Bar Harbor’s newly approved water rate increase could face fresh scrutiny from the state, after the Maine Office of the Public Advocate suggested regulators consider investigating whether the town’s rate structure is fair to residents.
Just a week after Bar Harbor’s water rates officially rose by approximately 35 percent, Maine’s Office of the Public Advocate signaled that state regulators may need to take a closer look at the town’s pricing system.
The public advocate’s April 3 comments suggest that the Public Utilities Commission, if it shares concerns about Bar Harbor’s newly commission-approved water rates, investigate “whether the [Bar Harbor Water] District’s two-tier rate structure results in just and reasonable rates or whether a different rate structure, such as the flat per-unit rate structure proposed by the complainants, would be more likely to result in just and reasonable rates.”
The comments come after a 10-person complaint to the commission asking that Bar Harbor’s approved water rate increases be sent back to the town.
As of April 7, the case is still considered open. All written filings about the complaint had to be turned in to the utilities commission by April 3.
The lead petitioner of the complaint is Charles Sidman, who also led the citizen’s initiative for the town’s cruise ship disembarkation changes and has been involved in multiple appeals and lawsuits since then, including acting beside the town as a defendant-intervenor in a lawsuit filed against the town’s new cruise ship rules.
In this matter, the town’s water rates have increased by approximately 35% after a decade of no changes.
The increase is meant to cover an approximate $1 million budget shortfall for an approved budget of $3.3 million. The current rate results in $2.2 million revenue.
Those new rates began as of April 1, 2026.
In March, Sidman and nine others requested the utilities commission to investigate Bar Harbor’s rates and how it achieved them. The group said that the rates favor those who use more water than residents and that they cause economic hardship to “average citizens.”
Sidman’s initial three-page letter details that the complaint is based on their belief that the town has a “harmfully preferential and discriminatory” water rate structure that negatively impacts smaller users of water and benefits larger consumers of the resource. He also argues that the town was not transparent as it proposed the changes to the public and the commission.
The complaint was signed by Sidman, Nathan Young, David Rapkievian, James O’Connell, Jeffrey Miller, Rick Seabury, James Schramm, Mary Jane Whitney, Dee Karnofsky and Norah O’Brien.
The group requested that the rate change go back to the town for rates that they believe would be more equitable to residents.
The public advocate’s office said much hinges on whether the commission can find a statutory basis for the complaint.
“Put simply, the Commission will need to determine whether it finds that there is a statutory basis for the 10-person complaint in case in light of the fact that the complaint raises issues that could have been investigated as part of the Section 6104 proceeding, had the required number of signatures been submitted to the Commission,” the public advocate’s office wrote.
After the complaint, the Bar Harbor Water Division responded that it was in compliance with state rules and looking to multiple alternatives to create revenue so the division wasn’t operating at a million dollar loss.
Both the Office of the Public Advocate and Sidman responded.
In his letter Sidman questioned “whether a town’s residents should be required to pay almost twice as much per unit of water as non-residential customers, in continuation of a long-standing Bar Harbor tradition of imposing on, sacrificing and exploiting its residents in favor of the financial bottom lines of larger, wealthier and commercial entities. In stark contradiction to the Town’s officials’ and consultants’ statement that a flat rate structure would lead to up to four-times higher rates for residential users, the town’s own figures show that a flat and non-discriminatory water rate would decrease residential users’ rates by 14%, in contrast to the 35% increase incorporated in the Town’s recent proposal, all while raising the Town’s water revenue to that amount that the Town states as necessary for sustainability.”
Sidman wrote that he doesn’t want the utilities commission to open an investigation, but instead examine and consider Bar Harbor’s best course of action for its water rates.
Several residents spoke against the plan during a public hearing at a Town Council meeting in February.
The town has argued that the rate plan is fair and necessary. Past shortfalls in the water budget have been made up by using its reserves, Public Works Director Bethany Leavitt has previously said.
Those reserves have dwindled. The budget shortfall also stems from other planned capital improvement projects. Other causes, according to town staff, are inflation, increases to staff salaries, and an increase in capital investment.
“The need for a rate adjustment was identified through a formal rate case study conducted with the Town’s consultant in response to a documented structural deficit in the Water Enterprise Fund. That deficit is driven primarily by non-discretionary obligations, including debt service associated with a voter approved infrastructure bond and ongoing system operations. As presented publicly, the majority of system costs are fixed and must be supported regardless of water usage,” Town Manager James Smith wrote in the March 25 response to Sidman’s letter.
“The Town also evaluated several alternative approaches, including a flat rate. Based on its analysis, and in consultation with its rate expert, the Town determined that such an approach could not reliably recover fixed system costs without the necessity to significantly increase the minimum billing, which would disproportionately impact lower-use customers,” Smith continued.
Lower-use customers are typically residential users.
“The proposed rate structure incorporates two tiers as part of the Town’s effort to transition away from the historically declining block structure while maintaining a balanced distribution of costs. This approach reduces reliance on minimum charges while still ensuring recovery of fixed costs and limiting disproportionate impacts on lower-use customers,” Smith wrote.
This story was originally published by The Bar Harbor Story. To receive regular coverage from the Bar Harbor Story, sign up for a free subscription here.
