Desalination Plant Fraud |
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Fraud
There is evidence to suggest that the El Paso Water Utilities Public Service Board (PSB) and its' President/CEO fraudulently collected $100 Million from El Paso water customers, bond holders and the U. S. Government to build a desalination plant and learning center on property owned by Fort Bliss. The PSB does not have title to the facilities. It appears that the plant was a gift to entice the Base Realignment and Closure Commission to expand Fort Bliss. Local businessmen and members of the PSB wanted to stimulate the El Paso economy so they forced unsuspecting water customers to pay for the plant.
El Paso City Council Woman Susie Byrd says that "The PSB is currently working on a long term lease agreement with the military that would be in keeping with the original memo of understanding" (Note 1). Such a lease will lock the PSB into continuing losses on sales of water to Fort Bliss and the losses will be absorbed by El Paso Water Customers.
On March 7, 2005 PSB signed a Memorandum of Agreement to construct a $100 Million desalination plant and learning center on Fort Bliss property and to sell water from the plant to Fort Bliss at a price of $0.71 per CCF (Note 2, A4.1). The price has since escalated to $.80 per CCF (Note 3).The cost to produce water from the plant is $1.23 per CCF ($5.34 per AF) (Note 4, P66). Although El Paso Water customers paid for the plant, the agreement does not allow for water to be delivered to any customer other than Fort Bliss.
The Memorandum of Agreement is shockingly unfair to PSB bond holders and El Paso water customers. PSB collected millions from El Paso water customers in order to build a plant on Fort Bliss property that will lose $0.43 per CCF on sales to Fort Bliss. The PSB President/CEO was instructed to delay improvements to the El Paso water system so that money could be spent on the desalination plant (Note 5). PSB rewarded their President/CEO with a compensation package worth $508,000 a year (Note 6).
Fort Bliss produces and consumes an average of 4.5 million gallons of water per day (MGD) from a shrinking underground aquifer (Note 7, S51). BRAC was reluctant to move more troops to Fort Bliss because an environmental impact study suggested that such action "will likely require purchase or development of new potable water sources" (Note 8,P2).
The PSB, along with elected City officials, the Chamber of Commerce and El Paso Regional Development Corporation worked hard to assure Congress and military officials that Fort Bliss had an adequate water supply (Note 9). PSB promised to build a desalination plant on Fort Bliss property and that the "plant will produce 27.5 MGD, Allowing Fort Bliss to keep existing wells in reserve as a strategic buffer" (Note 7, S51).
Plant construction began on the same day that the BRAC Commission announced plans to expand Fort Bliss (Note 10). Due to the urgency expressed by the City of El Paso, Fort Bliss gave PSB a right of entry to build the plant (Note 10). In return, the City of El Paso agreed to execute, accept and be bound by an easement and to such terms and conditions which the Department of the Army may deem to be reasonable and proper to protect its interest. The right of entry expired May 11, 2007, was extended for one year (Note 11) and expired again on April 23, 2008. Three years have passed and the plant has been in operation for over a year but the easement has not been signed.
PSB will delay signing as long as possible because the final agreement will provide proof that PSB has been shockingly unfair to bond holders and El Paso Water Customers.
Bond holders and El Paso Water Customers have been led to believe that the 27.5 MGD desalination plant will take 12 MGD of fresh water from sixteen new wells on Fort Bliss and blend it with 15.5 MGD of salt water from wells outside the base (Note 12,P2). Fort Bliss would use 4.5 MGD and the rest would be exported to the City of El Paso (Notes 14, 18).
Fort Bliss will not allow that to happen because Fort Bliss would then produce four times more fresh water than it did before which means that their fresh water supply would shrink four times as fast.
The plant was built to entice the BRAC Commission to move more troops to Fort Bliss and stimulate the El Paso economy. Economic development is not the mission of the PSB. The PSB cannot cut off a poor man's water because he can't afford to pay for economic development. The PSB cannot jeopardize the collateral of bond holders by giving away $100 Million to stimulate the El Paso economy.
PSB investment in the desalination plant and learning center is carried on the Balance Sheet at $100 Million (Note 16). PSB has already agreed to be bound by any agreement that Fort Bliss prepares (Note 10). The agreement will probably lock PSB into a loss of $.43 per CCF. PSB will have to write off its' $100 Million investment and record a liability for future losses.
Notes:
1) EMAIL from Susie Byrd 12/1/2008
2) Memorandum of agreement March 7, 2005,A4.1
3) Summary Comparison of Updated Wholesale Rate Calculations - Cost per CCF
4) Presentation to International Border and Water Commission 8/9/07 by Bill Hutchison http://www.ibwc.state.gov/Files/ibwc080907.pdf.P66
5) Performance plan for Edmund G. Archuleta July 1, 2007 - June 30, 2011.
6) Theresa Caballero Blog, November 4, 2008 http://elpasoda.org/blog/index.php?id=145
7) Team Bliss BRAC Commission Familiarization Briefing 27 May 05. http://www.brac.gov/ShowPubDoc.aspx?Doc_st=Fort_Bliss_Installation_Familiarization_Briefing_(27_May_04).pdf&Path_st=BRAC\OTHER&DocID_in=9864, Slide 51
8) Impact study http://www.brac.gov/ShowPubDoc.aspx?Doc_st=USA-0221v4_Criteria_8_Army_SSEI.pdf&Path_st=BRAC\RPT&DocID_in=185 page 2
9) Letter from PSB dated February 13, 2008
10) Immediate Right-of-Entry No. DACA63-9-05-0535 DATED May 11, 2005
11) Extension of Right-of-Entry No. DACA63-9-05-0535 Dated April 18, 2007
12) Record of decision 2/5/2005 https://www.bliss.army.mil/About%20Ft%20Bliss/EIS/PDF%20Files/Bliss_ROD.pdf
13) Official Statement filed with the Securities and Exchange Commission February 14, 2006 p. 16
14) Ibidp14, P16
15) Ibidp15
16) PSB 2008 CAFR Note 5 to Financial Statements, p41
17) Final Programmatic Environmental Impact Study, Army Growth and Force Structure Realignment, October 2007, Page 92
18) :: El Paso Water Utilities - Public Service Board | Desalination Plant ::
