Posts Tagged Utility

FIEC Power Outage Report for 27AUG23

Wednesday, August 30, 2023

Dear Fishers Island Community:

Please join us in thanking the crews of the electric, telephone, and water companies on Fishers Island and the team at Groton Utilities for their collective efforts this past Sunday to limit the duration of power outages on the island while fixing a serious line failure in Groton. The responsiveness and competence of these professionals during an emergency, on a summer Sunday,, was a reminder that we are fortunate to have them working for our island community.

Power was lost at 10:24 a.m. August 27, 2023, and Electric superintendent Jay Cushing immediately alerted Groton Utilities.  Electric crew members Matt Larson and Harrison Hall joined Jay on duty within fifteen minutes of the outage and within 45 minutes confirmed the system failure was in Groton.  

At 11:30 a.m. crews mustered by Groton Utilities found a fault in the circuit dedicated to sending power to the transformer at Groton Long Point that feeds the submarine cable to Fishers Island.  It became apparent that the fault in Groton would take time to pinpoint and rectify.  Fishers Island Electric asked Connecticut Municipal Electric Energy Cooperative (CMEEC) to fire up its generator, located near Dock Beach, to power the island.  In that way, power was restored at 11:51 a.m. 

During the morning, Fishers Island Electric had an outage notice posted on Fishnet, and paper notices were posted at the post office, Village Market, both cafés and outside Shutters and Sails.  The fire chief, school superintendent, ferry manager, Community Center, Goose Island gas station, and the three clubs were all notified directly.  As a precaution, a telephone crew set up an emergency generator at Top of the World to power the island’s microwave link to the mainland.

Power was lost again at 5:00 p.m. when a surge in energy demand caused the CMEEC generator to overheat and trip off.  In order to reduce demand, water superintendent Chad Mrowka switched off the high lift pumps in the surface water plant at Middle Farms.  The generator faults were cleared, and the generator was restarted.  Power was restored on the island at 6:10 p.m.

The CMEEC generator ran through Sunday night while Groton Utilities worked to replace 300 feet of underground cable in the faulty circuit to the Fishers Island submarine cable. Fishers Island Electric arranged a 6:00 a.m. Monday fuel delivery by truck to the generator in case it would have to run longer.

In the event, the generator was shut off at 6:19 a.m. on Monday so that the power supply via the submarine cable could be restored three minutes later at 6:22 a.m.

In short, although it took nearly twenty hours to fix the fault in Groton, Fishers Island was without power for less than three hours in total, thanks in large part to the island’s utilities team.

We would also like to thank Jane Ahrens, for assisting with posting community updates on during the day Sunday, and Dave McCall and Captain John Haney at the Fishers Island ferry, for organizing on short notice the special ferry run for the generator fuel truck early Monday.

Chris Finan, President               Tom Siebens, Chairman

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FI Electric Company Proposed Electric Tariff Revisions

The Fishers Island Electric Company published a legal notice in The Suffolk Times on July 27, 2023, referencing a change in rates that might affect anyone interested in putting solar on their properties on Fishers Island. The ICB shares information on this filing here.

Matter/Case Title: Tariff Filing by Fishers Island Electric Corporation to Modify Its Electric Tariff Schedule, P.S.C. No. 2, to include Rules and Regulations Governing the Purchase of Renewable Energy from New Distributed Generators.

The Suffolk Times classified published on July 27, 2023

The Fishers Island Electric Corporation

Case 23-E-0394


NOTICE IS HEREBY GIVEN by the The Fishers Island Electric Corporation (“FIEC”) that on July 17, 2023, it issued and filed with the New York State Public Service Commission (“Commission”) Tariff leaves to amend its Schedule for Electric Service, P.S.C. No. 2, Electricity to become effective December 1, 2023Changes in the Tariff leaves are proposed as follows:

Service Classification Nos. 1, 2, 5, and 7: Residential and Non- Residential Customers:

  • New provisions to govern the rules for interconnection of distributed generation to FIEC’s system by residential and non-residential customers who receive service under Service Classification Nos. 1, 2, 5, and 7 and who own or operate electric generating equipment located and used at their premises.
  • The program will be available to qualifying customers on a first-come, first-served basis until total rated generating capacity for electric generating equipment owned or operated by customers in FIEC’s service territory is equivalent to 30 kilowatts (“KW”).

