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Full text of "Annual report"

BOSTON PUBLIC LIBRARY 



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2001 Annual Report 

lesou[ce for Boston 














Boston Water and Sewer Commission 



From Nature 

Every day all of Boston's homes and busi- 
nesses receive one of nature's greatest 
resources from the Quabbin Resei-voir 
Since the mid-1940s, the Quabbin has 
provided its consumers with some of the 
highest quality water in the world. 

Through the joint efforts of the Boston 
Water and Sewer Commission (BWSC) 
and the Massachusetts Water Resource 
Authority (MWRA), water travels from the 
Quabbin Resei^voir through an intricate 
system of reservoirs, aqueducts and 
pipelines until it reaches consumers. The 
water is treated and tested repeatedly to 
insure that all consumers are receiving 
the highest quality product. 

MWRA has developed a 10-year, 
$1.7 billion Integrated Water Supply 
Improvement Program, and through 
the years, BWSC has contributed to many 
of these improvement projects. In fact, 
nearly 60% of all rate revenues generated 
from BWSC ratepayers are used to fund 
MWRA projects. During 2001, there was 
an emphasis placed on three major com- 
ponents of this program. These projects 
are the MetroWest Water Supply Tunnel, 
new covered storage facilities, and the 
Walnut Hill Treatment Plant. 

The MetroWest Water Supply Tunnel is a 
17.6-mile aqueduct boring through solid 
bedrock 200 to 500 feet below the ground 
from Marlborough to Weston. Once com- 
pleted in 2003, this new tunnel will link 
the MWRA water facilities to the City tun- 
nel, thereby increasing the water delivery 
system's overall capacity by 450 million 



gallons per day and providing a redundant 
supply system for Boston consumers. 

Covered storage tanks are a second 
major project that BWSC and its ratepay- 
ers have been contributing to through 
MWRA's improvement program. Covered 
storage facilities provide water sources 



jlV^y^jf, 




with added protection by reducing the 
risk of potential contamination. As a 
result, in 2001 construction continued on 
new covered tanks in Marlborough and 
Weston, due to be completed in 2004. 
These tanks will create water storage 
capacity available for peak daily con- 
sumer demands and emergencies. 

The new Walnut Hill Water Treatment Plant 
is the third project to which BWSC and its 
ratepayers made significant contributions 
in 2001. This new plant will enhance the 
quality of drinking water supplied to 2.2 
million people in the greater Boston area. 
More than 400 million gallons of water 
can be treated at this facility on a daily 
basis through ozonation/chloramination. 
Ozonation/chloramination, a modern 
method of water disinfection, dramatically 



reduces the amount of chlorine used 
during treatment, thereby improving the 
ability to meet all anticipated state and 
federal drinking water standards. The 
Walnut Hill Plant is expected to go 
on-line in 2004. 




Once the water reaches Boston's city 
limits, it is distributed to homes and 
businesses through an extensive net- 
work of water mains, service pipes, 
valves and hydrants. The Commission's 
current water distribution system con- 
sists of approximately 1,021 miles of 
pipe which range in size from 4 inches 
to 48 inches, including almost 14 miles 
of high pressure fire service mains 
located in downtown Boston, 12,760 
hydrants and 16,073 valves. 

BWSC enhanced its customer service in 
2001 with its Geographical Information 
System (GIS). GIS technology allows for 
quick access to detailed maps of water 
distribution lines and infrastructure. A 
web-based GIS application is networked 
to all departments of BWSC, enabling the 
engineering, customer service and opera- 
tions staff to track the age and condition 
of pipelines as well as establish its plan 
for infrastructure upgrades. GIS provides 
more efficient record accessibility, improv- 
ing the data search time and providing 
the ratepayers of Boston with even more 
reliable service. 

Utilizing GIS technology BWSC continued 
in 2001 to replace older water mains and 
to clean and line structurally sound water 



\U\ kUUi UfU] 



t 

investments in the 
water and wastewater 
systems, two yreat 
natural resourcBS- 
theQuabbin and Boston 
Harbor-are protected 
and preserved for 
future generations. 



Shown from left to right: 

Dennis DiMarzio, Chair, Board of 
Commissioners; Muhammad Ali- 
Salaam, Commissioner; Cathleen 
Douglas Stone, Commissioner; and 
Vincent G. Mannering, Executive 
Director. 



A Messaye from the [xecutive Director 





Since its creation in 1977, the 
Boston Water and Sewer 
Commission has been provid- 
ing Boston consumers with 
the most efficient city water 
and sewer service possible. 
The year of 2001 was no 
exception, as the Commission 
continued to meet the needs 
of Boston consumers with a 
quality water supply and reli- 
able wastewater removal. 

Throughout 2001, the 
Commission continued to 
make improvements in the 
way it delivers service to its 
customers. The completed 



implementation of our Work 
Order Management System 
granted access to all work in 
progress on graphical maps. 
This system links all customer 
requests for service to a work 
order and this work order is 
graphically presented to the 
crews that do the work. The 
Commission's Geographical 
Information System has 
enhanced customer service 
by allowing quick access to 
detailed maps of the water 
and sewer distribution system, 
and to track the age and con- 
dition of pipelines to allow for 
infrastructure upgrades. 



Beyond system upgrades, 
the Commission continues 
to make constant strides in 
its customer service efforts. 
In October of 2001, the 
Commission launched its 
updated website to provide 
customers with comprehen- 
sive information regarding 
Boston's water and sewer 
systems, environmental data 
such as rainfall statistics, forms 
and regulations. Additionally 
the Commission's customer 
service access lines are open 
24 hours a day, 365 days a 
year, to provide any caller with 
assistance regarding their 
water distribution and sanita- 
tion services. 

All of these efforts, combined 
with strong management initia- 
tives and a solid financial foun- 
dation enabled the Commission 
to get the job done, and get it 
done well for our ratepayers. 
The Boston Water and Sewer 
Commission is proud of the 
services that have been pro- 
vided through 2001 and is 
committed to continue this tra- 
dition of excellence through- 
out the coming years. 




Vincent G. Mannering 
Executive Director 



ISIfll WAHR All SfWfR COMMI 



Independent Auditors' Report 



The Commissioners 

Boston Water and Sewer Commission: 

We have audited the accompanying balance sheets of the Boston Water and Sewer Commission (the Commission) 
as of December 31, 2001 and 2000, and the related statements of operations and Commission equity, and cash 
flows for the years then ended. These financial statements are the responsibility of the Commission's manage- 
ment. Our responsibility is to express an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with auditing standards generally accepted in the United States of 
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the 
accounting principles used and significant estimates made by management, as well as evaluating the overall finan- 
cial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial posi- 
tion of the Commission at December 31, 2001 and 2000, and the results of its operadons and its cash flows for the 
years then ended in conformity with accounting principles generally accepted in the United States of America. 

