PURA: Review of the Financial Capacity and System Viability of Connecticut’s Small Community Water Systems

Review of the Financial Capacity and System Viability of Connecticut’s Small Community Water Systems Pursuant to Section 47 of Public Act 13-298
 
Section 47 of Public Act 13-298 - Act Concerning the Implementation of Connecticut’s Comprehensive Energy Strategy and Various Revisions to the Energy Statutes - directed the Connecticut Public Utilities Regulatory Authority (PURA) in consultation with the Connecticut Water Planning Council (WPC) and the Connecticut Department of Public Health (DPH) to study the financial capacity and the system viability of the small community water systems not included in Section 25-32d of the general statutes.
 
The Study was conducted by the Townsley Consulting Group, LLC of Old Saybrook, Ct a firm with experience in utility operations and regulatory processes.

The study process included: a mail survey to the target group of small community water systems (CWS), a review of a statically valid random sample of the CWS’s triennial physical inspections reports conducted by the DPH, discovery inquiries issued by PURA to the larger water companies regarding their acquisition activities, a review of the DPH’s draft Intended Use Plans for fiscal years 2014 and 2015, as well as other DPH data and solicited public comments. 
 
The study found that the vast majority of the CWS are currently providing adequate drinking water service which meets regulatory requirements and that many of the systems are sound financially.  The study also found that over half of the CWS are probably not escrowing adequately for future repairs and emergencies and are therefore potentially vulnerable to major infrastructure repair costs and costs associated with increasing regulatory compliance requirements.  The independent review of the DPH’s triennial inspection reports indicated that most CWS were deferring numerous maintenance needs.
 
The major study recommendations focused on establishing processes that would be forward looking in identifying CWS that are struggling financially or are not consistently meeting safe drinking water standards or with large looming capital requirements for special oversight by PURA and DPH to avoid crisis management situations and protracted regulatory processes.  The study found that some CWS (serving smaller populations) could likely benefit from a supplemental financing mechanism.
 
The report was discussed and approved at the April 1, 2014 meeting of the WPC subsequent to being reviewed and discussed at a meeting of the WPC’s Advisory Group on March 18, 2014.
 
 
Appendix A - Mail Survey & Other Investigation Results, Findings & Recommendations
 
Appendix B - Inspection Report Review
 
Appendix C - Discovery Responses of Aquarion and CWC