The proposed Tariff is available via the internet on the Department of Public Service’s (“DPS”) Document and Matter Management (“DMM”) system under Case 23-E-0394 ( e-0394&CaseSearch=Search)Questions or comments may be addressed to FIEC at (631) 788- 7251 or 161 Oriental Avenue, P.O. Box 604, Fishers Island, New York 06390; or by posting a comment to [NYSDPS]

New York State Department of Public Service

Find FIEC tariff filing letter, application, and public comment links

Company/Organization: Fishers Island Electric Corporation
Matter #: 23-01526
Case #: 23-E-0394
Link to Documents: NYSDPS

Find FIEC tariff filing letter, application, and public comment links:

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Fishers Island Long Distance Calling

After our posting in the July Foghorn, we have had good success in helping subscribers save on their National and International Long Distance bills.  

It is quick and easy to switch, and our team can assist you in making this cost-saving change.  If you are already a Fishers Island Long Distance subscriber, you are already experiencing the savings, and we thank you for your subscription.  If you are not sure which long-distance plan you have, give us a call, and we can help you identify your Long Distance Carrier.  

Fishers Island Telephone offers a National Plan to help lower your long-distance bill with an offering of $17.00 per month.  This special offer provides you with the first 500 minutes of calls for free, and then after the 500 minutes the cost is only 3 cents a minute!  You will also notice an improvement in the quality of the call as Fishers Island Long Distance utilizes state-of-the-art technology to complete your call.  Our International Plan is only an additional $3.00 per month and the per-minute rates can be as low as 3 cents a minute depending on the country you are calling.  

If you are an AT&T Long Distance subscriber, you may want to compare your AT&T bill and review the cost per minute for making calls off the island, which are long-distance calls.  By switching, you will be surprised at how much money you will save! 

If you have any questions about the program or would like to make the change, give us a call at the telephone office (631) 788-7001 x4 or send an e-Mail to  

Telephone Co. Logo Phone logo

161 Oriental Ave
PO Box 604
Fishers Island, NY  06390
Office: 631-788-7001   
Fax: 631-788-7999

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911 Emergency Services Upgrade

Fishers Island Telephone, Chief Flatley of the Southold Police Department, and Michael Postel the communications director for 911 in Suffolk County have been working together these past 18 months to develop an improved 911 emergency services access. The current system connected through antiquated AT&T network equipment installed in the 90’s has experienced decades of connectivity issues on the route between Fishers Island and the Southold Public Service Answer Point (PSAP).  Making this state-of-the-art upgrade to the network will increase the number of available circuits from one (1) to twenty (20).  We don’t anticipate 20 simultaneous 911 calls but, we are now ready to accommodate more than one.  Finally, the new solution is to be implemented in July.  

The importance of having reliable 911 emergency services is paramount for our community.  

Please note that if you are calling 911 from a Cellular Phone, the call will be routed over the Cellular Network and not through the Fishers Island Telephone Network.  This upgrade applies only to your local telephone service.  

An additional Enhancement to 911 service is described below: 

There is a new program called SMART911 for residents to identify key information about members of your household that would help anyone you care for in the event of an emergency whether the call to 911 is from the home or any mobile phone. You can register information that enables first responders to have visual details on an emergency location and provides information on access points like hidden driveways or gate codes. You can also provide critical medical conditions of members of your household that may need special attention to prepare first responders before they arrive.  You can also add information such as your vehicles, pets, and service animals, along with any special notes that you would want responders to know.

Your Safety Profile is Free, Private, and Secure. There is also an App for mobile phones as well.

Check for more information and registration at or on the App

If there are any questions regarding these upgraded services, please contact the Telephone Office either via email ( or by calling 1 (631) 788-7001 x4.

Thank you for your support of the Fishers Island Telephone Company.

Steve Head
Telecom Superintendent
Fishers Island Telephone Company
1 (631) 788-7001 x4

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FI Electric Corp.: Update on Electric Network Modernization

Fishers Island Electric Corporation

Update on Electric Network Modernization

November 29, 2022
By Tom Siebens, Director

AMI & Engineering Study

Fishers Island Electric Corporation plans to install automated metering infrastructure (“AMI”) over this coming winter.  The 700 electric meters on the island will be replaced with new meters that will allow system-wide data collection, remotely, to monitor, analyze and more efficiently manage power flows.

