An Illinois-based company is negotiating a deal to buy 220 community water and sewer systems in south Louisiana owned by Total Environmental Solutions Inc., a company that has faced years of complaints about poor service.
The proposed sale comes after the state Public Service Commission launched an investigation last year into whether TESI was investing enough to maintain its water wells, pipes, sewer plants and other infrastructure.
Utilities Inc. has agreed in principle to pay $9.3 million to acquire TESI’s 28 water systems and 192 sewer systems in Louisiana, effectively ending that company’s operations here, according to filings with the PSC.
“I think we see an opportunity to improve service and compliance,” said Don Sudduth, who oversees Utilities Inc. subsidiaries in Louisiana.
TESI has roughly 2,350 water customers and 14,387 sewer customers in 18 parishes, but operations are heavily concentrated in rural Lafayette Parish, serving subdivisions beyond the reach of municipal water and sewer systems.
Lafayette City-Parish Councilman Don Bertrand said he has heard nothing but complaints about TESI — cloudy water, substandard service, environmental issues.
“Hopefully, they will see some relief,” he said of TESI customers. “I would like to see somebody reputable who has the ability to improve the system.”
Shenandoah Estates, a subdivision near Broussard, has been a source of many of the complaints.
TESI provides water and sewer service to the subdivision, where residents have talked of spotty sewer service and of appliances and clothes fouled by water clouded with iron and manganese.
Shenandoah Estates resident Graeme Tuminello said some of the sewer problems have been addressed in recent years, but water quality continues to be an issue.
He is optimistic — but at the same time wary — about a new company taking over, and he longs for the day when basic water and sewer service is “something we don’t have to worry about.”
The proposed deal, which could come before the PSC for approval as early as this month, calls for $23 million in upgrades spread across all the water and sewer facilities.
Customers can expect the phasing in of varying rate increases, depending on how much work is slated for the system serving their subdivision, according to the PSC filings.
“TESI is actually selling its assets to a company we believe has a better track record of taking care of these types of systems,” said Scott Angelle, a public service commissioner who represents the Acadiana area.
Angelle had called for the investigation into TESI’s finances last year, but he said it was put on hold once the sale was proposed.
“I’m glad they reached that conclusion because that’s what needs to happen,” he said.
Utilities Inc. operates more than 600 water and sewer systems, serving some 300,000 customers in 15 states, Sudduth said.
The company has owned systems in St. Tammany Parish for several years but began expanding its footprint in Louisiana last year, buying up smaller operators with the hope a larger company’s expertise and economies of scale could improve service and profits.
“We’ve been acquiring some of the troubled systems,” Sudduth said.
He said Utilities Inc. is under contract to purchase TESI, but there are still a few loose ends, such as securing pledges from state and federal regulators that Utilities Inc. would not be liable for any environmental violations that happened on TESI’s watch.
Sudduth said he is confident those issues will be resolved.
“The EPA has signaled that they do want us to be the operator,” he said.
TESI officials declined comment on the potential sale, acknowledging an interested buyer but citing a confidentially agreement that prevents them from discussing the deal.
Follow Richard Burgess on Twitter, @rbb100.