As discussed in note 1, the Commission adopted the provisions of GASB Statement No. 33, Accounting and 
Financial Reporting for Nonexchange Transactions, in 2001. 

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. 
The accompanying supplemental schedule of revenues and expenses — rate basis is presented for purposes of 
additional analysis and is not a required part of the basic financial statements. Such information has been sub- 
jected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is 
fairly stated in all material respects in relation to the basic financial statements taken as a whole. 



iOH 



csr a"p 



March 29, 2002 



2U\ UNIAL REPOn 



Balance Sheets 



December 31, 2001 am 



Assets: 

Current assets: 

Cash and cash equivalents (note 8) 
Accounts receivable, net: 

Customers, less allowances of $5,435,458 in 2001 and 2000 (note 1) 
Unbilled revenues, less allowances of $1,702,361 in 2001 
and $1,703,561 in 2000 
Constaiction grants receivable 
Prepaid expenses 



$ 7,072,158 

8,130,567 

6,910,585 

1,282,682 

331,014 




$ 10,065,720 

10,604,714 

8,290,990 

1,277,328 

360,463 



Total current assets 



23,727,006 



30,599,215 



Restricted investments (notes 4 and 8) 
Property, plant, and equipment, net (note 3) 
Deferred charges (note 2) 
Bond issue costs, net JSSBSSBmK. 



273,941,597 

589,487,908 

27,762,709 

2,290,345 



308,162,056 

549,588,174 

29,364,185 

2,516,855 



Total assets 



$917,209,565 



$920,230,485 



Liabilities and Commission equity: 

Current liabilities: 

Payable from current assets: 
Accounts payable 
Other accrued liabilities 
Current portion of long-term notes (note 4) 
Current portion of revenue bonds (note 4) 



12,188,635 
5,907,724 
5,076,025 
8,955,000 



14,887,662 
5,989,789 
4,693,186 
8,550,000 



Total current liabilities 



32,127,384 



34,120,637 



Long-term debt, net (note 4) 
Long-term notes payable (note 4) 
Other long-term liabilities 
Deferred credits and reserves (note 2) 



320,321,133 
33,136,635 
27,966,905 

340,612,566 



329,024,788 
32,701,475 
35,145,029 

335,700,714 



Total liabilities 


754,164,623 


766,692,643 


Commission equity: 
Contributed capital 


163,044,942 


153,537,842 


Commitments and contingencies (notes 9, 10, 11, and 12) 
Total liabilities and Commission equity 


$917,209,565 


$920,230,485 



See accompanying notes to financial statements. 



BOSIOI WAHR All S[W[II CBMMISSIOI 



Statements ot Operations and Commission [qoity 



Yeafs ended December 31,2001 and 2000 



Operating revenues: 

Water and sewer usage 

Fire pipe 

Other 



$173,054,018 

2,690,551 

10,851,618 



$174,766,567 

2,595,314 

18,035,955 



Total operating revenues 



186,596,187 



195,397,836 



Operating expenses: 

Operations 

Maintenance 

MWRA. assessment (note 5) 

Depreciation and amortization 



44,329,620 

6,537,991 

117,674,466 

15,376,188 



45,014,062 

6,386,469 

112,524,614 

14,328,173 



Total operating expenses 


183,918,265 


178,253,318 


Excess operating revenues 


2,677,922 


17,144,518 


Nonoperating revenue (expense): 

Investment income 
Interest expense 


17,289,911 

(17,793,752) 


24,181,337 
(18,812,982) 


Total nonoperating revenue (expense) 


(503,841) 


5,368,355 


Excess revenues before capital grants and contributions, depreciation 

add-back, and transfer requirements 
Capital grants and contributions 


2,174,081 
12,244,871 


22,512,873 
12,316,488 


Excess revenues before depreciation add-back and transfer requirements 
Add: Depreciation on fixed assets acquired by grants 


14,418,952 

2,737,771 


34,829,361 
2,582,478 


Excess revenues before transfer requirements 

Excess revenues used to fund reserves, increase contributed capital, 

and other deferrals (note 2) 
Accumulated revenues used to offset future rates — beginning of year 


17,156,723 

(26,609,868) 
9,874,570 


37,411,839 

(34,660,134) 
7,122,865 


Accumulated revenues used to offset future rates — end of year 


$ 421,425 


$ 9,874,570 



See accompanying notes to financial statements. 



2111 nun ufu] 5 



Statements of Cash Flows 

Years eoded December 31, 2001 aodZOOD 



Cash flows from operating activities: 

Excess operating revenues 

Adjustments to reconcile operating income to net cash: 

Excess revenues used to fund reserves and other deferrals 
Depreciation and amortization 
Change in assets and liabilities: 

Accounts receivable, net 

Unbilled revenues 

Construction grants receivable 

Prepaid expenses 

Accounts payable 

Other accrued liabilities 

Deferred credits and reserves 

Other long-term liabilities 



Cash flows from capital and related financing activities: 

Additions to property, plant, and equipment 

Proceeds from notes payable 

Payment on bonds 

Contributions in aid of construction 

Payment of bond interest 



(53,196,589) 

817,997 

(8,550,000) 

12,244,871 

(17,793,752) 




$ 2,677,922 


$ 17,144,518 


(4,911,852) 


(25,095,351) 


15,376,188 


14,328,173 


2,474,147 


657,971 


1,380,405 


(1,106,338) 


(5,354) 


(15,501) 


29,449 


(25,754) 


(2,699,027) 


1,094,578 


(82,065) 


14,402 


4,911,852 


25,095,351 


(7,178,124) 


(15,037,346) 



Net cash provided by operating activities 


11,973,541 


17,054,703 


Cash flows from investing activities: 

Sale of investments, net 
Investment income 


34,220,459 
17,289,911 


50,749,880 
24,181,337 


Net cash provided by investing activities 


51,510,370 


74,931,217 



(71,660,305) 
(2,349,736) 
(8,180,000) 
12,316,488 

(18,812,982) 



Net cash used in capital and related financing activities 


(66,477,473) 


(88,686,535) 


Net (decrease) increase in cash and cash equivalents 
Cash and cash equivalents, beginning of year 


(2,993,562) 
10,065,720 


3,299,385 
6,766,335 


Cash and cash equivalents, end of year 


$ 7,072,158 


$ 10,065,720 



See accompanying notes to financial statements. 