The Company’s plans for the AMI system were recently approved by the New York State Public Service Commission after a petition process that took over a year.

AMI is an essential first step toward modernizing the island’s electric infrastructure.  The AMI system will collect more accurate, real-time and extensive data on network use and performance and perform much more sophisticated analysis of that data than is possible with the existing old meters.  The data gathering and analytical capabilities of AMI will enable the Company’s consulting engineers to develop a comprehensive master plan for renovating the infrastructure.  A master plan will enable the Company to arrange financing for the modernization over time.

AMI will also help in day-to-day operations, enabling the Company to respond faster to problems and to regularly optimize the network’s efficiency. Customers with AMI meters will be able to access their usage data remotely through a customer portal and thereby better manage their own energy usage.

Challenges & Solutions

The island’s electric infrastructure has two major challenges.  First, the electricity distribution network is inefficient and vulnerable due to aging components and because it operates with two transmission voltages.  Second, the expected growth in demand for power on the island will likely exceed, within the foreseeable future, the capacity of the submarine cable that transmits the island’s power from Groton Long Point.

The master plan will help determine which parts of the infrastructure to replace first and how.  It will also help planning for an additional submarine cable from Groton Long Point.  This will add capacity to ensure that Fishers Island Electric can supply 100% of the island’s power needs far into the future.

The additional submarine cable will enable conversion of the island to a single voltage as well as a reduction in transmission losses over the four miles from Groton.  It will include a fiber optic line, providing a more stable, durable and scalable broadband capacity than the present microwave link to the mainland.


The engineering study will also help determine the best way to incorporate renewable energy, into the island’s energy mix.  As an alternative source of power, a potential hedge against the cost of power from the New England grid, and as a mitigant to climate change, renewables must be part of long-term planning.

However, adapting and managing an electricity distribution network that is connected to customers with their own micro generation is technically more complex than operating an electric network with one source of power supply, as is currently the case for Fishers Island Electric.  Fortunately, the New England grid, which supplies Groton Utilities, currently obtains more than 50% of its power from carbon neutral sources.  It’s future power sources will include substantial amounts of offshore wind as it continues to de-carbonize.


The financing for installing the AMI will be spread out over time under the terms of a lease-to-buy financing.  The cost of the engineering study and master plan will be covered by retained earnings.  Over time, Fishers Island Electric will recover the costs of these investments through a system improvement charge to customers, as authorized by the Public Service Commission on September 16, 2022.

The costs of modernizing the infrastructure will be developed and budgeted as part of the master plan.  Fishers Island Electric will then be in a position to plan infrastructure improvements comprehensively and cost-effectively.

In addition to financing new infrastructure, Fishers Island Electric faces the challenge of redesigning its rate structure in order to achieve three goals.  First, the rate structure needs to ensure that the Company recovers its fixed operating costs.  This is not possible under the current rate structure without the supplemental revenue from electrical contracting work done by the Company.  The Company plans to file a rate case before the Public Service Commission to address the shortfall.

Second, the Company needs to maintain a rate structure that is fair to year-round residents since much of the of the infrastructure and associated operating costs are necessary mainly to service seasonal residents.

Third, if the Company is going to interconnect with customer-owned generation, the Public Service Commission will require first that a new tariff class is in place to ensure that those customers, while purchasing less commercial power, continue to pay their fair share of the fixed costs for the distribution network.  Typically, such customers continue to rely on the network infrastructure for power when their own generation is insufficient to meet their full electric loads.

Designing a fair rate structure that ensures revenues on an economically sustainable basis for the utility, yet passes the scrutiny of the consumer-oriented Public Service Commission, is a significant undertaking.  It involves analyzing power use patterns, projecting the costs of operating, modernizing and optimizing the electrical infrastructure, and forecasting demand for power over decades to come.  This process will be set in motion with AMI data and a master engineering plan.

Designing a rate structure also involves conducting a rate study which Fishers Island Electric will be undertaking with the help of a rates consulting firm. The study will be the basis for eventually filing a case before the Public Service Commission seeking approval for a new, sustainable and fair rate structure.

