaining land assets.
This new structure would permit Dartmouth to shed the financial liabilities, primarily debt, associated with owning a water utility, and therefore allow the College to focus on its core educational mission, said Dartmouth general counsel Bob Donin, who also serves on the Board of Directors of the Water Works Company.
The company has not made a profit in several years, he said.
"Fortunately, the town is well equipped to operate the system," Donin said. "The College co-ownership is a vestige of an earlier time. It does not fit with the core mission of the College."
The municipalization plan must be approved at the Hanover town meeting on May 12, as well as at by a state-mandated second vote, which will be held at a special town meeting in late September. If the proposal passes in both votes, the Hanover Water Works Company will officially become a municipal utility on July 1, 2010.
The municipalization should not affect the daily operations of the Hanover water supply system, said Peter Kulbacki, the General Manager of Hanover Water Works Company and Director of Hanover's Public Works Department.
Currently, as a private water utility, the Hanover Water Works Company is subject to regulation by the New Hampshire Public Utilities Commission. That regulation costs tens of thousands of dollars annually in taxes, fees and paperwork, according to a mailing sent to Hanover residents about the plan. In addition, the Public Utilities Commission does not allow private companies to save money for future capital improvements, forcing the company to finance its projects up front, and therefore at higher interest rates, the mailing said.
There are very few private water utilities serving New Hampshire towns as small as Hanover, Kulbacki said. Most private water utilities are much larger than the Hanover Water Works Company, and can therefore reduce costs through efficiencies of scale.
Municipalization will also help reduce overhead costs, as the town of Hanover will now run the water works insurance policy and accounting, Kulbacki said.
Town officials have been discussing the change for the past five to six years, Hanover Town Manager Julia Griffin said, but decided to wait until the Company completed a series of infrastructure projects to put forth the proposal.
"We didn't want people to feel that we were taking over a water company that needed major capital improvements," she said.
The town is now educating residents about the proposed changes, Griffin said, and has thus far seen little to no opposition to the proposal.
Hanover Water Works Company currently serves Dartmouth College and more than 8,000 individuals in the downtown Hanover area. The company owns 1,440 acres of land, including three reservoirs, a water filtration plant, surrounding watershed land and a related water distribution infrastructure.
