Presentation to Rumford Board of Selectmen 8/5/2010

One of the best parts of the job of being a legislator is getting to learn about a lot of the details that make up the funding patterns for state and local government. I had no idea about charges mandated to municipalities by the state in order to offset the cost of fire protection from a publically operated and regulated water district. Selectman Buccina brought this to my attention a couple of months ago when he asked why Rumford had to pay the water district a mandated fire protection charge that is governed by the Public Utilities Commission.

It was a great question, and I didn’t have the answer, so I set up a meeting with PUC staff to get some history and background on this charge. Selectman Buccina and I met with PUC staff on June 25th, and they were ready for us. It seems like we are not the first to raise this question and look for alternatives to this mandated charge.

Here are some of the things we learned:

• As far as the state is concerned fire protection is the main purpose for any municipal water system, with providing water for other uses (residential of commercial) are all secondary.
• Since fire protection is the primary rationale for creating, funding and regulating a municipal water system -- it must be built to produce flows that are adequate to meet fire protection demands -- and for small systems that means the total system is significantly “overbuilt” were it to be compared to a system just to deliver water to homes and businesses.
• The assessment to the municipality is based on a formula that has been developed over many years -- starting in 1888 -- with the most recent study finished in the late 1980’s. That resulted in Chapter 69 of the PUC rules which establishes the rate setting mechanisms for these charges.
• I’ve provided a very complete overview of the charges and how they have been determined, prepared by the PUC staff. It gives lots of detail about these charges and how they are governed.

Next steps:

The PUC does not seem ready to abandon this long held practice of charging a Public Fire Protection assessment to every municipality with a regulated water utility. In fact, just the opposite -- they are ready to defend this practice vigorously.

Here are our choices:

1. Take the information and drop the matter -- continuing to pay the fire protection assessment.
2. Look at alternative ways to evaluate the real cost / value of the fire protection assets, so that the annual payment reflects the actual associated costs. This approach has two downsides -- it will cost money to conduct such a study, and the study could actually raise the assessment rather than lower it.
3. Pursue a policy change that would create a new approach or formula for the allocation of fire protection assessments to municipalities. If that is your choice, I would be happy to work with you to put together legislation to accomplish this and sponsor that legislation. Let me observe, however, that this will likely be a contentious issue that could pit municipalities against one another. Most likely, depending upon what changes would be made, it would match bigger municipalities against smaller ones. Therefore, if you want to pursue policy changes, I suggest that you bring the matter up with the Maine Municipal Association and work through their Legislative Policy process.

I am happy to stick with this issue and process just as long as you want to. Let me know what you want to do and we’ll stay at work on the issue. You may want to review this material from the PUC in some detail and discuss this again at another time. We have several months before any legislative proposals would be submitted, so you can consider the approach with some tine. The way to succeed with a policy change in an area like this is to build some allies -- and that will mean close cooperation with other municipalities -- probably though MMA.

Selectman Buccina may have something to add -- so I’ll turn it over to him. Thank you for the opportunity to serve in this matter and at least get the ball rolling.