NEWPORT — The City Council last night unanimously supported the recommendations of a consulting firm that concluded that the water system should not be privatized and that it should remain subject to regulation by the state Public Utilities Commission.

The council voted 6 to 0 for a resolution that accepts CDM Consultants recommendations and directs the firm to now begin studying options for making required capital improvements to the water system, including major upgrades to the Lawton Valley Water Treatment Plant. The engineering firm was paid $116,200 for the study.

“City ownership with rate-payer financing offers the lowest cost strategy,” the study asserts. “Unlike the options involving the sale of assets to a regional authority or private company, the owner’s equity [some $35 million based on current net book value] is not funded or financed under continued city ownership and does not become an added cost that would be charged to rate-payers.”

CDM also concluded that “given the relatively lean operational cost levels for current city operations, the potential efficiency gains from private company operation would be somewhat limited and would likely be offset by higher costs for taxes and higher indirect costs for overheard and profit.”

As for a proposal to be removed from PUC jurisdiction, the consultant determined such a scenario “does not appear feasible and may not be beneficial.” The reason, CDM states, is that regulation by PUC preserves the faith that customers, including Portsmouth and the Navy, have in knowing that Newport’s rates “are fair and equitable.”

“The city would risk the possibility of significant revenue loss if one or more of the stakeholders were to pursue alternatives to replace water currently supplied by the city.”

In other business, the council gave final approval to an ordinance regulating the use of Segway electric scooters. The council gave preliminary approval to the ordinance two weeks ago, with members reluctantly accepting that the state has not allowed the vehicles to be banned outright.

Segway is the brand name popularly used to describe two-wheeled scooters that carry a single passenger, who operates the vehicle while standing upright. Early last year, the council reacted coolly to an informal proposal by Shoreline Segway, of Guilford, Conn., to open a store to sell the scooters and to lead tours around the city on them.

Last night, Councilman Justin McLaughlin said that the company had assured him that the company would require anyone renting a scooter to wear a helmet. The council last night, at the suggestion of Councilwoman Jeanne-Marie Napolitano, required that operators also wear protective eyewear, as the state requires for motorcycle operators.

The council also received a report from the solicitor’s office about the city’s efforts to force the owners of two properties in the Historic Hill section to make repairs to the houses. An arson fire in April 2007 at one property, 166 Spring St., heightened neighbors’ concerns about the neglected houses and prompted the city to take the owners to Municipal Court.

The case will return to Municipal Court next month where a judge may again find the owners in contempt of court.

“If you all lived next to these properties, you would wonder why it’s been going on so long,” said neighbor Federico Santi, who nevertheless said he was encouraged by the progress in court.

The solicitor’s office may ask the court for permission for the city to undertake repairs at the properties and to place a lien on the properties.

The other two properties are at 62 Mill St. and 23 Sherman St.

rsalit@projo.com