*   Fishers Island Electric Corporation is a New York corporation, regulated by the New York State Public Service Commission.  It is managed and 51% owned by Fishers Island Utility Company, Inc. and 49% owned by Fishers Island Development Corporation.

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Exciting FIUC News Fiber is coming!

Happy Holidays! Give the Gift that Keeps on Giving
High Speed Fiber To The Home!

Fishers Island Telephone has received tremendous support for the future of the Islands Internet!! We are almost there. Today, we need just 15 more first adopters to move this project forward! Can you think of a better gift to your household other than super-fast reliable fiber internet? The sign-up is fast and easy so even if you started the process and needed more time, now is the opportunity to become one of the first 50 adopters that will enjoy the benefits package of High-Speed Internet, telephone, and long distance for one special price. After the first 50 have been reached, these special benefits will expire. Sign up now to enjoy High Speed Fiber Internet!

Why Upgrade?

As you know, the Internet has become an essential service and the demand for faster speeds to support the growing number of devices is rising every year. Because the copper cable that is delivering your telephone and internet services today is approaching the end of its useful life, the Telephone company is preparing to launch a major construction project to upgrade the Island residents and businesses with state-of-the-art high speed fiber optic cable to the premise.

What are we hoping to learn from this survey?

With the EVERNET II project, we are strategically evaluating the zones with the highest demand for service where we will plan to engineer and construct our fiber network first. We are looking to identify 50 first adopters to begin the construction of the multi-year Fiber To The Home (FTTH) network project. The information that is collected will aid us in determining where to commence the deployment of this new high speed fiber network.

What can you do to help?

Registering your address and agreeing on a product, you will be one of the first to receive Fishers Island Telephone EVERNET II FTTH High Speed Internet Services.  It’s really that simple!

Once enough registrations have been expressed in a specific zone, we will begin the planning to expand our service network to your neighborhood. There are many resources required to bring a fiber-optic network to a neighborhood and Fishers Island Telephone will target the construction to follow the demand to deliver EVERNET II fiber to areas of the highest demand first.

Sign Up Today before the special pricing and benefits are gone.

Simply Click on the link below to get started on this exciting project!

Thank you for your continued support of Fishers Island Telephone Corporation.

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Fishers Island Water Works Corporation: Water Infrastructure Financing

By Tom Siebens
Director, Fishers Island Water Works Corporation
December 20, 2021

Fishers Island Water Works has been invited by the U.S. Environmental Protection Agency to apply for an infrastructure loan under the Water Infrastructure Finance and Innovation Act of 2014.  The invitation follows from the EPA’s review of a letter of interest filed by the company in July 2021.

If the application is successful, the loan could finance up to 80% of the estimated $16 million cost to replace 7.75 miles of old transmission mains and associated hydrants and to modernize the surface water filtration plant at Barlow Pond.  These are the most critical components of the island’s network for ensuring potable water distribution and emergency fire flows.

WIFIA loans are low-interest, fixed-rate, and long-term, up to 35 years, with possibilities for deferred repayment.  These are very favorable terms for a small community water system and help mitigate the increases in water rates necessary to support water infrastructure renovation.

Loans under WIFIA are funded by Congressional appropriations and administered by the EPA.  Fishers Island is one of 39 new projects around the country announced by the EPA on December 3, 2021, as being selected to apply for a loan under the 2021 round of WIFIA funding.

Chris Finan, president of Fishers Island Water Works, identified the WIFIA program early this year as a potential source of financing.  The company will continue to look for potential funding under federal and state programs, including the infrastructure bill recently passed by Congress.  However, most of those programs target acute problems that Fishers Island does not face, such as deficient sewage treatment, poor potable water sources, lead water pipes, and sub-standard water systems in deprived communities.

The WIFIA loan application process will be demanding.  The EPA will require compliance with a variety of federal requirements, including an environmental impact assessment.  Support will be needed from the Suffolk County Department of Health.  Fishers Island Water Works will have to demonstrate the project’s economic feasibility based on water surcharges that fairly allocate the cost of the financing.  The New York State Public Service Commission will have to approve any proposed schedule of surcharges.

