Letter to Senator Hutchison

February 16, 2011

Senator Kay Bailey Hutchison
284 Russell Senate Office Building
Washington, DC 20510-4304

Dear Senator Hutchison,
At the opening ceremony for the Kay Bailey Hutchison Desalination Plant, you said "there was a time in previous Base Realignment and Closures when it looked like the Army was kind of bleeding Fort Bliss..........the big question is - can El Paso produce the water that is needed for a major infusion at Fort Bliss?"¹ El Paso Citizens have no idea that they are expected to underwrite the water that is needed for a major infusion at Fort Bliss. That has been a carefully guarded secret. However an underwriting of this magnitude cannot remain a secret for long.

The President/CEO of El Paso Water Utilities also attended the opening ceremony. He said that, before the plant was built, the amount of water taken out of the Hueco Bolson aquifer was equal to the amount put in. The Hueco Bolson was "a sustainable aquifer."¹

The desalination plant was designed to take water from the Hueco Bolson aquifer. Therefore the increase in pumping to supply the plant had to be offset by a decrease in pumping elsewhere in the Bolson. Otherwise the amount taken out would no longer equal the amount put in.

The leading expert on the Hueco Bolson has said "from a groundwater management perspective, the brackish wells are not a "new water supply" if one views them as part of the overall management of groundwater pumping from the Hueco Bolson."²

The Kay Bailey Hutchison desalination plant will cost El Paso Citizens around $1 Billion and reduce their water supply by around 483,720 Acre Feet (AF).³ That is enough water to supply the entire City of El Paso for five years.⁴ I am certain that you will find this hard to believe so please examine the evidence and then appoint independent experts to determine if it is true.

The 2011 Far West Texas Water Plan was published by the Texas Water Development Board in January 2011.⁵ The Plan shows that EPWU cannot increase groundwater production6 as a result of the desalination plant. However EPWU plans to sell 483,720 Acre Feet³ of water to Fort Bliss that otherwise would have gone to Citizens of El Paso. El Paso Citizens will pay around $403 Million³ to desalinate the water and around $885 Million³ to replace it. They will sell the water to Fort Bliss for around $341 Million,³ a loss of $947 Million.³ EPWU refuses to answer any questions regarding sales to Fort Bliss. ⁷

On July 1, 2007 the EPWU Board of Directors (PSB) instructed their President/CEO to delay improvements to the El Paso water system and to spend that money on Fort Bliss and economic development.⁸ EPWU violated fourteen6 of their own rules and regulations in order to subsidize Fort Bliss. EPWU refuses to answer any questions with regard to these violations. ⁷

The EPWU President/CEO was rewarded with a $508,0009 annual compensation package because the $90 Million desalination facility "made a critical difference in the expansion of Fort Bliss."¹⁰ He is arguably the highest paid government employee in the United States. The U. S. President has a salary of $400,000.

El Paso Water Utilities (EPWU) created the myth of a new water supply " water from water"¹¹ to convince the Base Realignment and Closure (BRAC) Commission that "Water is not a Problem in El Paso."¹² EPWU told the BRAC Commission that a "Desalination plant will produce 27.5 MGD, allowing Fort Bliss to keep existing wells in reserve as a strategic buffer."¹² EPWU failed to mention that, owing to limits on sustainability,⁶ ground water production could not be increased by 27.5 MGD.

Fort Bliss paid nothing for the desalination facilities but their water supply will be increased by 483,720AF.1 El Paso Citizens paid $65 Million for the desalination plant but their water supply will be reduced by 483,720AF so that EPWU can supply Fort Bliss.

I filed an appeal¹³ with EPWU but they refused to answer the appeal. I then asked the El Paso City Manager to direct EPWU 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." ¹⁴

EPWU 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."¹⁵ PSB answers to no one. They don't even obey their own rules and regulations.⁶

EPWU is a non-profit City owned monopoly that has recorded income of $1,293 Million for itself and $71 Million for the City of El Paso in the past ten years.¹⁶ Their profit margin was 14% of sales¹⁷ compared to 8% for Exxon Mobile.¹⁸ They have increased their collections from El Paso Citizens by $60 Million per year,¹⁹ increased their debt by $324 Million²⁰ and acquired assets worth $846 Million²¹ but El Paso Citizens were forced to reduce their water consumption by 17%.²²

EPWU officials recently ordered mandatory restrictions on water use and urged residents to boil tap water before drinking. 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. The money spent on the commitment to Fort Bliss should have been spent to prevent interruption of service to El Paso Citizens during a winter storm.

Fort Bliss expects to purchase water from EPWU for the next sixty years.¹ That expectation may be unrealistic. EPWU admits that current supplies can only "meet expected future demands until sometime between 2015 and 2020."²³ The FWTWP shows that EPWU will begin bringing in new water supplies in 2016.¹ El Paso citizens are already suffering from EPWU's commitment to Fort Bliss. Fort Bliss will also suffer. The potential water shortage was not solved by the desalination plant. The potential still exist.

I hope that you will find enough evidence here to warrant further investigation by independent experts. Such an investigation will be in the best interest of Fort Bliss and El Paso Citizens.

Sincerely,

Jimmy W. Janacek, Retired CPA

___________________________________

¹ Attachments:
The Fort Bliss Monitor, August 16. 2007, P. 5 www.savetexaswater.org/cm/wg/ct/docs/2007-11-15b.pdf

² EMAIL from Dr. Bill Hutchison, Ph.D., P.E., P.G. Director, Groundwater Resources, Texas Water Development Board and former Water Resource Director for EPWU.

³ Exhibit A

⁴ Attachments:
2011 Far West Texas Water Plan p 2-8

⁶ Questions presented at PSB meeting on November 15, 2010

⁷ Letter from PSB Chairman dated November 18, 2010

⁸ Performance Plan for Edmund G. Archuleta, P.E.. President/CEO July 1, 2007 - June 30, 2011 .

⁹ CEO Employment Contract

¹⁰ Third Employment Extension Agreement, July 1, 2007

¹¹ EPWU web site; Water; Desalination Plant ; http://www.epwu.org/water/desal_info.html

¹² Team Bliss BRAC Commission Familiarization Briefing 27 May 05, Slide 5

¹³ Attachments:
Letter to Mark Bolduc dated August 2, 2010

¹⁴ Letter from City Manager dated January 31, 2011

¹⁵ Letter from City Manager dated January 27, 2009

¹⁶ 2009 Annual Report, page 18,19

¹⁷ 2009 Annual Report, page 18 ,19 $174M income/ $1,293M sales = 14%

¹⁸ 1/31/11 News release $30.5 Billion income/ $383 Billion sales = 8%

¹⁹ 2010 CAFR page B-4, (Water Revenue in 2010 - Water Revenue in 2001) + (WW revenue in 2010 - WW revenue in 2001) www.epwu.org/financial/reports/2010/statistics.pdf

²⁰ 2010 CAFR page C-2

²¹ 2010 CAFR page A-5

²² 2010 CAFR page B-3 (163gpd in 1999 - 135gpd in 2009)/163gpd = 17%

²³ EPWU web site