Keene Residents Shouldn’t Have to Choose Between Unaffordable Water Bills and Losing Water Service

Union Pacific remains responsible for water service in Keene

Keene’s unique water system dates back more than a century. Southern Pacific Railroad originally built the system to supply water to steam locomotives and the communities that developed along the railway. Even after the railroad’s own need for water declined, residents continued to rely on the system for water service.

When Union Pacific merged with Southern Pacific in 1996, Union Pacific became the owner and operator of the Keene Water System and thereby assumed responsibility for the system and its customers. In 2002, the CPUC determined that the system had previously been dedicated to public use and was a public utility subject to its jurisdiction and required Union Pacific to continue providing water service to existing customers. Since then, Union Pacific has repeatedly challenged its obligation to operate the system as a public utility, but it remains obligated to provide water service to Keene.

Despite this obligation, Union Pacific has sought to end its role as Keene’s water provider and has consistently argued that continuing to do so is financially infeasible. That position is reflected in its two current applications. In one application, Union Pacific requests to raise rates to levels that the company itself acknowledges “are not affordable.” If those rate increases are not approved, Union Pacific has requested in a separate application to be relieved entirely of its obligation to provide water service and to transfer all “appropriate” assets to a new owner that has yet to be determined.

Union Pacific’s lack of transparency regarding water rights

To date, no willing new owner has surfaced. Notably, Union Pacific has not identified its 98 acre-feet of water rights – valued at approximately $2 to $3 million – among the “appropriate” assets it proposes to transfer. The value of these water rights could both help fund the necessary system improvements that Union Pacific alleges are financially infeasible and provide a source of working capital for a new owner.

Union Pacific has also failed to report these water rights as utility assets in its annual reports to the CPUC for more than twenty years. That omission is particularly important now that Union Pacific is seeking to transfer the system. Without a complete accounting of the system’s assets, the CPUC cannot fully evaluate what resources may be available to support continued water service or what should be transferred to a new provider.

Any transition must protect Keene ratepayers

Union Pacific’s proposed exit from water utility status should be contingent on a full transfer of all system assets – wells, water rights, tanks, and infrastructure – to a new owner. Those assets are essential for continued provision of water service and to ensure that a future provider has the resources necessary to operate the system safely and successfully.

Ultimately, Keene residents should not be left with unaffordable water bills or uncertainty about whether they will continue to have access to an essential service. Union Pacific should not be permitted to abandon water service until a qualified new provider is in place with the resources necessary to provide safe, reliable, and affordable service. Union Pacific also should be required to provide a complete accounting of all system assets, including its water rights, and identify which assets it proposes to transfer to a new provider. Any transition must keep the responsibility to serve Keene together with the assets needed to do so.