Despite the effort required, Fishers Island Water Works views a potential WIFA loan as an opportunity worth pursuing as part of addressing the island’s biggest infrastructure challenge.

*     *     *

This is the third in a series of articles about the renovation of the water distribution infrastructure on Fishers Island. See Fog Horn, January and February 2020

 About us:  Fishers Island Water Works Corporation provides water services on Fishers Island, New York.  It is owned by Fishers Island Utility Company, Inc. and Fishers Island Development Corporation and is regulated by the New York State Public Service Commission.

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FI Telephone: Long Distance circuits upgrade maintenance

The Fishers Island Long Distance circuits will be undergoing upgrade maintenance on Monday night, Tuesday Morning as follows:

  • Date: Tuesday Morning, 14 December 2021
  • Time: Midnight:01am EST through 05:00am EST
  • Impact: During this period, Fishers Island Telephone subscribers that have Fishers Island Long Distance may experience the following:
    • Unable to make long distance or international calls
    • Calls in progress may be dropped
    • Call quality is suffering
    • Noise on the line
  • It is highly possible that there will be Zero impact as we work with our redundant configurations.
  • 911 emergency services will not be affected
  • The internet will not be affected
  • Inbound calls to Fishers Island subscribers will not be affected.

If you have any questions regarding this upgrade maintenance, please contact Fishers Island Telephone at

Stay tuned for updates on the new Fiber Optic Network to the Home that is in the final stages of design.

Steve Head
Telecom Superintendent
Fishers Island Telephone Corporation
+1-631-788-7001 x4
161 Oriental Ave
P.O. Box 604
Fishers Island, NY   06390

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Renewable Energy: Challenges on Fishers Island

August 19, 2020
By Tom Siebens, Director
Fishers Island Electric Corporation

Over the past two decades, Fishers Island Electric has researched three forms of renewable energy generation: wind, tidal and solar.  The island’s current source of supply from the New England grid via an undersea cable from Groton Utilities has proven reliable for decades and is expected to remain so.  Renewables, however, offer carbon-free generation, enhanced energy security and, potentially, a hedge against rising costs of conventional power.

The research shows that renewables face technical, regulatory and economic challenges, some of which are unique to the island.  A way forward is becoming clearer, though it will require overcoming significant obstacles.

Technical Challenges

Wind Energy. Onshore, studies commissioned by the Electric Company over a decade ago indicated that the airfield is the only viable location on the island for a mini-wind farm of several turbines.  The airfield has the best wind profile with little topographical interference and, given some concern with generator noise, has the benefit of some distance from residential areas.  However, abandoning the airport in order to install wind turbine towers would likely be a non-starter for the island community and the Town of Southold, which owns the airport.

Offshore, the Electric Company has considered whether it might tap into any of the wind farms being developed far offshore of Montauk and Block Island.  To date, the Company is unaware of any plans to route transmission cables near Fishers Island from these projects.

Tidal Energy.  In 2015, the Electric Company consulted a developer of tidal power on the viability of installing tidal turbines in The Race.  The evidence available indicated that the tidal velocities in The Race are insufficient to make the tidal turbines currently available cost-effective.  An application to the New York State Energy Research & Development Authority for grant funding for a survey to confirm velocities in various water columns in The Race was denied because the Authority views tidal technology as unproven.  Given the costs for further research and the limitations of turbine technology, the Electric Company did not pursue tidal energy.

Solar Energy.  The Electric Company first considered in 2013 whether it could take electric power from a house built with a solar photovoltaic system on its roof.  Proposals for a solar farm on the Pickett Landfill were considered in 2014 and 2017.  These initiatives highlighted two technical challenges to incorporating solar or other renewables into the island’s energy mix.

The first is load balancing.  The entire demand for electric power on the island, the “demand load”, is met today with power supplied by Groton Utilities.  Taking power from a second source, such as a solar farm, will require “load balancing”, controlling power input from two sources so that it matches the demand load.  Additional infrastructure will be needed, as well as operating agreements among Groton Utilities, the Electric Company and whoever owns the second power source.  Load balancing will get more complex if power input to the island’s electric grid comes from multiple sources such as solar panels on houses and commercial buildings.

