Beto O'Rourke on $1 Billion Subsidy

Correspondence with Representative Beto O'Rourke regarding our water company's $1 Billion gift to Fort Bliss

EMAIL FROM JIMMY JANACEK TO REPRESENTATIVE BETO O'ROURKE 2/10/11

Please investigate El Paso Water Utilities.
Please go to this link to see questions asked at the December 8, 2010 PSB meeting. No answers were given. https://www.citizensmakethecall.com/psb_2011_budget.htm

 

EMAIL FROM O'ROURKE TO CHRISTINA MONTOYA 2/14/11

Christina,
I know that you and the PSB have responded to a number of Mr. Janacek's inquiries in the past. Have these questions been answered and if so can you point me to the answers?
https://www.citizensmakethecall.com/psb_2011_budget.htm

Is the following question accurately posed and does it have an answer?:
EPWU has contracted to sell 483,720 AF of water to Fort Bliss at a total Price of $341 Million. The water otherwise would have gone to your customers. EPWU will replace the water at a cost of $885 Million. Will the $544 Million difference be billed to Fort Bliss or to your customers? Is this $544 Million a part of your "commitment to Fort Bliss and economic development?"
thanks,
Beto

 

EMAIL FROM MONTOYA TO O'ROURKE 2/15/11

Good afternoon Representative O'Rourke,
I wanted you to know we are looking into your question and will get back to you as soon as possible. Mr. Janacek has made numerous requests and we are trying to go through them now to accurately respond.
Thank you for your patience.
Regards,
Christina

 

EMAIL FROM JANACEK TO O'ROURKE 2/16/11

Click here for more unanswered questions

 

EMAIL FROM JANACEK TO O'ROURKE 2/16/11

Still more unanswered questions, click here to read.

EMAIL FROM JANACEK TO O'ROURKE 3/10/11

Have you received a response from EPWU?

EMAIL FROM JANACEK TO O'ROURKE 3/21/11

EPWU intends to sell water to Fort Bliss. Is it not fair to ask where this water will come from? Does El Paso have a water surplus? Please ask EPWU to answer my questions.

 

EMAIL FROM JANACEK TO O'ROURKE 3/23/11

This is a link to the 2011 Far West Texas Water Plan which was prepared, in part, by EPWU. Please go to Table 4-3 on page 4-10 and you will see that EPWU will be purchasing water at prices ranging from $538 to $2,359 per acre foot while simultaneously selling water to Fort Bliss at prices ranging from $279 to $1,222 per acre foot. Does a citizen have the right to ask why his government is selling water for less than cost? Click here to read summary.

 

EMAIL FROM O'ROURKE TO JANACEK 3/31/11

Mr. Janacek, You do have a right to ask. EPWU says they've answered your questions a number of times in a number of different ways. I'm not making any progress in forwarding your questions to them for additional response.

My take --- we are subsidizing the water for the department of defense. Just like we are subsidizing a number of other public infrastructure and services (spur 601 freeway, discounted bus fares, etc). Whether or not you or I agree with that is another thing. But that's the deal El Paso cut with the feds at the beginning of the last decade to get the expansion at ft. bliss.
Beto

 

EMAIL FROM JANACEK TO O'ROURKE 3/31/11

The deal was cut without the knowledge and consent of the people that you represent. The desalination plant did not increase the annual water supply. Our government has lied to us while jeopardizing our water supply. They told us to conserve water for our children but they intend to sell water to Fort Bliss and force our children to replace it at a cost of $1 Billion. There is no guarantee that the water can be replaced.  Both Fort Bliss and El Paso Citizens are at risk.
The people that lied to us will retire, sell their homes in El Paso and move to another city. The remaining El Paso home owners, including thousands of Fort Bliss soldiers, will be left to suffer the consequences of this lie. 
Do you have a social conscience?

