AUGUSTA — The controversial rates set by the Greater Augusta Utility District in October 2011 will stand.

The city of Hallowell had challenged those rates in Kennebec County Superior Court, claiming the structure unfairly burdened its sewer customers; but a judge has ruled in favor of the utility district.

Hallowell and a group of citizens said the district’s 35 percent increase in sewer rates was too high, and that the district had failed to keep proper records to justify the rates. The Greater Augusta Utility District provides sewer service to 758 customers in Hallowell.

Ratepayers in Hallowell said they were being charged $950,000 too much over a five-year period for sewer services from the utility district.

Hallowell City Manager Michael Starn said he does not intend to recommend that the city appeal Mills’ decision; however, he said the City Council will make the final decision when it takes up the issue at its April meeting.

Starn estimated Hallowell’s legal bills for the case at around $50,000.

“We were concerned about the cost of this, and as sewer rate payers, we were concerned about GAUD’s costs as well,” Starn said.

The utility district’s legal bills for the case were estimated earlier at $70,000.

Michael Hodgins, the attorney who represented the utility district, said Tuesday that his client and its trustees were pleased with the decision, which Justice Nancy Mills issued late Monday.

Ken Knight, chairman of the Greater Augusta Utility District, said in a statement that Mills’ decision confirmed what the district has asserted: The board followed the district’s charter and reviewed all costs in detail “to ensure that stormwater-only costs were charged to stormwater customers.”

“Because there is no ideal means to measure the flow of stormwater and sewer separately in a combined system, GAUD used our best judgment to calculate the flow and allocate costs fairly rather than simply dividing the costs based on an arbitrary formula,” Knight said.

In Hallowell, officials expressed disappointment.

“I think that we brought an important issue to people’s attention,” Starn said.

Starn differentiated Hallowell’s system, which has separate sewer and storm water systems, from that of the utility district’s, which has a combined system.

“Unfortunately for Hallowell, none of our storm water goes into the GAUD system,” Starn said. “We maintain our own. We just spent almost $150,000 on a storm water project last year. We have costs with our own storm water management, and we obviously didn’t want to pay for anybody else’s.”

Starn said Hallowell believed it was protected by charter language from paying for Augusta’s storm water treatment.

“The judge saw the governance structure, which included a representative from Hallowell, and deferred to that structure,” Starn said.

Attorney William Harwood, who represented Hallowell, had asked the court to delay the new rates, vacate the August 2011 decision by the utility board setting those rates, and come up with “objectively verifiable and rational methodologies” for allocating costs.

An appeal such as this one is heard by a judge only, and the case went to trial in September 2012 before Mills. The attorneys then had until mid-November 2012 to file briefs in the case.

Mills noted in her decision that the 2011 rate increase — which saw storm water rates rise 40 percent as well — was driven largely by the $17 million Bond Brook Combined Sewer Overflow project, which was aimed at preventing sewage and storm water from major rainstorms from flowing into Bond Brook and then the Kennebec River.

Mills outlined testimony presented at trial by Dennis Kinney, who has worked for the Hallowell Water District for 25 years; utility consultant Ronald Norton; Greater Augusta Utility District General Manager Brian Tarbuck; and Harold Smith, a consultant hired by the utility district to look at the proposed rate structure.

“The court concludes that Mr. Smith and Mr. Tarbuck have more experience and knowledge with regard to GAUD’s system than the plaintiffs’ experts,” Mills wrote near the end of her 33-page decision.

About the board’s rate-setting decision, Mills wrote that the plaintiffs present alternatives, but those “are not as well supported by data specific to the GAUD system and to the Bond Brook project as the rate model submitted to the board by GAUD.”

“The fact that there are alternatives presented now by the plaintiffs but not to the board, does not compel a finding that the methodology and resulting allocation factors adopted by the board must be rejected,” she wrote.

Betty Adams — 621-5631
[email protected]