As the saying goes, if at first you don’t succeed – try, try again. That’s what Providence Mayor Jorge O. Elorza is doing with a legislative proposal to let the city lease its water-supply system to an outside operator in order to raise money for costly employee pension-payment obligations.
Opponents in the past have criticized the proposal as privatization of a public resource that would lead to higher water rates and other drawbacks for Providence and other Rhode Island communities that get water from the city.
So, what’s changed? Not much, it seems, beyond an earlier start in the legislative process.
The legislation is similar to last year’s bill and House Speaker Nicholas A. Mattiello still opposes it. He believes it will lead to higher water rates in communities that had nothing to do with creating the city’s pension problems, said spokesman Larry Berman. “It will get a hearing this year,” Berman said, adding that it got a hearing before and that’s as far as it went.
Providence Water has retail customers in Providence, Cranston, Johnston, North Providence and Smithfield. It also has eight wholesale customers that resell water in local communities.
As Elorza and his staff describe it, the city has its back against the wall financially, facing a staggering $1 billion “unfunded actuarial accrued liability” over the next 22 years. And that does not include other post-employment benefits, which in 2013 totaled $1 billion for Providence, according to an actuarial evaluation by Segal Consulting.
The situation is so dire, they argue, that if such steps are not taken to stabilize the city’s long-term finances, Providence’s water system could be among the first city assets to slip into insolvency. The city had a valuation of its water system done in 2017 that found it was worth $404.2 million.
At least three companies have responded to the city’s request for qualifications for a contract to run its water system: Boston-based Poseidon Water in partnership with Suez Water Environmental Services of Paramus, N.J.; Veolia Water North America – Northeast in Boston; and Aquarion Water Co. in Bridgeport, Conn. The General Assembly would also need to give its approval of the lease arrangement.
Though acknowledging the city’s long-term financial problems, some City Council members aren’t having the proposal.
“It’s not credible that the city … will somehow receive hundreds of millions of dollars today [through a lease] without residents, ratepayers and employees bearing the cost for future decades through higher rates, lower wages and potential water-quality issues,” said Councilman Seth Yurdin.
“When private entities manage public resources [such as] water, rates go up, quality goes down, worker protections are eroded and the environment is threatened,” said Councilwoman Rachel Miller.
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