The second technical challenge is the seasonality of the demand load.  The island’s demand for electricity fluctuates significantly between its low point in winter and peak in summer.  Micro-generation capacity, from solar panels or otherwise, that can meet the low demand could be used year-round.  Generation capacity beyond that might make sense to supply high demand load in summer, but would be under-utilized and wasted in lower demand periods.

Regulatory Challenges

An electric utility generally is required to maintain electricity distribution infrastructure with enough capacity to provide 100% of each customer’s power needs, even if some customers, at times, use solar or other renewable sources of power.  Maintaining that capacity represents a fixed cost that the utility recovers in electric rates, which include a “capacity charge” component.  Yet rate revenue from a customer that uses its own renewable generation typically drops.  The customer buys less power from the electric utility.  In addition, under “net metering”, revenue from power the customer does purchase is reduced by credits for surplus renewable power the customer does not use but supplies to the electric grid.

Faced with such a reduced revenue scenario, Fishers Island Electric would have to increase rates to recover its fixed costs, resulting in higher electricity bills for customers, including those who do not have renewable energy facilities.  An upward spiral of rates could drive still more customers, if they could afford it, to install solar or other renewable power generation, compounding the problem.

In effect, although more renewable generation would be good for green energy, it could conflict with the Electric Company’s policy goal of recovering its fixed costs in a way that is fair and keeps electricity as affordable as possible across the community.  To accommodate net metering, the Company would need to introduce a system charge, applicable regardless of power consumption or net metering.  Revenue would have to increase to cover the financing of load balancing infrastructure as well as a costly rate study required by the Public Service Commission to help it evaluate whether the new rate structure unfairly impacts different groups of customers.

The challenges of designing fair rate structures and revenue recovery is the reason small electric utilities like Fishers Island Electric are not required to offer net metering.

Economic Challenges

Given its other investment needs, the Electric Company cannot justify to its ratepayers or the Public Service Commission building its own renewable generation capacity, especially with the risk that the power produced would cost more than power purchased from Groton Utilities.  Similarly, if renewable generation capacity is built by others, the Electric Company cannot commit to purchasing the power produced unless the price is competitive with Groton Utilities.  The Company has not yet seen a proposal that addresses the competitive cost challenge.

Another challenge to renewable power developers generally is the uncertainty of subsidies and tax incentives for renewable energy.  Government tax credits for construction are changeable.  State tax credits for building renewable generation facilities in New York may not be available if the power is transmitted out of the state to Connecticut and the New England grid.  In New York, rate subsidies are not currently available to enable renewable power producers to sell their power at rates low enough to compete with power from conventional generation.

The Way Forward

Despite the challenges, renewable energy is being incorporated into the Electric Company’s plans for modernizing the electricity infrastructure on Fishers Island.  The modernization has three goals: (1) updating obsolete and aging infrastructure, (2) expanding the infrastructure to supply higher demand loads and (3) integrating renewable on-island generation.  Planning is needed to ensure that these goals are addressed in a coordinated and cost-effective way.

Three main issues have to be addressed.  First is how to ensure the ability to load balance power supplied from micro-generation, which may be configured in different ways.  Solar power, for example, could come from individual houses, from a solar farm, or from micro-grids.  These grids are small networks that share renewable power generation and power storage but at times produce surplus power in excess of the network’s needs.

The second issue is how to make development of renewable generation cost-effective.  It will be less economic to build micro-generation capacity that produces power in excess of the island’s lowest average demand during the off-season if that excess capacity cannot be fully utilized all year long.  The Electric Company might be the off-taker for some of the surplus power during higher demand periods.  But power beyond the needs of the Electric Company will be lost unless it can be sold to a purchaser off-island.

This leads to the third main issue: how to plan for an additional undersea cable that provides more power transmission capacity than is available with the present cable.  Among the justifications for a new cable is that it would provide capacity for producers of surplus renewable power to deliver and sell that power to an off-taker on the mainland.

Modernizing the island’s electricity infrastructure with these issues and goals in mind will take time, engineering studies and, eventually, financing, supported by rate increases.  The challenges to bringing cost-effective renewable generation to the island are significant.  A number of modernization projects will have to take priority over renewables.  The technical and regulatory environment will continue to change.  But the Electric Company fully supports renewable generation as an objective and looks forward to the community’s continued interest and support in achieving it.

