State PSC Approves Sale of Most Cecil County Water, Sewer Plants to Private Artesian Firm

September 2, 2011

The Maryland Public Service Commission has approved the sale of most Cecil County water and sewage treatment plants to the private Artesian firm, rejecting arguments by the Appleton Regional Community Alliance (ARCA) that has battled against the sale for over three years.

In an order dated 8/31/11, the PSC ruled that Artesian had “the financial, technical, and managerial resources and qualifications to operate and maintain the water system in Elkton West and in the Elkton West Extended area in Cecil County, Maryland.”

Furthermore, Artesian demonstrated, with a detailed analysis by the Maryland Department of the Environment, that the company has significant water resources to more than meet the needs of the area for which the county granted Artesian a franchise, the PSC said.

“In addition to its financial, technical and managerial fitness, the Applicants have demonstrated the ability to assure the availability of adequate and reliable water supplies for the foreseeable future from a variety of sources, including Susquehanna River sources that are currently unavailable to the County,” the PSC stated.

And the regulatory panel also rejected claims by ARCA that the sale would impair the county’s ability to comply with state and federal anti-pollution mandates for its other operations. In fact, the PSC said, documents and the sales contract specifically show that excess nutrient credits would revert to the county.

“The Applicants have also provided adequate assurances that their acquisition of the County’s wastewater facilities will not jeopardize the availability of Chesapeake Bay nutrient credits to the County’s detriment,” the PSC ruled. “Indeed, the Applicants have obligated themselves to release any excess nutrient credits associated with facilities acquired from Cecil County back to the County for the County’s use at other facilities.”

The PSC ruling was the last regulatory hurdle to the sale, which has been pending since a contract was signed over three years ago. But earlier this week, a three-member majority of the current Board of Commissioners voted to hire a new legal counsel to review that contract and also seek ways to “renegotiate” the agreement.
[SEE previous Cecil Times report here: ]

Meanwhile, the county contacted Artesian this week to suggest a renegotiation, especially on the sewage plant portion of the agreement, as well as some broader points that could, in effect, reopen the entire document, sources said.

Asked about that proposal, Joseph DiNunzio, executive vice president of Artesian Resources, told Cecil Times that the company’s board met to review the matter. He said thanks but no thanks would be “a fair representation” of Artesian’s reaction.

DiNunzio welcomed the PSC decision as “a good, positive step” but added, “it isn’t over until it’s over” and there are still significant “hurdles” to be overcome before the sale is finalized.

Foremost among those hurdles is the complicated process of refinancing of more than $6 million in county bond debt on its facilities that will ultimately become the responsibility of Artesian to repay. The PSC ruled that the bond refinancing was proper and authorized that process to proceed. “The clock is ticking on that,” DiNunzio said.

Cecil County Commissioner Tari Moore (R-2), said the PSC order “gives a go-ahead to move forward” with the sale. “Now the county has a lot of work” to do to meet a 12/31/11 deadline to complete the sale.

ARCA, which sued the county but lost its case before the state’s highest court in a recent ruling, might still try to block the sale with a possible request for reconsideration by the PSC of its decision or yet another court challenge, questioning the PSC ruling. Cecil Times has called Eva Walker, ARCA’s president, for comment on the PSC decision and will update this report upon her response.

But even if ARCA challenges the PSC action, “that does not stop the clock on the contract,” Moore said, and the county’s obligation to proceed. If the county does not go ahead with the sales contract, the county—and taxpayers—could be on the hook for a costly breach of contract legal action. The ARCA lawsuit has already cost county taxpayers over $203,000 in legal fees.

Commissioner Robert Hodge (R-5) told Cecil Times that he expected the commissioner board’s majority will probably “try to put him (the newly hired lawyer) on a fast track to try to find deficiencies” in the contract. But he said the PSC’s ruling, along with the Court of Appeals decision, could “put a noose around their neck.”