WAHR HI S[W[I1 CflMMISSIOI 



Notes to Financial Statements 



Oecember]], 2001 and 2DD0 



(1) Organization, Basis of Presentation, and Summary of 
Significant Accounting Policies 

The Boston Water and Sewer Commission (the Commission) has 
the responsibility to provide water and wastewater services on 
a fair and equitable basis in tlie City of Boston (the City) as re- 
quired under the Boston Water and Sewer Reorganization Act 
of 1977 (the Enabling Act). 

Under the Enabling Act, the Commission is subject to regulation 
with respect to rates, accounting and other matters, where applica- 
ble, by the Board of Commissioners (the Board). The Board is 
appointed by the City's mayor subject to confirmation by the City 
Council. It regulates the rates that the Commission can charge its 
customers for water and sewer usage. The rates charged to cus- 
tomers are based on the cash required for the Commission's opera- 
tions, debt service, and reserve contributions. However, there is no 
legally adopted budget that the Commission must adhere to. To 
comply with the external financial reporting requirements of the 
Board, the accompanying financial statements are presented on a 
basis that is consistent with generally accepted accounting principles 
(GAAP) for regulated utilities (i.e., the accnial basis of accounting 
and the capital maintenance measurement focus). 

To accommodate the rate-making process, the Commission follows 
the accounting standards set forth in Statement of Financial Account- 
ing Standards (SEAS) No. 71, Accounting for the Effects of Certain 
Types of Regulation. SEAS No. 71 allows certain (a) revenues pro- 
vided for future allowable costs to be deferred until the costs are 
actually incurred (deferred credits) and (b) costs incurred to be capi- 
talized if future recovery is reasonably assured (deferred charges). 
Revenues and expenses appearing in the supplemental schedule of 
revenues and expenses-rate basis are presented in the same format 
as utilized in the Commission's operational budgeting and rate-setting 
process. The revenues and expenses shown on the statements of 
operations and Commission equity are presented on a GAAP basis. 
A reconciliation between the revenues and expenses of these two 
operating statements for the year ended December 31, 2001 is 
provided at right: 



Expenses 



As presented in the statements of operations 

and Commission equity: 

Operating revenues/expenses 
Other revenues/expenses 



Total 

Reclassifications and deferrals: 

Provision for working capital 
Revenue adjustments/ 

bad debt expense 
Excess bond payments over 

depreciation and amortization 
Interest expense (escrowed funds) 
Investment income 

(escrowed funds) 
Capital expenditures 
Excess revenue used to offset 

current rates 
Other deferrals 



$186,596,187 


$183,918,265 


17,289,911 


17,793,752 


203,886,098 


201,712,017 


570,428 


— 


(5,859,720) 


(5,859,720) 


— 


(1,933,297) 


— 


(1,085,996) 


(4,723,977) 


— 


— 


11,138,500 


9,874,570 


— 


154,593 


(490,937) 



As presented in the supplemental 
schedule 



$203,901,992 $203,480,567 



The Enabling Act requires that any net surplus, as defined by 
the rate-setting process, be either turned over to the City or 
applied to offset water and sewer rates for the following year. 
The Commission has applied $421,425 and $9,874,570 for the 
years ended December 31, 2001 and 2000, respectively, to offset 
rates in the respective subsequent years. 

(a) Revenue Billings 

Water and sewerage fees are billed to users of the systems on a 
monthly cycle basis. Revenues are accrued for periods between the 
termination of billings for the various cycles and the end of the year. 
Various adjustments are made on a post-billing basis that reduce the 
amount of total billings. Accordingly, the 2001 and 2000 total cus- 
tomer bills outstanding of $23,585,805 and $26,059,952, respectively, 
have been reduced by provisions for billing adjustments and sewer 
abatements of $10,019,780 in 2001 and 2000. These net billing 
amounts are further reduced by an allowance for uncollectible 
accounts of $5,435,458 in 2001 and 2000 to arrive at net accounts 
receivable. 



2111 yyAi UHU ] 



(b) Investments 

Investments, consisting of direct and unconditionally guaranteed 
short-term obligations of the U.S. Government, repurchase agree- 
ments, and money market funds secured by government securities, 
are stated at fair value. 

Investments are recorded at fair value. Fair value is determined 
based on quoted market price. 

(c) Property, Plant, and Equipment 

Property, plant, and equipment is stated at historical cost. 
Depreciation is provided on the straight-line method based upon the 
estimated useful lives of the various classes of assets. Maintenance 
and repairs are charged to expense as incuiTed. Major renewals or 
betterments are capitalized and depreciated over their estimated use- 
ful lives. The Commission does not have any donated fixed assets. 

The Commission capitalizes interest costs during constaiction of 
assets for its own use. No interest was capitalized in 2001 or 2000 
because the difference between interest expense and interest income 
on unexpended proceeds was not material. 

(d) Compensated Absences 

Various employees of the Commission accumulate unused sick time 
(subject to certain limitations) to be used at a later date or a percent- 
age paid in cash upon voluntary resignation and/or retirement from 
the Commission (subject to Commission policies and/or bargaining 
agreements). The liability for vacation leave is based on the amount 
earned but not used; for sick leave, it is based on a percentage of 
the amount accumulated at the balance sheet date. The liability for 
both amounts is calculated based on the pay or salary rates in effect 
at the balance sheet date. 

(e) Depreciation 

The Commission provides for depreciation using the straight-line 
method. Estimated useful lives used in computing depreciation are 
as follows: 



:er 


Years 


Sewerage 


Years 


Works 


100 


Works 


75 


Meters 


10 


Pumping station 


35 


Hydrants 


40 


Buildings 


40 






Other 


4 to 14 




(f) Capital Grants and Contributions 

The Commission receives capital grants and contributions from 
governmental agencies, individuals, and the City in aid of specific 
construction projects. In fiscal 2001, the Commission adopted 
GASB Statement No. 33, Accounting and Financial RepoiUng for 
Nonexchange Transactions, which requires capital grants and contri- 
butions to be reported as revenue rather than contributed capital. 
The amount recorded as revenue in fiscal 2001 and 2000 was 
$12,244,871 and $12,316,488, respectively. 

Depreciation related to the assets funded by these grants is charged 
to contributed capital over the estimated useful life of the assets. 
Depreciation of assets begins when the related facilities and equip- 
ment are put into service. 

(g) Cash Equivalents 

The Commission considers all highly liquid, short-term cash invest- 
ments with original maturities of thi'ee months or less to be cash 
equivalents for purposes of the statements of cash flows. 

