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For Torrington Water Co., Friendly Takeover?

04/23/2004

By: Asa Fitch

Concerned that their water company might be wrested from local control by a multinational corporation in the near future, leading to the sale of unblemished watershed land for residential development and an increase in water rates, a group has formed to explore the possibility of buying the private Torrington Water Company and turning it into a publicly-held regional water authority.

The Litchfield Hills Council of Elected Officials-a regional agency composed of leaders from Barkhamsted, Colebrook, Goshen, Hartland, Harwinton, Litchfield, Morris, New Hartford, Norfolk, Torrington and Winsted-appointed a subcommittee at a recent meeting to explore the regional water authority possibility.

Tom Scoville, a former Torrington city councilman who owns Scoville Plumbing and Heating in Torrington, is to serve as chairman of the subcommittee.
"There are three fears," he said. "Number one, when this multinational corporation comes in, we would lose local control. Number two, there's a large amount of [open] land through Goshen, Norfolk and Torrington that could be sold by this multinational corporation for development, putting a great burden on towns, especially if it's residential development. Number three, the rates would go up. The ratepayers would pay more. Those are our three major concerns."
The privately-held Torrington Water Company, established in 1873, supplies drinking water from its 5,400-acre watershed in Torrington, Goshen and Norfolk to residents of Torrington, Litchfield, New Hartford and Harwinton. Approximately two thirds of the watershed is currently preserved as open space. About 9,000 households use the company's services, and the company has roughly 200 shareholders.

State Sen. Andrew Roraback (R-Goshen), who is one of those shareholders, said there was a growing trend in the state and the nation in which large foreign companies are buying small local water companies, an eventuality the establishment of a public regional water authority would avert.
"There is a growing trend in America generally and in Connecticut specifically of small locally-owned water companies being acquired by large multinational corporations, specifically a British company called Kelda, and another company called Suez, which owns United Water in New Milford," said Mr. Roraback, who, despite his status as a shareholder, has been cleared by the state's ethics commission to collect and disseminate information about the proposed water authority.

"Kelda is the biggest water company in Connecticut," Mr. Roraback said. "All over the world, big multinationals are buying small local utilities. [When that happens], you lose local control over the land and the water, and instead of having decisions made locally about these resources, they are made by owners in foreign countries."

But the process leading up to a possible transformation will not be an easy one, and it is likely to take a year or more even if it clears all the obstacles in its way.
It is not an unprecedented idea, however. Proponents of a water authority often cite what happened in New Haven in the 1970s as a model for what might happen with the Torrington Water Company. The New Haven Water Company was dissolved and a public entity called the South Central Connecticut Regional Water Authority was set up in its place.

According to Mr. Roraback, the transformation of the Torrington Water Company from private to public might follow New Haven's lead, and the conversion could work as follows. First, the legislature could vote to establish a regional water authority that has the power to incur debt. Next, the new water authority could borrow enough money to buy the Torrington Water Company. And then, with the approval of the company's shareholders, the water authority could make the purchase. Finally, the new authority could pay off the debt incurred in the purchase through money made from the services it provides.
In the long run, Mr. Roraback said, such a scheme would preserve large tracts of land the company owns and keep the company in local control. It would also save money for water company ratepayers, he said. Because a public water authority would not have to realize profits for its shareholders, and because the authority would be exempt from state and federal income taxes because of its status as a nonprofit entity, the company would save money. Those savings could be passed on to consumers.

Dick Calhoun, the president of the Torrington Water Company, said he was receptive to the idea of a regional authority because he, too, understood the deleterious impact a takeover by a multinational company could have.
"I am concerned that there is a potential for a foreign interest to acquire our company, as has happened elsewhere," he said. "In my mind, [a water authority] would be better [than a multinational corporation]."
He said he would cooperate with the subcommittee investigating the water authority option. But he cautioned that the final decision on the sale of the company is up to the shareholders.

"Ultimately the question will be decided by shareholders," he said. "It would come to a shareholder vote. That is the ultimate determinant."
According to Mr. Scoville, because of its merits, the water authority proposal already has a broad base of supporters, including business leaders, environmentalists, local government officials and state General Assembly members. But he qualified that, saying his subcommittee is approaching the prospect of a water authority with an open mind.

"I think our preliminary discussions, just looking at some numbers, show that it is favorable to happen, that things have moved along positively and certainly ahead of any schedule that we have thought of," Mr. Scoville said. "So, as it moves forward we are very positive, but at the same time we need to keep our objectivity and look at all aspects of the situation."

He said he expected that, given enough support, a regional water authority could form before the end of the year. In any case, however, he said coming to a final verdict on the idea shouldn't take more than a year or so.

©Litchfield County Times 2004