Press Statement

For nearly three years, we have been informing residents of the City of Nashua about the millions of taxpayer dollars being spent in the city's attempt to take Pennichuck - New Hampshire's oldest continuously operating business - by eminent domain. At the same time, city leaders have been putting forth information that is, at best, less than complete and at worse, inaccurate. The latest of such statements is their consultant "analysis" of "cost savings" resulting from the acquisition and operations outsourcing.

City leaders have said that while the taking would require an initial expenditure of funds, in the end, water customers would see significant savings. Not so! In fact, the city's numbers do not add up. It is likely that under city ownership customers could see an increase in costs.

The city's consultants have provided and city leaders are adopting incomplete information and estimates of significant cost savings related to the operations of the water business. The purported savings stem from the recently proposed contract for operations and management of the water system, which would become effective should the city ultimately succeed in taking the system from Pennichuck by eminent domain.

We were initially skeptical of the city's claim that they could achieve any operating efficiencies, and decided to engage Infrastructure Management Group, a nationally recognized firm, which specializes in advising municipalities. The president of IMG recently appeared at a forum sponsored in Nashua to discuss the pros and cons of public-private partnerships. IMG's findings confirmed our skepticism.

City leaders claim a savings of $2 million under city ownership and Veolia management. What they don't tell you (or perhaps their consultants did not tell them) is that Veolia's proposal does not include a number of significant and known cost items.

Electric costs, emergency repairs and unplanned maintenance, the oversight consultant - RW Beck's - cost per year, one-time start-up charges from both Veolia and RW Beck, customer service expenses (consisting of billing, collection, meter reading and addressing user concerns), potable water costs and property and casualty insurance are all not included. Adding the current costs for these items to the Veolia proposal, IMG concludes, "The city could experience greater cost than presently incurred."

Further, IMG states, "Failure to include these costs violates the basic analytic standards for assessing the benefits of public-private partnerships, and properly including them appears to reverse the calculated balance of benefits and undermines the findings of the city's consultant."

In other words, the city of Nashua's numbers just don't hold water, and any "savings" referred to by the city will actually be increased "costs". You do the math.

The city's recently announced agreement with Veolia presents issues that should be of equal or greater concern to the taxpayers of Nashua. According to IMG, the proposal selected by city leaders for the operation and management of the water system shifts all risk to the city.

IMG concludes, "The procurement process employed by the city and its consultant differed materially from those employed by most cities that have achieved successful public-private partnerships for their water utilities . . . the savings calculations (versus the status quo) developed by the city's consultant inexplicably left out a number of important cost items, all of which are normally included in a city's service options analysis."

It would appear that city leaders are continuing to be sold a bill of goods by consultants who have a vested interest in seeing this eminent domain battle continue, no matter what the cost. Sadly, more than $1.2 million has already been paid or committed to these consultants and the process is not scheduled for hearings before the Public Utilities Commission (PUC) until 2007.