(h) Bond Issue Costs 

Expenses related to the issuance of bonds are amortized on a 
weighted average basis over the life of the bonds, which approxi- 
mates the effective interest method. 

(i) Proprietary Activity Accounting and Financial Reporting 

Under the Governmental Accounting Standards Board (GASB) 
Statement No. 20, Accounting and Financial Reporting for 
Proprietary Activities, the Commission has elected to apply all 
Financial Accounting Standards Board (FASB) statements and 
interpretations issued on or before November 30, 1989, except 
those that conflict with or contradict GASB pronouncements. 

Use of Estimates 

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of 
assets and liabilities, and disclosure of contingent assets and 
liabilities, at the date of the financial statements and the reported 
amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates. 

(k) Reclassifications 

Certain 2000 amounts have been reclassified to conform with the 
2001 presentation. 



I WAIER HI SEWER EOMMISSIOI 



Notes to Financial Statements 



December 31, 2001 and 2000 



(2) Deferred Charges and Credits 

As discussed in note 1, the application of SFAS No. 71 results in 
certain revenues and expenses being removed from the statements 
of operations and Commission equity and reflected in the balance 
sheets as deferred charges or deferred credits. The revenues and 
expenses that have been removed from the statements of operations 
and Commission equity and added to the balance sheets as deferred 
credits appear in the line "Excess revenues used to fund reserves, 
increase contributed capital, and other deferrals" on the statements 
of operations and Commission equity. The components of these 
amounts are as follows: 



Provision for working capital 
Provision for capitalized interest 
Principal payments on long-term debt 
Interest paid from escrow funds 
Capital expendiaires 
Depreciation and amortization 
Investment income on project 

and escrow funds 
Other 



$ (570,428) 

(154,593) 

12,809,815 

(1,085,996) 

11,138,500 

(12,638,416) 

4,723,977 
142,138 



$ (570,428) 

(154,593) 

12,586,564 

(1,135,147) 

12,431,415 

(11,745,692) 

8,777,579 
2,153,948 



Total 



$ 14,364,997 $ 22,343,646 



The activity in and components of deferred credits and reserves 
included in the accompanying balance sheets are as follows; 



December 31 
2000 



Increase 
(decrease) 



December 31 
2001 



Debt service 
Capital improvements 
Working capital 
Self-insurance 



$124,445,837 

173,471,025 

25,669,282 

2,240,000 



t — $124,445,837 

14,935,425 188,406,450 

(570,428) 25,098,854 

— 2,240,000 



Reduction of future 
rates 



325,826,144 
9,874,570 



14,364,997 340,191,141 



(9,453,145) 



421,425 



Total defeiTed credits 

and reserves $335,700,714 



$ 4,911,852 $340,612,566 



(3) Property, Plant, and Equipment 

The cost of water and sewerage property, plant, and equipment in 
service and related accumulated depreciation at December 31, 2001 
and 2000 is as follows: 



The components of deferred charges included in the accompanying 
balance sheets are as follows: 



Deferred loss on land taking 
Accrued pension expense 
Debt extinguishment expense 



Total deferred charges 



2001 



2000 



$ 6,189,868 $ 6,410,932 

12,955,715 13,428,725 

8,617,126 9,524,528 



$ 27,762,709 $ 29,364,185 



Works 

Meters and hydrants 


$179,594,305 
19,937,740 


$174,939,408 
18,034,512 


Total water 


199,532,045 


192,973,920 


Sewerage: 
Works 
Pumping stations 


280,552,099 
6,818,749 


274,095,751 
6,818,749 


Total sewerage 


287,370,848 


280,914,500 



Other: 

Total property, plant, 
and equipment 
Less accumulated depreciation 



123,831,724 



75,118,472 



610,734,617 549,006,892 
(122,845,764) (115,411,232) 



Net property, plant, 

and equipment 

Construction in progress 



487,888,853 
101,599,055 



433,595,660 
115,992,514 



Total 



$589,487,908 $549,588,174 



During 1999, the Boston Redevelopment Authority (BRA) took land 
owned by the Commission through eminent domain. The book 
value of the land, at the time of the taking, was $7,598,710. A 
portion of this loss, $6,632,000, has been included in deferred 
charges in the accompanying balance sheets as that amount 
will be recovered through future rates. The Commission was paid 
no compensation for the land and does not expect to receive 
any consideration from BRA in the future. 

During 2000, the Commission completed the construction of its 
new headquarters and moved in during February 2001. 



(4) Long-Term Debt 

The Commission issues revenue bonds to support various projects. 

A summary of the revenue bonds outstanding as of December 31, 
2001 and 2000 follows (amounts in thousands): 



Senior debt: 

1991 Series A, bearing interest at a 
rate of 6.5%, with maturity date 
on November 1, 2001 

1992 Series A, bearing interest at rates 
ranging from 5.5% to 5.75%, with 
maturity dates ranging from 
November 1, 2002 to 2013 

1993 Series A, bearing interest at rates 
ranging from 4.6% to 5.25%, with 
maturity dates ranging from 
November 1, 2002 to 2019 

1994 Series A, bearing a variable interest 
rate, with maturity dates ranging from 
November 1, 2002 to 2024 

1998 Series A, bearing interest rates 
ranging from 5.0% to 5.125%), with 
maturity dates ranging from 
November 1, 2014 to 2015 

1998 Series C, bearing interest rates 
ranging from 4.5% to 5.2%, with 
maturity dates ranging from 
November 1, 2002 to 2021 

1998 Series D, bearing interest rates 
ranging from 4.5% to 5.0%, with 
maturity dates ranging from 



— $ 1,045 



52,680 



93,650 



35,800 



12,960 



11,270 



55,665 



95,165 



36,500 



12,960 



11,280 



November 1, 2002 to 2028 


125,125 


127,420 


Less current installments 


331,485 
8,955 


340,035 
8,550 


Total long-term revenue bonds 
Less unamortized issue discount 


322,530 
2,209 


331,485 
2,460 


Net long-term revenue bonds 


$320,321 


$329,025 



Annual sinking fund requirements and debt principal and interest 
maturities for all future years are as follows (amounts in thousands): 



2002 
2003 
2004 
2005 
2006 
Thereafter 



Revenue Bonds 


Principal 


Interest 


$ 8,955 


$ 17,464 


9,475 


17,005 


9,910 


16,512 


10,480 


15,989 


10,980 


15,429 


281,685 


146,219 



$331,485 



$228,618 



(a) Prior Year Debt Refunding 

In the aggregate, $150,970,000 remains outstanding at December 31, 
2001 on the bond issues that were defeased "in-substance" during 
prior years. 

