For nearly two months, outgoing Ascension Parish President Tommy Martinez has pitched the purchase of Peoples Water Service Co. as a way to improve the flagging finances of a west bank parish water district and eventually expand water service to the east bank.
But the prospect of the parish having its own water plant has taken on heightened importance since state testing last week found brain-eating amoeba in the west bank system.
The parish district, which is on the outskirts of Donaldsonville, does not produce its own water and must ship purchased water by pipeline from Assumption and St. James parishes to 700 spread-out customers along miles of distribution line.
The district has struggled to meet higher state chlorine standards to kill the amoeba since they took effect in early 2014. The part of the system supplied by Assumption Parish — where the amoeba was found in one location last week — has had 13 violations of the new chlorine standard since it took effect Feb. 1, 2014, the state Department of Health and Hospitals website says.
Buying Peoples Water, a private water company in Donaldsonville, would give the parish a 3 million-gallon-per-day plant that purifies water from the Mississippi River and would allow the parish district, Ascension Consolidated Utilities District No. 1, to stop piping in water, parish officials have said.
Parish government has subsidized ACUD No. 1 to the tune of $1.5 million in loans and direct grants since parish government took over following major financial problems in late 2012, a parish budget and audits say.
The water district has had to resort to wasting purchased water to improve circulation in the lines to keep up chlorine levels. Martinez said if the parish bought Peoples Water, the parish district could avoid the waste and better keep up chlorine levels.
“We’re spending money on putting water on the ground rather than selling it,” said Martinez, who is not seeking re-election and will leave office in early January.
The discovery of Naegleria fowleri at 9295 Brou Road near Modeste and the Iberville Parish line July 28 prompted the state Department of Health and Hospitals to order the parish district to do a 60-day chlorine burn to clear the amoeba.
John Ford, DHH spokesman, said this week that the burn is underway and the system won’t be retested until the burn is finished to verify the amoebas are gone.
Lester Kenyon, parish government spokesman, said chlorine levels are currently at 1 part per million. That is twice the state chlorine standard of 0.5 ppm, which is known to kill the amoeba.
State and parish officials have said ACUD No. 1 water is safe to drink but have urged residents to avoid getting water in their noses, which is how the amoeba can travel to the brain. The amoeba, which is believed responsible for the deaths of at least three people in Louisiana since 2011, occurs naturally in fresh water and can cause a rare infection that destroys brain tissue and leads to death.
Parish officials had been proposing a chlorine burn and adding new chlorine injection sites for months prior to the amoeba discovery, but Martinez said the parish could not get approval from DHH to do either.
Ashley Lewis, a DHH spokeswoman, said the agency never received a permit request for the part of the water district supplied by Assumption Parish, though DHH had reviewed plans in June for the part of the Ascension system supplied by St. James Parish.
While buying Peoples Water may appear to be an all-around fix for parish government, Martinez said Monday that a parish bid to buy Peoples Water “definitely” would lead to rate increases for Donaldsonville customers now served by the company.
That comment came after claims from Donaldsonville Mayor Leroy Sullivan that Martinez admitted as much to him and other city officials. Sullivan said Martinez said the higher rates would supplement the cost of paying for long-term loans used to build the neighboring ACUD No. 1 system.
Created in 2000, the parish water district used grants and nearly $5.9 million in low-interest government water revenue bonds to put in miles of water lines and two water storage towers to supply far-flung homes in Modeste, Brusly-McCall and other areas where problematic water wells stained clothes and tubs. Peoples Water had refused to serve those customers, considering the infrastructure costs uneconomic.
Residents in the district pay a 10-mill property tax and user fees, but the district has about 500 fewer customers than the 1,200 originally projected. Near the end of 2012, the district wasn’t generating enough revenue and was in technical default on its loans, parish and ACUD audits say.
Martinez, who says there isn’t enough room on the west bank for two water providers, has been open about the district’s financial problems, but he had not previously discussed rate increases publicly.
On Monday, though, Martinez acknowledged them and predicted water rate increases for Donaldsonville’s 7,500 residents were unavoidable whether or not Peoples Water sells.
“Whoever buys it, the rates would go up,” he said.
Donaldsonville officials, who have tried to buy the company since the early 1990s, announced they would be restarting those efforts after Martinez announced the parish bid.
Sullivan said if Donaldsonville could get a deal, the city probably would need a loan to buy the company. When asked if that type of financing would require rate increases for city users, Sullivan said it was possible.
But he drew a distinction between rate increases for a city buyout of Peoples Water and rate increases for a parish buyout of Peoples Water.
“I guess from the city’s standpoint of looking at it, it’s OK for me to take more out of my check to take care of my own home, but they’re taking money out of my check to take care of somebody else’s house. You know, I have a problem with that,” Sullivan said.
As a private utility with more than 3,100 customers in Donaldsonville, Peoples Water’s rates are set by the state Public Service Commission. If the parish or another government entity were to buy the company, local government would set rates instead.
The PSC last approved a rate increase for Peoples Water in August 2006. Monthly rates for the average residential customer rose from $23.39 to $33.59, where they remain.
Sherlock “Shockey” Gillet Jr., president of Peoples Water, did not dispute the future possibility of a rate increase by his company even if it remains in private hands, noting that without strong customer growth, costs increase over time.
“Any business, after a period of time, has to raise prices,” Gillet said.
Martinez, who got authority in June to negotiate a purchase of Peoples Water for up to $5 million, said Monday talks are jockeying back and forth. He didn’t to discuss numbers.
“I can say it’s getting closer,” he said.
Gillet, the Peoples Water president, said Martinez’s proposal to buy Peoples Water allows the parish to spread its debt load and to stop having to buy water from other providers.
“It makes sense from a regional water perspective. It makes a lot of sense. You can’t argue with that,” Gillet said.
He said his company, which is based in Maryland and runs systems in Donaldsonville, Bastrop and Pensacola, Florida, does not have a for-sale sign out but is open to an attractive offer. He did not have a timeline for negotiations.
“We’ve been there since 1941. We don’t have any sense of urgency,” Gillet said.
Follow David J. Mitchell on Twitter, @NewsieDave.