EMAIL FROM O'ROURKE TO JANACEK 3/31/11

One other thing I forgot to add in my last email, Sen Shapleigh introduced legislation that passed in '03 to reduce Ft Bliss electricity rates (the rest of the rate base picks up the difference). So lots of deals were cut where the citizens of El Paso pick up the tab for: electricity, water, infrastructure and services used by Ft. Bliss. What do you propose we do about it now? Not honor the deals that previous elected bodies made? You've done a good job publicizing it and trying to shame people ("do you have a social conscience?"), what's your solution?

 

EMAIL FROM JANACEK TO O'ROURKE 3/31/11

You asked "What do you propose we do about it now?" I propose that we tell the truth to citizens and bond holders. The desalination plant will not provide the water that will be needed for the expansion of Fort Bliss. El Paso Citizens will provide the water at cost of around $1 Billion. Unlike El Paso Electric, the Public Service Board was not required by law to grant a $1 Billion subsidy. In fact, they violated 21 of their own regulations and 3 loan covenants to do so. Now they refuse to answer any questions.

The City of El Paso has the right, the authority and the obligation to rescind the verbal deal that PSB cut with the defense department. The deal will jeopardize our water supply, cost us $1 Billion and expose the city to law suits from bond holders.

EMAIL FROM JANACEK TO O'ROURKE 4/1/11

It appears that you do not intend to reply to my email of 3/31/11 so please allow me to summarize.

El Paso is number 7 on a list of U.S. cities with the highest poverty rate. Yet our civic leaders have agreed to provide a $1 Billion subsidy to the Defense Department. The subsidy will be secretly funded with water bills to El Paso Citizens. If a citizen is unable to pay for the subsidy, EPWU will simply shut off his water.

A citizen told his city representative that the city should rescind the subsidy because it violates 21 city regulations and 3 loan covenants. The representative did not reply.

 

EMAIL FROM O'ROURKE TO JANACEK 4/1/11

I apologize for not meeting your 24-hour deadline for reply. If you are still open to one, here it is.

First, I have done my best to get your answers addressed. And I've met with you, read your emails, and read the material that you've mailed and emailed to me. I've also taken the time to meet with the PSB, read their information and hear their arguments. I am not convinced that we are subsidizing them to the tune of $1 billion, as you claim.

I can believe that we have addressed the Dept of Defense concerns about water supply by investing in the desalination plant and ensuring a sustainable water supply for the base. That may include a price for water that is cheaper than the non-military rate payer pays. As I've said in previous emails, that is not unprecedented or out of step from what every other major entity in this region has done (City of El Paso, Texas Department of Transportation, El Paso Electric, Mass Transit, etc.).

Furthermore, the PSB sponsors a number of community initiatives not strictly tied to water supply for citizens, including funding REDCO, financing improvements at the El Paso Zoo, and purchasing publicly accessible open space for community enjoyment.

Lastly, I think the PSB is a very well run utility, and a model for utilities throughout the region and the country. While I do not always agree with the decisions that the utility makes, I do not question their integrity or their efforts to improve our community.

Thank you,
Beto

EMAIL FROM JANACEK TO O'ROURKE 4/1/11

Click here for a  link to the calculation of the $1 Billion subsidy

All of the numbers were taken from information supplied to the Texas Water Development Board by EPWU.
 
You sent the following email to the EPWU information officer on Valentine's Day 2011. She has not been able to "point you to the answers." Therefore, if you are not convinced that "we are subsidizing them to the tune of $1 Billion," it is because you have chosen to ignore the evidence and you have not insisted on a reply from EPWU.
 
Christina,
I know that you and the PSB have responded to a number of Mr. Janacek's inquiries in the past. Have these questions been answered and if so can you point me to the answers?
https://www.citizensmakethecall.com/psb_2011_budget.htm
Is the following question accurately posed and does it have an answer?:

EPWU has contracted to sell 483,720 AF of water to Fort Bliss at a total Price of $341 Million. The water otherwise would have gone to your customers. EPWU will replace the water at a cost of $885 Million. Will the $544 Million difference be billed to Fort Bliss or to your customers? Is this $544 Million a part of your "commitment to Fort Bliss and economic development?"
thanks,
Beto
 
I would be glad to meet with you to discuss an investigation of this matter by an independent third party expert. If I don't hear from you I will publish this email exchange in the local newspapers and pursue a political and/or a legal remedy.

