By DONNA KENNY KIRWAN

PAWTUCKET — Disturbed about a proposed application for a hefty rate hike by the Pawtucket Water Supply Board, one council member has floated the idea of privatizing the city’s water system to save money.

At Wednesday night’s City Council meeting, Councilor-At-Large Donald Grebien said he was cocnerned about a letter sent to the council by the Water Supply Board’s attorney, Joseph A. Keough, outlining a a proposed rate change that will bring in an additional $3.1 million in operating revenue.
Keough said the request, which the PWSB made in the form of an application to the Rhode Island Public Utilities Commisscion on March 28, will result in a 17.4 percent increase in revenues to support total operating revenue requirements of $20.9 million.
For a typical residential customer, the impact of this request will result in an increae of $91.28 per year or 25.5 percent. Keough noted, however, that while the PWSB is requesting this revenue increase, the PUC, after full investigation and hearings, “may order a different revenue requirement and rate.”
Grebien told the council that he finds it disturbing that the PWSB is seeking a 17.4 percent increase “in these economic times.”
 As such, he said the city needs to look into the feasibility of privatizing the entire water system process and department  to see if there would be any savings.
“We need to look at being creative. We need to look outside the box,” stated Grebien.
He asked the council to support sending a communication to the Mayor James Doyle’s administration and the PSWB to study whether there would be a savings realized by selling the water system to a private operator.
Grebien said later that he just wants to have an analysis done to see if there would be any cost benefit to to selling the entire water system to a private company, similar to a proposal that is being discussed by Providence city officials. He said that in addition to the money from the outright sale, the city could then place a tax on the pipes which would be absorbed by all of the users in the three communities served by PWSB customers.
While the entire 7-member council approved Grebien’s request to send a letter, several councilors expressed concerns about the privatization idea.
Councilor Thomas Hodge, who spoke with pride about the new water treatment plant coming on line at the last council meeting two weeks ago, said the city has already privatized some portions of its water system such as having a private company, Earth Tech, operating the treatment plant.
“I’m not sure I support the privatization of our water supply. If we own it, we control it,” Hodge stated. “I don’t see privatization as being a savings.”
Councilor John Barry said, “I don’t know whether I support it either,” but added that he thinks Grebien’s pitch to explore the idea “is a valid and reasonable request at this time.
Councilor Henry Kinch said he considers PWSB’s proposed rate increase “disappointing,” noting that an increase of nearly $100 or 25 percent over a year ago is substantial  “Two weeks ago, we were celebrating all the positive things going on at the new treatment plant,” he said. He added that, during the public hearings that the PUC is required to hold on the matter, residents should “let their feelings be known.”
In Keough’s letter, he states that the while the new rates are proposed to become effective April 28, the PUC can suspend the rates for up to six months while it conducts an investigation and public eharing. As such, it is anticipated that whatever new rates are set by the PUC will not become effective until September 28, 2008.
Keough told the TIMES on Thursday that the additional $3.1 million is “absolutely essential and needed” by the PWSB to operate the water system. Among the four primary reasons for the increase are that the operating contract for Earth Tech, the company that runs the plant, has gone up since the new plant has been completed; and labor costs are expected to rise as two loabor contracts are set to expire.
Also, energy-related costs, especially for electricity, are expected to rise. He said the PWSB had been purchasing its electricity at a discounted rate through a contract that expires in January, 2009. He said the PSWB has been told that the cost of electricity could rise as much as 100 percent.
Lastly, the PWSB wants to establish an operating reserve, Keough said.
When asked about the privatization idea, Keough said he doesn’t think it would do much to reduce rates. He explained that the PWSB operates the water system on a “break-even” basis, and said that any private owner would be looking to make some type of profit, even given the fact that mucniapl water supplies are regulated. He added that any private entity would also experience the same increases in operating costs that the PWSB is currently facing.