Lebanon Homeowners Face Big Bills for Small Water System

A small neighborhood in the town of Lebanon has been operating its own water system since the 41 houses were built in 1965. But now faced with the rising cost of meeting state regulations and with maintaining an aging infrastructure, the two remaining board members of the Carefree Homeowners Association are asking state regulators to mandate that Aquarion take over the system.

The outcome of the case could in part determine how the state manages all 497 community water systems across Connecticut, including Carefree, serving 2.7 million customers. They range in size from a well system in Andover serving 16 customers to the New Haven Regional Water Authority, which serves 418,900 customers. The median system serves 150. 


Bob Testa, president, and one of two remaining members of the water system’s board of directors, said Carefree has about $4,000 left in its reserve account and is facing hundreds of thousands of dollars of infrastructure costs that it won’t be able to afford. Testa said the association will be forced to shut down, and if the state doesn’t order Aquarion to step in and keep the system running, there isn’t anyone else who will. 

PURA will issue its final decision tomorrow, but a June 4 draft decision by the Public Utilities Regulatory Authority, or PURA, and the state Department of Public Health, determined that the system provides adequate service and remains economically viable.

Before 2016, the president of the board was an engineer who managed the system himself, and the vice president handled water testing. Both retired in 2015, and with no one left with the expertise to run the system, the board was forced to hire an outside operator. 

In 2018, in the middle of a drought, the water system tested positive for e. Coli. According to Testa, nearby private well owners also tested positive for the bacteria, but because Carefree is regulated as a water system, the Department of Public Health ordered it to cease use of two shallow wells and drill a third deep well as a replacement. 

“We drilled a well and it didn’t put up enough yield, it only put out 2 or 3 [gallons per minute],” Testa said. “It was ridiculous. We had to hire an engineer, a surveyor, and then we had to drill, and we even had it fracked as a last resort – and nothing. I mean we spent $52,000 on this thing. It practically broke us, and we just didn’t have enough money to continue.”

Aquarion offered to buy the system for $20,000 in 2018, but backed out in the face of a consent order and the need for a new well. The department has since lifted that order, satisfied by a 4-log treatment system implemented by Carefree – but officials at Aquarion say they’re no longer interested in acquiring the system.

In addition to the costs, Testa said no one is left to oversee the system. He is one of two remaining board members – both in their 70s, and neither with any background in water. The rest have stepped down, he said, because they are tired of the “bullshit.” Testa only became president after several other members resigned.

“I’m 73. I mean, I’m having memory problems, and I just can’t do what I used to do,” Testa said. “I’ve put out letters on several occasions asking for new volunteers to take over for us, and we have gotten absolutely no response.”

The Carefree community water system in Lebanon, CT

Testa said Aquarion suggested applying for an involuntary takeover, which, if approved by PURA, would force the company to take control of the water system. So they did that, and hired a lawyer – which cost them another $25,000.

Carefree has tried to argue that the water system is not sustainable to operate, even after the Department of Public Health lifted its order for a new well. According to Testa, the pipes used for the system are approaching the end of their useful life. He said that 10 years ago, the board was quoted a price of over $1 million to fully replace the underground lines. A rusting holding tank would cost at least another $20,000 to replace. Department officials are requiring another $120,000 of capital projects within two years to improve water quality.

“Even if we tripled what the association fees are, it would take us years to come up with that kind of money,” Testa said. “In my opinion, we should just shut the thing down and just have people drill wells.”

Draft Decision

In a draft decision rejecting Carefree’s plea, PURA ruled that the association could pay for needed improvements by increasing its flat, monthly fee by $14 to $74 a month – or could pursue outside financing, including low-interest loans from the Drinking Water State Revolving Fund.

The Office of Consumer Counsel argued in filings that Carefree’s customers would pay more if Aquarion took over the system, given that the company has said it would invest about $300,000 in the system, and recover it through an $85 a month surcharge that would bring their bills up to $130 a month – more than double the current cost.

“It is possible that if its residents were aware that their rates would more than double under the Aquarion plan, they may now be interested in taking a more active role in the management of their water system,” the office said in its filing.

Testa said that surcharge would be ridiculous, as it would allow Aquarion to earn a return over 20 years that is more than double their proposed investment.

PURA also suggested in its decision that Carefree could hire another contractor to manage the administrative functions that currently fall to the two-member volunteer board and supplement the operator it has already hired. According to state regulators, Carefree is like many other smaller water systems, which have been able to comply with state requirements by using outside contractors.

Testa said the draft decision doesn’t make sense, and would put the system in an even more precarious position than when the board petitioned for a takeover in February 2020. Carefree’s attorney has filed a response, arguing that the draft was simply a “mathematical exercise” that understates the true cost of maintaining the system.

“I would tell PURA, ‘Look, we are going to shut down. I don’t know what you want to do, we just can’t afford to continue,’” Testa said. “We own the property, we can just turn it over to the town. I mean they would end up getting it anyway if we can’t pay taxes on it.”

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