 

EMAIL FROM O'ROURKE TO JANACEK 4/1/11

There's no use threatening me - if you want to publish all of this, or pursue this through legal or political means, that's your right and I certainly wouldn't try to stop you. I've answered your concerns and questions to the best of my ability. I understand that you are not satisfied with the answers.

I have no intention of corresponding with you from this point forward, as it appears to be mutually unsatisfying and unproductive.
Thanks,
Beto

 

EMAIL FROM JANACEK TO O'ROURKE 4/1/11

One last offer. I will pay the cost of an investigation by an independent third party expert. You simply need to help choose the expert and then to abide by his opinion.

 

PSB Rules and Regulations No 11, Sec. II (B)(3)(a) provide that "in no case shall funds from the utility be used so as to cause an expense to the other
customers which would amount to a subsidy without benefits...." Yet according to Representative Beto O'Rourke, "we are subsidizing the water for the department of defense. Just like we are subsidizing a number of other public infrastructure and services (spur 601 freeway, discounted bus fares, etc). Whether or not you or I agree with that is another thing. But that's the deal El Paso cut with the feds at the beginning of the last decade to get the expansion at ft. bliss" (see attached).
 
This subsidy will cost El Paso Water Customers around $1 Billion (click here to read Exhibit A) The subsidy violates at least 14 PSB Rules and Regulations  (click here to read them) and several loan covenants.
 
I want El Paso Citizens to be aware that the desalination plant will not provide the water that will be needed for the expansion of Fort Bliss. El Paso Citizens will provide the water at a cost of around $1 Billion. The desalination plant did not increase our water supply. Our water supply will actually be reduced by the amount of water that we will supply to Fort Bliss. In the year 2025, El Paso Residents will spend $15.7 Million to deliver 8,992 acre feet of water to Fort Bliss. Fort Bliss residents will consume and average of 399 gallons per day and El Paso Citizens will consume 131 gpd (see attached).
 
I hope that you will verify this information and publish the story in the Newspaper Tree. Please let me know if you do not wish to publish the story so that I can pass it along to another newspaper.
 
EMAIL FROM EDMUND ARCHULETA, PRESIDENT EPWU TO NEWSPAPER TREE 4/4/2011
Just for clarification, there is no subsidy to Ft. Bliss on water.  We have emphasized that and shown this to Mr. Janacek many times.  Ft. Bliss hired at different times their own rate consultants who worked with us and our rate consultant on the rate.  The rate is  based on cost of service.  Mr. Janacek just will not accept the facts and is wrong.  The city may have subsidized some services, but there is no subsidy on water.

EMAIL FROM JANACEK TO NEWSPAPER TREE 4/4/2011
This is a link to the 2011 Far West Texas Water Plan which was prepared, in part, by EPWU. Please go to Table 4-3 on page 4-10 and you will see that EPWU will be purchasing water at prices ranging from $538 to $2,359 per acre foot while simultaneously selling water to Fort Bliss at prices ranging from $279 to $1,222 per acre foot.  (Click here to read the Executive Summary)
 
This is a link to the calculation of the $1 Billion Subsidy.  All of the numbers are taken from information provided to the State of Texas by Mr. Archuleta. Mr. Archeleta is welcome to refute the calculation with evidence to the contrary but he cannot dismiss these facts without presenting some facts to the contrary. Please see links below where he has been asked to respond to this matter at two Public Service Board meetings and by an official appeal. He refuses to respond or answer any questions. I don't think that we can expect Mr. Archuleta to admit to violating 14 PSB Regulations and 3 loan covenats. Please examine the evidence, ask questions and draw your own conclusion.
Questions presented at PSB Meeting on November 15, 2010  and Letter from PSB Chairman, November 18, 2010
Questions presented at PSB Meeting on December 8, 2010 , Appeal filed August 2, 2010