(b) Trusteed and Nontrusteed Cash and Investments 

The Commission has established both trusteed and nontrusteed 
funds with investments, principally short-term securities, which are 
restricted for payment of specified liabilities, capital projects, or 
other costs of operations. The components of the tioisteed and non- 
trusteed investments at December 31, 2001 and 2000 are as follows: 



Trusteed: 

U.S. Treasury notes 

Other government obligations 

Money market and cash 

investments 
Open-ended mutual funds 
Commercial paper 
Repurchase agreements 



$ 34,163,251 
90,814,967 

1,131,389 

6,435,585 

51,159,166 

8,416,250 



$ 52,668,023 
71,127,537 

10,976,143 

12,881,679 

42,324,433 

8,416,250 



$192,120,608 $198,394,065 



Nontrusteed: 

Other government obligations $ 853,408 $ 1,194,875 

Money market and cash 

investments 1,746,361 1,772,549 

Open-ended mutual funds 20,827,533 18,021,339 

Commercial paper 12,624,774 16,003,434 

Repurchase agreements 45,768,913 72,775,794 





81,820,989 


109,767,991 


Less: Taisteed and nontrusteed 
cash 


273,941,597 

(2,877,749) 


308,162,056 
(12,748,692) 


Trusteed and nontrusteed 
investments 


$271,063,848 


$295,413,364 



IISIIN WAnR yO SfWfll [DMMISSIIN 



Notes to Financial Statements 



December 31,2001 and 2000 



(c) Long-Term Notes Payable 

During 1997 and 1996, the Commission executed loan agreements 
with the Massachusetts Water Pollution Abatement Trust (MWPAT) to 
finance and refinance a portion of the Commission's water pollution 
abatement projects. As of December 31, 2001, an aggregate amount 
of $32,334,700 was received by the Commission. For purposes of 
offsetting principal and interest payments, an amount aggregating 
$16,798,608, consisting of contract assistance payments from the 
Commonwealth of Massachusetts and other interest subsidies from 
MWPAT, will be recognized as capital grants in aid of constrtiction 
over the remaining term of the loan. The long-term portion of the 
loan agreements with MWPAT is $23,466,003 at December 31, 2001. 



The scheduled loan payments for all present MWRA obligations are 
shown below: 



2002 
2003 
2004 
2005 
2006 
Thereafter 



$ 3,731,931 

2,764,054 

1,560,404 

799,115 

799,115 

3,747,940 



$13,402,559 



The scheduled loan payments for all MWPAT obligations and related 
subsidies are shown below (amounts in thousands): 



Scheduled loan repayments 



Loan subsidy amounts 



Net loan repayments 













Contract 


















Equity 


assistance 












Principal 


Interest 


Total 


earnings 


payments 


Total 


Principal 


Interest 


Total 


2002 


$ 1,344 


$ 1,329 


$ 2,673 


$ 656 


$ 852 


S 1,508 


$ 894 


5 274 


$ 1,168 


2003 


1,395 


1,261 


2,656 


619 


852 


1,471 


927 


260 


1,188 


2004 


1,446 


1,191 


2,637 


581 


857 


1,439 


958 


249 


1,207 


2005 


1.510 


1,115 


2,624 


542 


859 


1,401 


1,000 


233 


1,234 


2006 


1.573 


1,031 


2,604 


501 


862 


1,363 


1,041 


214 


1,255 


There- 




















after 


17,542 


4,798 


22,340 


2,381 


7,236 


9,617 


11,801 


918 


12,719 




S24.810 


510,724 


535,534 


55,281 


511,518 


516,799 


516,622 


52,149 


518,770 



The Commission has entered into various interest-free loan agree- 
ments with the Massachusetts Water Resources Authority (the 
Authority). Under these agreements, the Commission is required 
to repay these loans in five equal annual installments as part of the 
Authority's Infiltration/Inflow Local Financial Assistance program. 
No funding was received under this program in 2001 or 2000. The 
long-term portion of these loans at December 31, 2001 is $1,310,216. 
In addition, the Commission has received interest-free loans from 
the Authority as part of the Authority's Local Water Infrastaicture 
Rehabilitation Program (WIR) and Pipeline Assistance Program 
(PAP). The Commission received no funding in 2001 and 2000 
for WIR but received $5,514,798 and $2,476,351 in 2001 and 2000, 
respectively, for PAP. The long-term portion of these loans at 
December 31, 2001 is $1,416,013 and $6,944,399, respectively. These 
programs are designed to assist service area communities with sewer 
system rehabilitation. 



(5) Massachusetts Water Resources Authority 

The Authority provides all the Commission's water supply and sewer 
treatment requirements and assesses the Commission for a portion 
of its actual operating and capital expenses. The assessment is based 
on the Authority's fiscal year (July 1 to June 30), and payments are 
due to the Authority in ten equal installments excluding the months 
of January and July. Amounts included in the statements of opera- 
tions and Commission equity for assessments by the Authority for 
2001 and 2000 are as follows: 



Assessments allocated on: 
Water usage 
Wastewater usage 



$ 40,035,390 
77,639,076 



$ 35,997,824 
76,526,790 



Total 



$117,674,466 $112,524,614 



In 2001 and 2000, over 78% of water provided from the Authority 
was billable to customers. Since its inception, the Commission has 
maintained the percentage of billable water at 78% in 2001 and 2000 
and is continuing to take steps to improve the amount of billable 
water, including replacement of old and defective meters and imple- 
mentation of a comprehensive leak detection and repair program. 



2101 yyn I BE Pin H 



(6) Transactions with the City of Boston 

The Commission's ongoing program to meter City facilities lias 
resulted in billings to ten City departments during 2001 and 2000, 
respectively, based on actual consumption of approximately 
$3,805,088 and $2,594,741 in 2001 and 2000, respectively. 

The City provides services to the Commission, including paving 
and facilities rental. Operating costs billed to the Commission by 
the City were approximately $1,066,553 and $1,528,122 during 
2001 and 2000, respectively. Capital costs billed by the City were 
approximately $2,336,802 and $2,203,630 during 2001 and 2000, 
respectively. 

The Commission has an agreement with the City that allows the 
Commission's water and sewer bills that have remained unpaid 
for more than two years to be added as liens on the City's property 
tax bills. Under this agreement, the City provides collection services 
on these bills for an administrative fee. As of December 31, 2001, 
receivables totaling approximately $1.7 million of billings had been 
included on propeity tax bills. 

