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Let Providence tap the water supply system

February 16, 2012

Providence city government faces daunting financial challenges. But the city owns a huge asset that could help finance government without raising property taxes. RIPR political analyst  Scott MacKay explains.

More than 60 percent of Rhode Island residents turn on their faucets and drink some of the purest and cheapest water in America. This is due to the Scituate Reservoir and the Providence Water Supply Board system that was built and is owned by the capital city.

Millions of gallons of   water – and millions of dollars – flow through the water system to communities from East Bay to the Pawtuxet River watershed.

Begun in 1915, the reservoir by the mid-1920s flooded a grand natural bowl at the headwaters of the North Branch of the Pawtuxet River, creating our state’s largest fresh water body. It was the source of clean drinking water for the city’s growing population and the wellspring for development of the industry that defined Rhode Island in the years before World War II.

Providence has long owned and maintained the reservoir, but city government gets nothing from this asset. Because of   political machinations that hark to the 1980 governor election between then-Mayor Buddy Cianci and then-Governor J. Joseph Garrahy, the city is barred by state law from using the water system as a revenue source.

Although the city runs the reservoir it cannot get what is known in utility speak as a rate of return from the water system, for the sale of water to other communities.

Other water agencies, such as the Kent County Water Authority and the Bristol County Authority, purchase water from Providence at wholesale rates and then mark it up and sell it at retail to communities on both sides of Narragansett Bay. Providence doesn’t get a dime for this.

The water rates are some of the cheapest in the nation for such pristine water. While this is good for Rhode Island, it isn’t helping a Providence government mired in deficit and the struggling homeowners who Mayor Angel Taveras says may be in line for yet another property tax increase.

Mayor Taveras has been aggressive in seeking new sources of  revenue from such non-profit institutions as colleges and hospitals. Now, quietly, the city is working on a plan to gain some money from its best asset.

City Hall sources say the Taveras Administration is working with the city council to obtain a new assessment of what the water system is worth and how it could be leveraged to help the city.

The reservoir, water treatment plant and grid of pipes that make up the system are likely worth $500 million or more. If the Governor Lincoln Chafee and the General Assembly are serious about helping the city cope with its structural deficits, there ought to be a way to allow Providence a modest rate of profit from its water.

A new quasi-public corporation – much like the Narragansett Bay Commission – could be set up to take over the water system and compensate Providence. Or it could be sold or leased to a private operator with money going to the city.

It is time the General Assembly worked with the city to overhaul the way city water is distributed and paid for. After all, it was the Assembly that slashed more than $40 million in state aid to Providence and helped put the city on the brink of bankruptcy.

Scott MacKay’s commentary can be heard every Monday on Morning Edition at 6:35 and 8:35. You cal also follow his commentary and political reporting at Rhode Island Public Radio’s `On Politics’ blog at RIPR.org

2 Comments leave one →
  1. Mister Guy permalink
    February 16, 2012 9:34 pm

    “Or it could be sold or leased to a private operator with money going to the city.”

    That’s an enormously bad idea. Privatizing public water supplies is never a good idea.

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