EMAIL FROM ARCHULETA TO NEWSPAPER TREE 4/4/2011
This 50 year planning document is prepared by the State of Texas as the State Water Plan for use by the Texas Legislature in formulating water policy.  There are numerous planning regions throughout the State and  ours falls into the Far West Texas Region which includes 7 counties. It is a long term needs assessment document with potential solutions to meet the water demands for all uses including municipal and agricultural during times of record drought.    Who knows what the price of water will be in 50 years or what the strategy will be.  In either case, EPWU will demand cost of service for the water from all of its customers including Ft. Bliss.  By then Ft. Bliss could have stayed the same in size, doubled or tripled or entirely closed.  Who knows for sure at this point.

EMAIL FROM JANACEK TO NEWSPAPER TREE 4/5/2011
The Far West Texas Water Plan is prepared by the Far West Texas Planning Group.* The group is composed of representatives of various water use categories within the region (page 10-3).* Ed Archuleta is Vice Chairman of the group.

"The purpose of the 2011 Far West Texas Water Plan is to provide a document that water planners and users can reference for long- and short-term water management recommendations. Equally important, this Plan serves as an educational tool to inform all citizens of the importance of properly managing and conserving the delicate water resources of this desert community" (Page ES 1).*  "The planning decisions and recommendations made in the Far West Texas Water Plan will have far-reaching and long-lasting social, economic, and political repercussions on each community involved in this planning effort and on individuals throughout the Region" (Page 10-5).*

EPWU began selling 3,376 AF per year (TABLE 4-2)* to Fort Bliss in 2010 at a price of $279 AF.** The estimated cost of service is $834 AF.*** The annual loss is $1,873,680 or 3,376 AF($834-$279)

EPWU will begin paying for new sources of water to replace the water sold to Fort Bliss in the year 201
6 (Table 4-9).*

In the year 2020, EPWU will be paying $1,671 AF** to replace the water that they will be selling to Fort Bliss at $375 AF.** The cost to desalinate is estimated at $834 AF.*** Cost of service will be $2,505 AF or ($1,671 + $834). EPWU will sell 8,992 AF (Table 4-2)* to fort Bliss at a loss of $19 Million or 8,992 AF($2505-$375).

The region will experience a significant increase in population while assuming that "the Kay Bailey Hutchison Desalination Plant is creating a new supply of water - water from water"**** and that the plant is augmenting "existing supplies to make sure El Paso and Ft. Bliss have sufficient water for growth and development for 50 years and beyond."**** The desalination plant does not increase the annual water supply.*****

* Far West Texas Water Plan, www.twdb.state.tx.us/wrpi/rwp/3rdRound/2011_RWP/RegionE/PDF's/Complete_Final_Report.pdf
** FWTWP ERRATA, http://www.twdb.state.tx.us/wrpi/rwp/3rdRound/2011_RWP/RegionE/3-Erratas%20&%20Transmittal%20Letter/Region%20E_Errata%20Sheet%20&%20Transmittal%20Letter%20(121610).pdf, Table 4-3
*** Cost of Desalination in Texas p. 5 www.twdb.state.tx.us/iwt/desal/docs/Cost_of_Desalination_in_Texas.pdf
**** www.epwu.org/water/desal_info.html
*****Questions presented at PSB Meeting on November 15, 2010 

 

EMAIL FROM NEWSPAPER TREE 4/4/2011
 
Hi Jim and Ed. 

Apologies for delayed response. Have been out of range for a few hours. 

NPT is in the process of re-establishing itself, a longer-than-expected process that we expect will pay off in the end with a new and improved report. Meanwhile, this is exactly why we need such a report, because it's a highly technical issue that requires attention to detail. At a quick glance, it's possible it's a net cost to the community, but the accounting is such that legally it's not applied as "a subsidy without benefits" toward "the cost of service for the water." Its also possible "benefits" might broadly be defined to include the overall economic impact of Fort Bliss. These are just two possible scenarios between your positions. It's also possible one of you is 100% right and the other wrong. I'm taking the liberty of copying David Crowder because he is the best investigative reporter left in El Paso and he might have some ideas. 

