Coalition Testimony, Feb. 15, 2001, Energy&Technology

Testimony of the
Energy and Technology Committee
February 15, 2001

Testimony submitted by Julie Belaga, Woody Bliss and Donald Strait, Co-chairs, in support of Senate Bill 918, House Bill 6172 and House Bill 6177.

Chairman Peters, Chairman Giannaros and Members of the Committee, thank you for the opportunity to testify before you today. We are here in support of the legislation proposed in Senate Bill 918 An Act Concerning a Southwestern Connecticut Regional Water Authority, House Bill 6172 An Act Concerning A Water Advisory Council and House Bill 6177 An Act Concerning Authority to Create Regional Water Authorities.
Support for the protection of open space land has increased markedly at the State Capitol during the last several years.  The Governor’s dramatic bonding proposal in 1999, committing $166 million over 5 years, brought the issue to the fore.  In 2000, House Speaker Moira Lyons initiated the Charter Oak Open Space Fund as a mechanism to allow General Fund and surplus revenues to be used for additional land purchases, giving priority to urban areas, water company and electric utility lands. In 2001, the Governor and the General Assembly are faced with the next open space challenge: How to protect not only the 18,773 acres owned by Kelda, but all of our threatened water company and utility lands, in a way that protects ratepayers and taxpayers.

The Coalition for the Permanent Protection of Kelda Lands, now one year old, has grown to 67 organizations, 47 elected officials and thousands of members who come from 166 of the 169 towns and cities in our State. While the main work of our Coalition has focused on protecting Kelda lands, we are acutely aware that the decision made about Kelda this year will directly influence decisions to protect other water company and utility lands across Connecticut.

The Coalition applauds the Governor for his proposal to permanently protect Kelda’s land holdings.  In doing so, the Governor has recognized the threat that mergers and acquisitions in the utility industry pose to forests, streams and reservoirs across our State.  Beyond the Kelda issue, thousands of acres of land in every corner of Connecticut that have been protected for generations by Northeast Utilities now face an uncertain future as a result of the proposed Con Ed merger.

The remaining private water companies collectively are also large landowners.  About 5,000 acres of these additional private utility lands are Class III, or so called “surplus land,” which could be contracted for development in the short term.  It is important that this Committee help craft an ultimate solution to the Kelda threat that also serves as a model for protecting the tens of thousands of acres of additional utility land whose future is now unsure.

As a result of the unprecedented investment and cooperation of 15 towns and cities, each of which contributed $5,000, the Coalition embarked on a feasibility study.  The towns chose Lamont Financial Services, which has a long track record of creative public finance in Connecticut, to identify financially feasible options to permanently protect all of Kelda’s lands while protecting taxpayer and ratepayer interests.  The $75,000 study was completed on January 31, 2001 and has been distributed to members of the Committee with this testimony.  The Study provides important options not only to permanently protect the Kelda land, but to also protect utility land threatened across the State.  We respectfully request that the Study be made part of this hearing record.

The Study identifies four options for preservation of the land.  Each has its own advantages and disadvantages.  The Coalition wishes to thank Senate Majority Leader George Jepsen who has played a key role in urging the examination of creative solutions to this challenge, solutions that can serve as a model for affordably protecting open space across the entire State.

The first option identified in the Study is the purchase of the land or the purchase of permanent conservation easements at a discounted price.  This is the option that the Governor announced last week at a press conference and in his budget address.  We applaud the Governor for this bold initiative to permanently protect Kelda land.
The second option is called asset buy-down.  This is a sophisticated financial approach about which the Coalition is very excited.  It would require Kelda’s cooperation, but in return would deliver to the company the value of the land or conservation interest in the land, while costing the taxpayers nothing and reducing water rates by a small amount.  It could easily be used to enhance and support the discounted purchase proposed by the Governor.  This combination is described on page 5 of the Report.  Such a powerful combination could potentially save the State millions of dollars while fully reimbursing Kelda for the value of the land.  Legislative authority would need to be enacted this year to form the framework for this approach.

We urge the Committee to examine this second option closely.  It offers great opportunity to be part of the Kelda solution as well as a method to protect utility lands in other parts of the State.  The proposed Water Council, which Coalition members strongly support, will search for just such creative solutions to protecting public water supply watershed lands as the asset buy-down. It is extremely critical, however, that the asset buy-down option be made available this year. Such an enactment would be entirely consistent with what the Coalition suggests be a core purpose of the proposed Water Council:  Protection of the open space that surrounds and safeguards our drinking water reservoirs both today and for generations to come.

The third and fourth options are the creation of a publicly controlled but privately operated Regional Water Authority.  These options are economically viable and are projected to not only reduce water rates both in the short and long term, but also have the potential to save all the land and provide towns with full PILOT payments to make up for projected local tax loss.

The Attorney General, a consistent leader in the effort to protect these lands, has identified the Regional Authority as a win for both consumers and the environment, and a fair deal for water companies.   In examining this issue, it is essential to remember that public utilities in this country are the rule, rather than the exception.  Across America, 85% of water utility customers receive water delivered by publicly-owned, not privately-owned, utilities.

Exhibit C to the Study convincingly demonstrates that overall Connecticut water rates are less expensive for customers of publicly-owned utilities.  The South Central Regional Water Authority can serve as a model for such an Authority.  We urge the committee to keep the Regional Water Authority options on the table in case the State and Kelda cannot reach agreement on a binding contract by the end of this legislative session. The Regional Water Authority is the only option being considered that can be implemented without Kelda’s approval.

We thank the Committee for the opportunity to appear before you today.

Respectfully submitted,

Julie Belaga    Donald Strait   Woody Bliss
Coalition Co-Chair    Co-Chair   Co-Chair