* * * * *

Image credit: Harvesting Solar, Wind and Tidal Power – Environment for Kids | Children’s Earth Sciences Books

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Sharing the Cost to Renovate Our Island Water Distribution Network

February 21, 2020

The Water Company is planning a major renovation of the water distribution system on Fishers Island.  This multi-year, multi-million-dollar infrastructure project has to be undertaken given the age and condition of the island’s network of cast iron water mains, many of which date back to the early 1900s.

This article is an overview of the investment required for this project, plans for financing that investment and the Company’s review of its rate structure.*

Project investment and borrowing.  Based on preliminary estimates, the investment required for the renovation will be substantial.  For example, the cost of detailed engineering plans for a network of replacement water mains is estimated at over $1.0 million.  Phase 1 of actual construction, a new trunk main running west from the wells at Middle Farms to the intersection of Montauk and Oriental Avenues, is estimated at around $4.0 million.

The Water Company expects to finance the renovation by borrowing.  It plans to do so in several tranches of loans over a period of years as the design and construction phases progress.  In parallel stages, the Company will have to increase its revenues in order to finance the borrowing costs, mainly interest and principal payments, over the life of the loans.

The Fair Allocation Issue.  Given the size of the impending financing costs for the renovation, the Water Company is considering whether its rate structure allocates the costs of the water system fairly between water customers, who benefit from potable water services, and property owners, who benefit from the fire protection infrastructure.

This allocation issue was debated in many water districts during the 20th century as water systems originally built exclusively for potable water were made more robust for fire protection or, conversely, systems built for fire protection were adapted to add potable water services.  While charging customers based on water consumption is fairly straightforward, charging for fire protection infrastructure that is used sporadically in emergencies is less so.  That infrastructure includes hydrants, standby water reservoirs for surges in water demand during a fire, supplemental high lift pressure pumps, and over-sized water mains to deliver higher volumes of water than needed for potable water services.

In the end, the water industry developed an allocation formula, now widely accepted, for estimating a water utility’s costs that are fire-related based on fire demand vs total utility demand for water.  Applying the industry formula to Fishers Island, 70% of the Water Company’s revenue would come from water customers. The remaining 30% would come from property owners via property taxes allocated to the Fire District, which leases the fire protection infrastructure from the Water Company.

The Company’s current revenue split between these two sources is 93% from water customers and 7% from property owners via the fire infrastructure lease.  In effect, according to the industry formula, water customers are providing a 23% subsidy to property owners for fire protection infrastructure.  Year-round water customers pay a disproportionate amount of this subsidy.

The Goal.  The Water Company has not made a final determination on how to change its rate structure to ensure that it has funds when needed to finance each phase of the distribution system renovation.  The goal will be to raise Company revenues, in stages over time, in a way that spreads the costs the entire water system more in line with industry standards.  The process will involve migrating the rate structure by weighting rate increases more toward property owners.

This could mean, for example, increasing incrementally charges to the Fire District under its infrastructure lease, leading to increases in property taxes to fund the resulting increases in the District’s annual budgets. However, the Fire District faces other budget considerations, such as financing a proposed firehouse renovation and housing a paid professional.

In any case, the Water Company is continuing its discussions with independent professional advisors, the Public Service Commission and the Fire District as a matter of priority given the critical nature of the renovation project.  Fishers Island is not alone.  Fresh water for daily use and water at high pressure from neighborhood hydrants have been taken for granted in water districts across the United States for decades.  But water main networks over 100 years old are now in many ways obsolete.  Across the country, water districts are facing this issue and an estimated $1 trillion of renovation costs.

The good news is that, by spreading the financing costs over time and across water customers and property owners, the community can support the renovation.  Moreover, with modern materials and engineering, renovated water distribution infrastructure is highly cost-effective: it is easy to maintain, reliable and can serve for another 100 years.

Tom Siebens, Director
Fishers Island Water Works Corporation

*This is the second in a series of articles about the renovation of the water distribution infrastructure on Fishers Island.  See “Renovating the Island’s Water Distribution System”, January 27, 2020, posted on and included in the February 2020 Fog Horn e-newsletter.

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