I appreciate the discussion. Good public policy is difficult, and it's also public. I don't expect this discussion to end any time soon, and am heartened to see it maintained at a high and civil level.

Regards all,
Sito

EMAIL FROM ARCHULETA TO NEWSPAPER TREE 4/4/2011

Sito, net benefits to the community are not taken into account at all in our analysis. Ours is based on allocation of water costs under well established rate accounting principles which have been accepted in our industry for decades. We utilize the same methodology in similar contractsd with have with other wholesale customers.

EMAIL FROM JANACEK TO NEWSPAPER TREE 4/5/2011
The following PSB Rules and Regulations prohibit the sale of water to Fort Bliss at wholesale rates.
a) "action taken by the Utility must be fair and equitable to all customers."⁹
b) "in no case shall funds from the utility be used so as to cause an expense to the other customers which would amount to a subsidy without benefits...."¹⁰
c) Water service is limited to "County residents who are not now served, or who are served on a substandard basis, which condition creates hazards to public health."¹¹
d) "El Paso Water Utilities is owned by the citizens of El Paso; is operated for the benefit of said citizens as a publicly-owned utility; the rates and charges to each customer should be related to the cost of service and to the benefits received"¹²
e) "Service extensions will be limited to properties within the extra territorial jurisdiction (ETJ)"13 of the city.
f) EPWU must "assure that costs are assumed by the apparently benefited parties and not by the general water users of the City and County of El Paso, Texas."¹⁴
g) EPWU cannot provide water to Fort Bliss unless Fort Bliss "is totally or partially within El Paso County, Texas, and the buildings and all other improvements to be served are included on the tax-rolls of the County of El Paso, Texas."¹⁵
h) Fort Bliss must be in "Compliance with the City of El Paso's subdivision ordinance and other applicable ordinances and state statutes, as they now read or may be amended."¹⁶
i) Fort Bliss must provide EPWU "with a complete legal description of all property on which buildings and/or other improvements are proposed to be located that require water or sewer service. This property description shall become a part of the application for service and will be used in calculating the extension charges as provided in Rules and Regulations No. 7. No water and/or sewer service shall be extended to any property other than that which was identified by the owner or applicant for service at the time such service was initially provided. Providing water and/or sewer service directly or indirectly to property other than that originally identified in the application for service is a violation of these rules and regulations and shall be cause for discontinuance of service in accordance
with Section IX.¹⁷
j) Fort Bliss "must negotiate a contract with EPWU specifying contract time, maximum quantity desired, cost of service and other conditions of service."¹⁸
k) Fort Bliss must "comply with and impose and enforce on their retail customers the Conservation Regulations of the City of El Paso, and its EPWU/PSB."¹⁹ "All water conservation rules and ordinances which are applicable to customers in the City of El Paso shall be applicable to "Outside-City" customers and will be strictly enforced."²⁰
l) "The purpose of extending service to outside-city customers by the Public Service Board is to promote the public health, safety and welfare of the community of El Paso County. However, it is the intent of the Public Service Board to maintain the viability of the Utility while serving this purpose. Existing customers shall not be burdened with rates and
costs associated with the expanded field of service. Therefore, a priority system for consideration of applicants such as included in the "Policies", as amended, which considers need, funding, health issues and engineering feasibility, or as may be determined by the Texas Water Development Board, will be utilized. It is the intent that the Utility will be expanded
contiguously without "leapfrogging" in accordance with available funding so as to be in the best interests of the rate-payers, existing and future, and of the Utility."²¹
m) Fort Bliss must "comply with Section V of Rules and Regulations No. 1, the City Plumbing Code, and the Regulations of the Texas State Department of Health, the rules and regulations of the TNRCC, and all other applicable laws." Fort Bliss must "permit inspection at any reasonable hour by the Department of Public Inspection, the City Plumbing Inspector, the Sanitary Engineer of the City-County Health Unit, the Cross-Connection Control Program Manager, a Water Conservation Enforcement Officer or Technician, Pretreatment Inspectors, or any official employee or representative of the Utility. The purpose of this inspection is to determine whether physical facilities exist on the premises of the user that are a hazard or may create a hazard to the health, safety, or welfare of the citizens of El Paso through possible contamination of the water supply by cross-connections, back siphonage, excessive leaks, or other means which constitute a threat to the water supply or other conditions or activities prohibited by the mandatory water conservation ordinance of the City of El Paso, Chapter 15.13 of the El Paso Municipal Code."²²
n) Fort Bliss will use the water resources of El Paso Citizens while "resting" their own water wells for future use. EPWU service cannot be "provided to a property, or shall be discontinued, when service has already been provided, where underground and/or surface water belonging to the property served is used in a manner that will not reduce by the same
amount the water requirements on the property served by the Public Service Board."²³