Under the Commission's own tax lien program, accounts which have 
unpaid balances over two years old are transfeired into the tax lien 
program for collection. As of December 31, 2001, approximately 
$3,270,797 remains outstanding. 



(7) Retirement Benefits 

The Commission provides retirement benefits to substantially all 
of its employees through the State-Boston Retirement System (SBRS 
or the System), a cost-sharing, multi-employer retirement plan. The 
Commission does not provide any other significant postemployment 
benefits. 



A dispute concerning the Commission's past and future obligations 
to all Commission employees covered by the SBRS was settled in 
1986, resulting in a payment of $19,100,000 to the SBRS. This pay- 
ment was funded primarily through 1985 and 1986 bond proceeds 
and is recorded as a deferred charge that will be recovered through 
future rates. As part of the settlement with the SBRS, the Commission 
annually reimburses the City for the Commission's share of pension 
benefits paid to Commission employees. The Commission's share 
is based upon the proportion of each employee's total years of 
creditable service, level of compensation, and group classification. 
Employees become 100% vested after ten years of creditable service 
as defined by Chapter 32 of the Massachusetts General Laws (MGL). 



(a) Description of the SBRS Plan 

The SBRS is a cost-sharing, multi-employer public employee retire- 
ment system established under Chapter 32 of the MGL and is a 
member of the Massachusetts Contributory Retirement System. The 
System provides retirement, disability, and death benefits to plan 
members and beneficiaries. Chapter 32 of the MGL assigns authority 
to establish and amend benefit provisions of the plan. The System 
issues a publicly available financial report which can be obtained 
tlirough the Commonwealth of Massachusetts, Public Employee 
Retirement Administration Commission (PERAC), One Ashburton 
Place, Boston, Massachusetts 02108. 

(b) Funding Policy 

Plan members are required to contribute to the SBRS at rates rang- 
ing from 5% to 11% of annual covered compensation. The Com- 
mission is required to pay into the SBRS its share of the remaining 
systemwide actuarially determined contribution plus administration 
costs which are apportioned among the employers based on active 
covered payroll. Through fiscal 1998, the Commonwealth of 
Massachusetts reimbursed the SBRS for a portion of benefit pay- 
ments for cost-of-living increases. Beginning July 1, 1998, the SBRS 
is locally funding the cost-of-living adjustments as approved by the 
SBRS' Board of Retirement, the City's Mayor, and City Council. The 
contributions of plan members and the Commission are governed 
by Chapter 32 of the MGL. The Commission's contributions to the 
System for the years ended December 31, 2001, 2000, and 1999 
were approximately $565,350, $1,244,000, and $1,181,000, respec- 
tively, which equaled its required contribution each year. Total 
employee contributions, based on actuarially determined amounts, 
were approximately $1,929,788 and $1,871,797 and $1,726,145 or 
8.2%, 7.9%, and 7.9% of covered payroll in 2001, 2000, and 1999, 
respectively. 

(c) Valuation of Investments 

The investment portfolio is regulated by the MGL, Chapter 32, 
Section 23. The investments are presented in the financial statements 
at fair market value. State Street Bank and Trust Company is the cus- 
todian of the portfolio, which is managed by independent invest- 
ment advisors. 

(d) The Commission's Trust Fund 

On a quarterly basis, the Commission deposits an amount into a 
Trust Fund, the assets of which are used to reimburse the SBRS for 
amounts paid on behalf of the Commission. As required by the 
Commission's Enabling Act, employee pension contributions are 
transfeiTcd to the SBRS directly and are either returned to employees 
upon termination or, for vested employees, are used to defray a 
portion of the total retirement benefit. The Commission's policy 
is to make employer contributions to the Trust Fund based upon 
the actuarially determined cost of future benefits, net of employee 
contributions. 



12 UUU WHnR HI S[W[R [IHMISSim 



Kotes to Financial Statements 



December 31, 2001 ani 



Trust Fund assets at December 31, 2001 and 2000 are as follows: 



Assets (at fair market value): 
Common stock 
International stock 
Mutual funds 
Fixed income 



$30,964,785 

5,800,928 

759,140 

25,915,183 



$31,905,760 

6,734,365 

713,502 

25,211,460 



Total 



$63,440,036 $64,565,087 



The Trust Fund activity is as follows: 

Assets (at fair market value): January 1, 2000 $61,796,885 

Employer contributions 1,244,261 

Investment income and gains 3,047,182 

Management fees (235,236) 

Payment to SBRS (1,288,005) 

Assets (at fair market value): January 1, 2001 $64,565,087 

Employer contributions 565,350 

Investment income and gains (13,357) 

Management fees (247,289) 

Payments to SBRS (1,429,755) 



Assets (at fair market value): 
December 31, 2001 



$63,440,036 



The investment portfolio is regulated by the MGL, Chapter 32, 
Section 23. The investments are managed by independent invest- 
ment advisors. Fleet Bank of Massachusetts, N.A. is the custodian of 
the portfolio. The Trust Fund assets will be used by the Commission 
to reimburse SBRS in future years for required employer contributions. 



(8) Deposits and Investments 

The Commission's General Revenue Bond Resolution, adopted 
December 6, 1984, as amended, places certain limitations on the 
nature of deposits and investments available to the Commission. 
Demand deposits and term deposits without coUateralization can 
only be made with financial institutions meeting certain criteria. 
Certificates of deposit must be fully collateralized and issued by 
FDIC-insured banks. Investments can also be made in securities 
issued by or unconditionally guaranteed by the U.S. Government or 
its agencies; public agencies, municipalities, or state obligations car- 
rying the highest bond rating; commercial paper rated A-1, P-1; A- 
Rated money market funds; fully collateralized investment contracts 
and certain futures contracts. In addition, the Commission's Trust 
Fund has additional investment powers, most notably the ability to 
invest in stocks, corporate bonds, and other instrtiments. 

(a) Deposits 

A summary of the Commission's deposits that are (Category 1) fully 
insured or collateralized with securities held by the Commission or 
its agent in the Commission's name, (Category 2) those deposits that 
are collateralized with securities held by the pledging financial insti- 
tution's trtist department or agent in the Commission's name, and 
(Category 3) those deposits that are not collateralized as of 
December 31, 2001 and 2000 follows: 





Category 


Total bank Carrying 


2001 


1 2 3 


balance amount 


Cash 

Bank money 
market 
deposits 


$100,000 — $ 7,068,787 
— — 2,877,749 


$ 7,168,787 $ 7,072,158 
2,877,749 2,877,749 


Total 


$100,000 — $ 9,946,536 


$10,046,536 $ 9,949,907 




Category 


Total bank Carrying 


2000 


1 2 3 


balance amount 


Cash 

Bank money 
market 
deposits 


$100,000 — $10,106,259 
— — 12,748,692 


$10,206,259 $10,065,720 
12,748,692 12,748,692 


Total 


$100,000 — $22,854,951 


$22,954,951 $22,814,412 



Deposits in transit and outstanding checks account for the majority 
of the difference between the bank balance and the carrying 
amount. 



