The Scam

Public Service Board/El Paso Water Utilities (PSB) officials recently ordered  mandatory restrictions on water use and urged residents to boil tap water before drinking it. Hospitals were forced to use outdoor toilets, schools and businesses were forced to close, and citizens could not bathe or wash clothes. By comparison, there was no significant interruption of water service at nearby Fort Bliss, in nearby Las Cruces, New Mexico or in any other city in the United States.

On July 1, 2007 PSB instructed its President/CEO to delay improvements to the El Paso water system and to spend that money on Fort Bliss and economic development.¹He was rewarded with a $508,000² annual compensation package because the $90 Million Fort Bliss desalination facilities "made a critical difference in the expansion of Fort Bliss."³ He is probably the highest paid water utility executive in the United States and it is no coincidence that PSB is probably the only unregulated water utility.

Fort Bliss paid nothing for the desalination facilities but their water supply will be increased by 8 million gallons per day (MGD).⁴ El Paso Citizens paid $65 Million for the desalination plant but their water supply will be reduced by 8 MGD.⁵ A Senatorial ear mark paid $25 Million.

The money spent by El Paso Citizens on Fort Bliss and economic development⁶ should have been spent for improvements to the El Paso water system to prevent mandatory restrictions during a severe winter storm.

PSB claims that "Using a previously unusable brackish groundwater supply, the Kay Bailey Hutchison Desalination Plant is creating a new supply of water - water from water" and "The desalination facilities increase El Paso Water Utilities' fresh water production by approximately 25%, based on current demand..."⁷ A 25 % increase amounts to 26.4 MGD⁸ but the plant is currently producing only 3.63 MGD.⁹

The myth of a "new water supply - water from water" was created by PSB to convince the Base Realignment and Closure (BRAC) Commission that "Water is not a Problem in El Paso."¹⁰ PSB told the BRAC Commission that the "Desalination plant will produce 27.5 MGD, allowing Fort Bliss to keep existing wells in reserve as a strategic buffer."¹⁰ PSB failed to mention that, owing to limits on sustainability,¹¹ production from the Hueco Bolson could not be increased by 27.5 MGD.

In the 2011 Far West Texas Water Plan (FWTWP), PSB admits that there are limits with respect to the ability of the Hueco Bolson to supply water reliably.¹²  Therefore the average additional fresh water production from the Hueco Bolson will be only 2.9 MGD^12,13 not 27.5 MGD as implied to the BRAC commission.

The 2011 FWTWP also shows that PSB will sell 8 MGD¹⁴ to Fort Bliss. PSB cannot increase production from the Hueco Bolson by 8 MGD.  The 8 MGD will be taken from water that otherwise would have gone to El Paso citizens. El Paso Citizens will pay around $403 Million¹⁵ to desalinate the water and around $885 Million¹⁵ to replace it. They will sell the water to Fort Bliss for around $341 Million,¹⁵ a loss of $947 Million. EPWU refuses to answer any questions regarding sales to Fort Bliss. ¹⁶ 

PSB acted outside the authority granted by its own rules and regulations. They have violated fourteen¹¹ of their own rules and regulations in order to subsidize Fort Bliss and they refuse to answer any questions with regard to these violations.¹⁶

I filed an appeal¹⁸ with PSB but they refused to answer the appeal. I then asked the El Paso City Manager to direct PSB to answer the appeal. She replied that "the City of El Paso vested complete management and control of the water utility system to the Public Service Board. Therefore, the City of El Paso will not take further action in this matter."¹⁹

PSB is a non-profit City owned monopoly that has recorded income of $103 Million for itself and $71 Million for the City of El Paso in the past ten years.²⁰ Their profit margin was 13% of sales²¹ compared to 8% for Exxon Mobile.²² They have increase their collections from El Paso Citizens by $60 Million per year,²³ increased their debt by $324 Million²⁴ and acquired assets worth $846 Million²⁵ but El Paso Citizens were forced to reduce their water consumption by 17%.²⁶

PSB may be the only monopoly in the State of Texas that is not regulated by the State or by a City Government. The State of Texas has relinquished control to the City of El Paso and the City of El Paso has relinquished control to the Public Service Board. The El Paso City Manager says "Neither the Council nor I have any control over their actions."²⁷ PSB answers to no one. They don't even obey their own rules and regulations.

We get the government that we deserve. We deserve the abuse that PSB has heaped on us if we do nothing to stop it. The State of Texas will regulate PSB if asked to do so by the Mayor and City Council. Please join me in this action by writing or calling the PSB, the Mayor, elected city, state and federal officials, certain developers who have been enriched by the PSB²⁸and anyone who might have a hand in the abuse or have the power to stop it..

Jimmy W. Janacek, Retired C.P.A.

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¹ Performance Plan for Edmund G. Archuleta, P.E.. President/CEO July 1, 2007 - June 30, 2011 .

² CEO Employment Contract

3 Third Employment Extension Agreement, July 1, 2007

⁴ 2011 Far West Texas Water Plan Table 4-2; Fort Bliss 2020: 8,992 AFY = 8MGD http://www.twdb.state.tx.us/wrpi/rwp/3rdRound/2011_RWP/RegionE/PDF's/Complete_Final_Report.pdf

⁵ 8,992AFY sales to Fort bliss less a 3,300 AFY = 5,692 AFY increase in water taken from the Hueco Bolson. 5,692 AFY= 5.1 MGD.

⁶ Questions presented at PSB meeting on December 8, 2010

⁷ EPWU web site; Water; Desalination Plant ; http://www.epwu.org/water/desal_info.html

⁸ 2011 Far West Texas Water Plan p 4-17; Projected demands on EPWU in 2010; 118,167AFY X 25% = 29,542 AFY=26.37 MGD http://www.twdb.state.tx.us/wrpi/rwp/3rdRound/2011_RWP/RegionE/PDF's/Complete_Final_Report.pdf

⁹ EMAIL from PSB May 11,2009 

¹⁰ Team Bliss BRAC Commission Familiarization Briefing 27 May 05, Slide 51.

¹¹ Questions presented at PSB meeting on November 15, 2010

¹² 2011 Far West Texas Water Plan p 4-22

¹³ 3,300 AFY = 2.9 MGD

¹⁴ 2011 Far West Texas Water Plan Table 4-2: Fort Bliss 2020: 8992 AFY = 8MGD

¹⁵ Exhibit A

¹⁶ Letter from PSB Chairman dated November 18, 2010

¹⁷ 2011 Far West Texas Water Plan Table 4-3; Strategy E-7, $2,353 per AF X 5,692 AFY.13

¹⁸ Letter to Mark Bolduc dated August 2, 2010

¹⁹ Letter from City Manager dated January 31, 2011

²⁰ 2009 Annual Report, page 18,19 http://www.epwu.org/financial/reports/2009/annual_report_09.pdf

²¹ 2009 Annual Report, page 18 ,19 $174M income/ $1,293M sales = 13%

²² 1/31/11 News release $30.5 Billion income/ $383 Billion sales = 8%: http://www.usatoday.com/money/companies/earnings/2011-01-31-exxonmobil_N.htm?csp=usat.me

²³ 2010 CAFR page B-4, (Water Revenue in 2010 - Water Revenue in 2001) + (WW revenue in 2010 - WW revenue in 2001)

²⁴ 2010 CAFR page C-2

²⁵ 2010 CAFR page A-5

²⁶ 2010 CAFR page B-3 (163gpd in 1999 - 135gpd in 2009)/163gpd = 17%

²⁷ Letter from City Manager dated January 27, 2009
²⁸ Paseo Del Este