Moore and Hodge opposed firing the county’s long-time attorney, Lawrence Haislip, on the Artesian sale and opposed the hiring this week of Irwin Kramer, a legal ally of Del. Michael Smigiel (R-36). Smigiel intervened in the PSC case to try to delay a hearing by the PSC in early August. [SEE previous Cecil Times article here: ]

The leading commissioner opponent of the Artesian sale is Diana Broomell (R-4), who testified against the sale at the PSC hearing. The PSC ruling mentioned her in a footnote, noting, “Ms. Broomell stated that she has been seeking to intervene in this matter… since she was elected.” Cecil Times has called and emailed her for comment on the PSC decision and will update this report upon her response.

Broomell and Commissioners James Mullin (R-1) and Michael Dunn (R-3) voted to fire Larry Haislip and replace him with Kramer as the county’s legal counsel on the Artesian matter.

The PSC order was almost a full victory for Artesian, but on one point the PSC said no.
The county commissioners have been considering, and delaying action on, increases in water and sewer fees and connection charges for new customers since this spring—in part because the usual three didn’t want to boost rates that could ultimately be collected by Artesian—despite the fact that an independent consultant long ago recommended even higher increases.

Artesian said it had no plans to increase fees to customers but asked the PSC to allow it to charge customers whatever rates were in effect at the time the County Commissioners complete the sale, so that if the rates were increased, Artesian could charge the same fees. The PSC decided that Artesian must charge whatever rates were in effect on the date of its order—8/31/11. However, the PSC said that once the sale is completed, Artesian could file a formal application and go through the agency’s regulatory review process for permission to charge any higher fees.

DiNunzio said that aspect of the PSC ruling was not a problem for Artesian and the company would go through the regular review process at some point in the future if necessary.

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4 Responses to State PSC Approves Sale of Most Cecil County Water, Sewer Plants to Private Artesian Firm

  1. Ed Burke on September 3, 2011 at 9:05 am

    SMIPKIN bully tactics only work on those unable to defend themselves against the 3 Amigos. Why would Artesian renegotiate when the contract has been approved by the Court of Appeals and the PSC? Why would they take any action that could move the settlement beyond 12/31?

    Please 3 Amigos, drop the Kramer “legal review.” Save the county money in legal fees and don’t add to the breach of contract problem.

  2. Totally Disgusted on September 3, 2011 at 9:13 pm

    Commissioners already raised wastewater fees 20% this year. This is only the beginning since Artesian has stockholders and CEOs to be paid.

    Cecil will be developed like New Castle county in a very few years. We will be West Delaware. I am glad ARCA sued. That is one tax expenditure I do not mind paying. At least they were trying to look out for the private citizens. [Libelous statement removed.]

    • John Abbott on September 4, 2011 at 4:57 pm

      Disgusted, you are entitled to your own opinion; however, you are not entitled to your own facts.

      The Commissioners have not raised waste water fees this year.

      ANY increase in rates by Artesian has to be justified and approved by Maryland’s Public Service Commission.

      Cecil will never be like New Castle County. First of all, Cecil County doesn’t have the infrastructure. Second, Middletown (DE) wanted to develop, and put ordinances and infrastructure in place to encourage growth. Cecil County’s Comprehensive Plan restricts where growth can occur.

      ARCA was not looking out for the private citizens– the only people they were concerned about were themselves. They just didn’t want Aston Pointe developed (which is in their backyard).

      Even more revealing, they LOST every one of their legal challenges. How offensive that their selfishness has resulted in legal fees of over $200K to Cecil County taxpayers!

      It’s a good thing you don’t mind paying for lawsuits — because the continued decisions and actions of Commissioners Broomell, Dunn and Mullin are leading exactly in that direction.

      • Real GOP on September 5, 2011 at 9:18 am

        The sale will stop the practice of subsidizing county-owned water and sewer plant operations from the general fund. Prior commissioner boards failed to raise rates to cover increased costs, forcing taxpayers county-wide to pay for benefits to a few. Fees will now be based on free market principles. The Smipkins should be happy with such a strong “Fiscal Conservative” solution.

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