!yi Aiya un\ 



(b) Investments 

The Commission's investments are categorized according to the level 
of risk assumed by the Commission. Category 1 includes investments 
that are insured, registered, or held by the Commission's trustee in 
the Commission's name. Category 2 includes uninsured and unregis- 
tered investments held by the counterparty's trust department or 
agent in the Commission's name. Category 3 includes uninsured or 
um-egistered investments held by the counterparty, its trust depart- 
ment, or agent but not in the Commission's name. 

Category 



Categorized: 

U.S. Government 

obligations $ 34,163,252 

U.S. Government 

agency obligations 91,668,376 
Repurchase 

agreements — 

Commercial paper — 



54,185,163 
63,783,939 



34,163,252 

91,668,376 

54,185,163 
63,783,939 



Total 



$125,831,628 $117,969,102 



$243,800,730 



Not categorized: 
Open-end mutual 



funds 




27,263,118 


Total 




$271,063,848 




Category 




2000 


1 2 


3 Fair value 



Categorized: 

U.S. Government 

obligations $ 52,668,024 

U.S. Government 

agency obligations 72,322,411 
Repurchase 

agreements — 

Commercial paper — 



81,192,043 
58,327,867 



52,668,024 

72,322,411 

81,192,043 
58,327,867 



Total 



$124,990,435 $139,519,910 



$264,510,345 



Not categorized: 
Open-end mutual 
funds 



30,903,019 



(9) Lease Commitments 

The Commission leases office space and equipment under various 
leases that have been accounted for as operating leases. The pay- 
ments received under these leases are not material. 

Rent expense under operating leases amounted to $464,760 and 
$1,773,127 in 2001 and 2000, respectively. 



(10) Commitments 

A major capital improvement program is currently in progress. As 
part of this program, the Commission has entered into a number of 
contracts for the design and construction of its facilities. Commit- 
ments under these contracts aggregate approximately $101.0 million 
as of December 31, 2001. Capital improvements, primarily related 
to water and wastewater system projects with an emphasis on the 
cleanup of the Boston Harbor area, are expected to aggregate 
approximately $137.5 million for 2002 through 2003. Of this amount, 
approximately $101.8 million represents extension and improvement 
projects and $35.7 million represents renewal and replacement proj- 
ects. The extension and improvement projects are expected to be 
25% funded by federal and state grants and Authority grants and 
loans. The remaining amounts will be funded from the 
Commission's bond proceeds and operating revenues. 



(11) Risl< Management and Other Insurance 

The Commission carries self-insured retention limits for claims filed 
under workers' compensation and general liability and completely 
self-insures for all unemployment benefits. The workers' compensa- 
tion self-insured retention limit is $250,000 per claim and is supple- 
mented with $5 million in excess coverage purchased through an 
outside carrier. For general liability, the Commission's self-insured 
limits are $1 million per occurrence, $2.5 million aggregate, and is 
subordinate to $5 million of excess coverage purchased through an 
outside carrier. Under the sections of the Model Water and Sewer 
Act, the Commission's tort liability is capped at $100,000 per 
claimant. 



Total 



$295,413,364 



WAl 



:W[R [OMMISSIO 



Notes to Financial Statements 



Qecember 31, 2001 and 2000 



The Commission maintains other insurance coverage as follows: 



Policy type 



Coverage 



Health Premium-based 

Vehicles Combined single limit of $1 million 

Property Aggregate limit of $66.3 million 

Public officials Coverage of $3 million; $100,000 

self-insurance retention 

Fiduciary $2 million coverage 

Crime Employee dishonesty coverage of $5 million 

The Commission participates in the City's health benefits plans for 
which the City assesses monthly premiums to the Commission based 
on current enrollments. Insurance claims for all policies have not 
exceeded coverage by a material amount in the past three years. 

Liabilities for self-insured claims are reported if it is probable that a 
loss has been incurred and the amount can be reasonably estimated. 
The Commission has established a liability based on historical trends 
of previous years and attorney's and independent insurance reserve 
appraiser's estimates of pending matters and lawsuits in which the 
Commission is involved. Unemployment claims paid during 2001 
and 2000 were immaterial. 



(12) Contingencies 

The Commission is involved in ordinary and routine litigation and 
other matters related to its operations and the establishment of rates. 
Management believes that the resolution of these matters will not 
materially affect the financial position of the Commission. 

The Commission has received federal and state grants for specific 
purposes that are subject to review and audit by the grantor agen- 
cies. Such audits could lead to requests for reimbursement to the 
grantor agency for expendimres disallowed under terms of the grant. 
The Commission believes such disallowances, if any, will not be 
significant. 

The Commission is involved as a defendant in litigation regarding 
the pollution of Boston Harbor. Management believes that the 
Commission's extensive capital improvement program (see note 10) 
addresses probable actions that the Commission may be required 
to undertake in connection with this litigation. Additionally, the 
Commission is likely to bear either directly or through future assess- 
ments of the Authority a substantial portion of the financial costs 
involved. As of December 31, 2001, the overall cleanup costs are 
estimated to be approximately $570 million. However, the extent 
of the Commission's liability for these costs cannot be determined. 



Changes for the years ended December 31, 2001 and 2000 are as 
follows: 



Beginning balance of reserves 


$3,242,384 


$5,091,183 


Payment of claims attributable 






to events of both current 






and prior years: 






"Workers' compensation 


(665,123) 


(745,104) 


General liability 


(269,619) 


(1,877,075) 


Incurred claims 


547,329 


773,380 


Ending balance of reserves 


$2,854,971 


$3,242,384 



Incurred claims represent the total of a provision for events of the 
current fiscal year and any change in the provision for events of the 
prior fiscal years. 