"Customers with premises having private wells who wish to connect to the public water supply shall have the following two options: 1) Agree to permanently abandon use of the private wells by plugging the well, prior to connecting to the public water supply, in accordance with Utility procedures and TCEQ requirements; 2) Agree to completely
and permanently sever the private well from the premises water supply system in accordance with Utility procedures, prior to connecting to the public water supply and Customer shall install an approved backflow prevention assembly at the water service connection."²⁴

⁹ Rules and Regulations No 8, P. 1 http://www.epwu.org/pdf/rules_regs.pdf
¹⁰ Rules and Regulations No 11, Sec. II (B)(3)(a)
¹¹ Ibid, Sec. II (A)(1)(b)
¹² Ibid, Sec. II (A)(1)(a)
¹³ Ibid, Sec. II (A)(1)(b
¹⁴ Ibid, Sec. II (A)(3)
¹⁵ Ibid, Sec. II (A)(4)(a)
¹⁶Ibid, Sec. II (A)(4)(d)
¹⁷ Ibid, Sec. II (A)(5)
¹⁸ Ibid, Sec. II (B)(1)(a)
¹⁹ Ibid, Sec. II (B)(1)(f)
²⁰ Ibid, Sec. II (B)(6)
²¹ Ibid, Sec. II (B)(9)(a)
²² Ibid, Sec. V
²³ Ibid, Sec. II (A)(2)
²⁴ Rules and Regulations No. 7, Sec. II(m) and No. 11, Sec. II(A)(5) and No. 11, Sec. II(B)(1)(c) and No.
11, Sec. II(B)(3) and No. 11, Sec. II(B)(4)

EMAIL FROM JANACEK TO NEWSPAPER TREE 4/25/2011
It appears that Mr. Archuleta has walked out of the debate. Three weeks have passed since I listed fourteen PSB Rules and regulations that were violated by EPWU when they agreed to sell water to Fort Bliss at wholesale rates. Mr. Archuleta has walked out of the debate because the following facts are indisputable:
1. The desalination plant does not increase our annual water supply.
2. El Paso does not have a surplus of water.
3. EPWU intends to sell 483,720 AF of water to Fort Bliss at prices ranging from $279 to $1,222 per AF while simultaneously purchasing replacement water at prices ranging from $538 to $2,359 per AF. A net loss of around $1 Billion will be buried in water bills to El Paso Citizens.
4. EPWU is presently selling 3,376 AF per year to Fort Bliss at a price of $279 AF. The estimated cost of service is $834 AF. The annual loss is $1,873,680 or 3,376 AF($834-$279).
5. In the year 2025, EPWU plans to spend $15.7 Million to deliver 8,992 acre feet of water to Fort Bliss. Fort Bliss residents will consume an average of 399 gallons per day and El Paso Citizens will consume 131 gpd.