Water Utility Faces Scrutiny Over Nestle Ties
By Sara Jerome
A proposed water rights contract between a Maine water utility and Nestle is under fire because the company allegedly has a cozy relationship with state government officials.
Fryeburg Water Co. is a family-owned water utility in the town of Fryeburg, ME. State regulators with the public utility commission (PUC) have reviewed a water rights contract between this utility and Nestle, the owner of Poland Spring.
But government watchdog groups say that the three voting members of the PUC, and other government personnel, have no way of making a fair decision when it comes to Nestle because they have personal ties to the company. A lawsuit has ensued. Final briefs are due this week, and a decision is expected in November.
“Everybody in the PUC has significant relationships with Nestle,” said Bruce Taylor, a Fryeburg taxpayer and one of the case’s interveners, said in The Stream blog. “This is a clear conflict of interest."
The Maine Sunday Telegram originally brought the potential conflicts of interest to light. A rundown of the questionable relationships: "Before joining the PUC in 2011, Chairman Thomas Welch was an attorney at Pierce Atwood, where he represented Nestle Waters for several years, including during the 2008 reorganization of the Fryeburg Water Co. that set the stage for the current contract. He has twice been asked to recuse himself by an attorney representing some of the contract's opponents," the report said.
"I am clearly in an uncomfortable position and I understand that people would feel this way,” Welch said in The Stream.
Another commissioner, Mark Vannoy, did recuse himself because he previously worked for Nestle, the Telegraph said. Public advocate Timothy Schneider also recused himself "because he did work for Nestle Waters on the current Fryeburg case while an attorney at Pierce Atwood. The other remaining commissioner, David Littell, was a partner at Pierce Atwood a decade ago, but did not personally work on Nestle matters."
What's in the proposed contract, anyway? "Nestle would continue to draw water at a low 'tariff' rate and pay lease fees to the water company, but would make a guaranteed minimum payment of about $144,000 every year, ensuring a more predictable cash flow. Nestle Waters' payments account for about 40 percent of the utility's operating revenues," The Telegraph reported,
Contract opponents say the price might be under fair market values. Opponents, which include environmental activists, say "their ultimate concern is over long-term sustainability of the resource." They have lobbied the governor's office urging that the contract be blocked.
It's not unusual for environmental activists to levy conflict of interest claims against a water utility during a controversial government proceeding. The water sector, after all, is sometimes a small world.
One example: "While working as the town's top administrator, Cudahy's then-city manager also served as a director of a private utility that sold water to the small Los Angeles County city, boosting his income by as much as $23,580 a year and raising conflict-of-interest questions," The LA Times reported.
Sometimes the claims hold water, and other times they amount to stall tactics, but either way it's clear that water utilities in hot regulatory proceedings are vulnerable to "conflict of interest" claims. For similar claims levied against water utilities, click here and here.
Image credit: "Water Bottles," © 2008 sskennel, used under an an Attribution 2.0 Generic license: http://creativecommons.org/licenses/by/2.0/