1U\ 



Supplemental Schedule ol Revenues and [xpenses-Rate Easis 



Years eoded December 31, 2001 and 



Revenues: 



Water revenue 
Sewer revenue 


$ 63,020,837 
110,033,181 


$ 63,579,945 
111,186,622 


Sub total 


173,054,018 


174,766,567 


Less: 

Adjustments 
Discounts 
Bad debt 


4,707,667 

657,474 
494,579 


5,116,196 
666,928 
845,418 


Sub total 


5,859,720 


6,628,542 



Net billed charges 167,194,298 168,138,025 

Prior year surplus 9,874,570 7,122,865 
Miscellaneous revenues: 

Late charge revenue 1,475,973 1,781,353 

Investment income 11,089,964 13,622,403 

Fire pipe revenue 2,690,551 2,595,314 

Other income 11,576,636 18,760,974 

Total revenues 203,901,992 212,020,934 

Direct operating expenses: 

Salaries and wages 24,997,216 24,953,058 

Overtime wages 617,803 733,483 

Fringe benefits 4,169,896 3,815,591 

Supplies and materials 2,354,260 2,205,368 

Repairs and maintenance 6,537,991 6,386,469 

Utilities 1,354,969 783,556 

Professional services 2,501,705 2,311,596 

Space and equipment rentals 548,735 1,831,915 

Other services 1,234,412 979,459 

Insurance 502,664 432,371 

Damage claims 48,896 110,584 

Inventory 31,546 37,906 

Capital outlay 653,751 137,433 

Total direct operating expenses 45,553,844 44,718,789 

Nonoperating expenses: 

MWRA assessment 117,674,466 112,524,614 

Capital improvements 10,484,749 12,293,982 

Principal payments 12,809,815 12,586,564 

Interest expense 16,707,756 19,766,774 

SDWA assessment 249,937 255,641 



Total nonoperating expenses 


157,926,723 


157,427,575 


Total current expenses 


203,480,567 


202,146,364 


Current year rate surplus 


$ 421,425 


$ 9,874,570 



This supplemental schedule presents the Commission 's revenues and expenses on the basis that is presented in the Commission 's budget and rate-setting documents. 



IB BOSION WUER HI SEWER [IHMiSSIII 



mains with cement through the Water 
Main Rehabilitation Program. The primary 
purpose of this program is to insure the 
quality and quantity of water provided to 
all customers by relaying or rehabilitating 
all water mains in excess of 100 years of 
age. Older hydrants and valves are also 
replaced to insure system operability 
and maintain public safety. By tracking 
pipeline condition with GIS, BWSC was 
able to reduce the occurrence of main 
breaks and decrease water leakage, there- 
by reducing long-term maintenance costs. 

Working in conjunction with GIS, the 
Commission completed its implemen- 
tation of an integrated Work Order 
Management System (WOMS) in 2001. 
This system facilitates the scheduling of 
work performed on BWSC's water and 
sewer infrastructure. The new WOMS has 
dramatically improved the level of service 
provided to BWSC customers with access 
to all work in progress graphically dis- 
played on a map. Customer requests for 
service are linked to work orders. Work 
orders are then linked to physical assets 
such as a pipe, catch basin or hydrant 
for tracking purposes. Estimated costs 
associated with these work orders are 
monitored to better determine trends 
in BWSC's maintenance investments 
in labor, inventory and equipment. 



And Back to Nature 

During 2001, BWSC worked vigorously to 
collect, transport and dispose of sanitary 
waste generated by households, business- 
es and industry. The City's wastewater 
was directed to the new $3.5 billion 



MWRA. Deer Island Treatment Plant, 
where it was treated in compliance with 
all federal and state environmental stan- 
dards and released into the marine envi- 
ronment. These treatment investments 
are directly responsible for the cleanup 
and revitalization of Boston Harbor. 




The original backbone of BWSC's waste- 
water system began in 1884 with the com- 
pletion of the Boston Main Drainage 
System. This system was designed to 
carry the City's sanitary flow with an 
allowance for stormwater in combined 
sewer lines. In 1988, improvements were 
made to this system increasing capacity 
and eliminating dry weather overflows 
as well as reducing the volume of wet 
weather overflows. 

In recent efforts to clean up Boston 
Harbor, BWSC has made it their primaiy 
objective to reduce or eliminate com- 
bined sewer discharges and associated 
floatables to the Harbor and its tributary 
waters through the Combined Sewer 
Overflow (CSO) Project. In 2001, parts of 
Dorchester and Stony Brook underwent 



sewer separation in combined sewer 
areas. Additionally, Dorchester, Mattapan, 
West Roxbury and Roslindale ratepayers 
were involved in the disconnection of 
building downspouts from existing sani- 
tary and combined sewers. 

BWSC's CSO Project has a $152 million 
capital budget for the purpose of separat- 
ing combined sewers into pipes for sani- 
tary flow and pipes for storm water. 
Sanitary flows are then sent directly to 
the Deer Island Treatment Plant, and 
storm water is disbursed back into the 
earth or into Boston Harbor and its tribu- 
taries. The separation of the storm water 
from the sanitary system significantly 
reduces the amount of extraneous 
flows transported to Deer Island and 
the cost associated with treating this 
clean water 

City wastewater reaches the Deer Island 
Treatment Plant through underground 
tunnels where the wastewater is treated 
and disinfected before being discharged 
to the receiving waters of the Massa- 
chusetts Bay. The treated effluent 
reaches the Bay through a 9.5-mile 
outfall tunnel burrowed through 
solid rock more than 250 feet below 
the ocean floor. Extensive monitoring 
insures that the environment is properly 
protected. 

By making significant investments in the 
water and wastewater systems, two great 
natural resources — the Quabbin and 
Boston Harbor — are protected and pre- 
served for future generations. In main- 
taining this complicated water system, 
BWSC provided customers with the high- 
quality service for both personal and 
business usage. 



lout tie Duabbin 




The Quabbin's Winsor Dam under construction in 1938. The Winsor Dam is the main dam 
that creates the Quabbin Reservoir. 



The town of Enfield prior to construction of the 
Quabbin Reservoir. Enfield was one of four towns 
removed from the area in 1939 to allow for creation 
of the 39-square-mile Quabbin Reservoir. 



The history of the Quabbin's creation is a fascinating story. To accommo- 
date the increasing size of Boston, engineers were forced to look toward 
the western part of the state for larger water sources to meet the drink- 
ing water, fire protection and sanitary needs of the burgeoning Boston 
metropolitan area. In 1939, approximately 2,500 people in four towns 
located 65 miles west of Boston were relocated in order to facilitate the 
construction and filling of this 39-square-mile reservoir. It took seven 
years for the reservoir to reach its maximum capacity of 412 billion gal- 
lons of water. With its 118 miles of shoreline, the Quabbin is presently 
the largest man-made drinking water reservoir in the United States. 




Greenwich Village before construction began on the 
Quabbin Reservoir. Greenwich Village was also one of 
the four towns that was relocated in 1939 to facilitate 
construction and filling of the Quabbin. 



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