Invasion of the Water Snatchers

Pittsburgh Utility Snapping Up Area Companies



Swimmers plunge into the cool waters of Jacob's Well near Wimberley.

photograph by Robert Bryce

Water and wastewater service is the lifeblood of any community. As the region around Austin continues to boom, water issues are coming front and center. And the recent entry of a Pittsburgh-based electric utility into the local water business is making big waves. Over the past few months, AquaSource, Inc., a subsidiary of Duquesne Light and Energy (DQE), has purchased a half-dozen water utilities in Travis and Hays Counties, and is hoping to buy at least one more. AquaSource has also purchased a water well drilling company in Dripping Springs. While some observers welcome the entry of the utility onto the local scene, many residents in the Wimberley area are concerned about the company's intentions. They fear that if AquaSource is able to provide water services to new developments without regard for local oversight, the pace of growth in the region between Austin and Wimberley will accelerate and may become unmanageable.

David Baker - who operates a bed and breakfast on land that adjoins Jacob's Well, a landmark spring on Cypress Creek located three miles northwest of Wimberley - has been one of the most outspoken opponents of AquaSource's entry into the local water services market. Last year, AquaSource bought the water and wastewater utility at Wood Creek, a subdivision that lies across Cypress Creek from Baker's land. According to Baker, the Wood Creek utility has had numerous problems with its wastewater facility, including several sewage spills. Baker has complained about the sewage problem to the Texas Natural Resource Conservation Commission, which issues permits to water service providers, and he hopes to get the TNRCC to hold a public hearing on AquaSource's takeover of the Wood Creek facilities.

"What concerns me is not just the wastewater treatment, but the water availability," says Baker. "I am concerned about the amount of water available, and about the pumping of the aquifer to the point that it will affect our spring flows." Under the "right of capture," the antiquated Texas law that governs groundwater, landowners can pump as much water as they want from wells on their land. Baker fears that AquaSource could legally tap into the same aquifer that feeds Jacob's Well, and then use that water to feed new developments in the Wimberley area or, for that matter, in areas miles away from Jacob's Well.

Mary Kelley, an attorney and director of the Texas Center for Policy Studies who is representing Baker, says that local governments have traditionally provided water and wastewater infrastructure. "In the past, when for example, Austin decides whether to extend water and wastewater service, there are public debates about those decisions. When a private company makes those decisions in an unincorporated area, like in much of Hays County, there is no public debate."

But Hays County Judge Eddy Etheredge argues that AquaSource is only fulfilling the needs of people who are moving into the area. Etheredge says the City of Austin has tried to curb development by limiting water and wastewater services. But he says the city has "had only a limited degree of success because you can't make people build in places they don't want to live. I don't see it as a threat that AquaSource would drive development over sensitive areas so much as they would give some latitude and flexibility in how those areas would be developed," said Etheredge, who has met with AquaSource officials and residents concerned about the company's presence in their community. The more important issue, says the county judge, is how local governments respond to new utility services being put into place. "That's where the challenge comes back to city and county governments," he said.

AquaSource's lack of experience in the water business has not stopped it from rushing into the Austin-area market. Rick Melcher, a spokesperson for AquaSource, said that DQE officials want to "grow their customer base" and "that there was an opportunity to do that in the water utility industry across the country." Melcher says that AquaSource, which was launched by DQE last June, already has 37,000 water customers in Texas. The company operates water plants in Kyle, Manchaca, Abilene, Kerrville, Fort Worth, and Houston. But its heaviest concentration of facilities is in western Travis County and northern Hays County, where it has purchased several water and wastewater providers since last September. "The whole AquaSource plan is to acquire and hold and clean up these water systems and bring them up to TNRCC regulations," Melcher said.

Many small water utilities, Melcher continued, do not have the resources needed to perform maintenance that would allow them to operate at peak efficiency. And he adds that the company's new customers should not be worried. "We're proud to have the resources to buy them [small water utilities], and we are not going to flip them for profit, but for long-term benefit of customers." But AquaSource is clearly being very aggressive in its acquisition strategy. According to Melcher, the company is negotiating to buy Mid-Tex Utilities, a new company that as yet has not pumped a single gallon of water. Mid-Tex was formed last October in anticipation of a large development near Driftwood that is being planned by Austin developer John Lloyd. The project could include several parcels including the Spillar Ranch south of the Circle C Ranch development. The project plans include a golf course, office complex, and several hundred homes.



AquaSource, Inc. owns several water plants in the area, and hopes to drill new wells in Barton Springs Recharge Zone to serve new development near Driftwood.

Bill Couch, the general manager of the Barton Springs-Edwards Aquifer Conservation District, opposes Mid-Tex's proposal, which would allow the utility to sink several wells into the recharge zone of the Barton Springs segment of the Edwards Aquifer. Couch says the proposal is faulty because the recharge zone cannot produce enough water to support Lloyd's development plan. In addition, Couch says, the proposal calls for drinking water wells to be located down gradient from the golf course, which is supposed to be watered with treated effluent.

Despite Couch's reservations about the Mid-Tex deal, he is not opposed to AquaSource. "Consolidation of water systems is a common practice right now," he says. "There's a lot of mom and pop systems that are not capable of maintaining the standards expected of these water systems." AquaSource has "taken over systems where we've had lots of problems. From the district's perspective, it's a much more professional situation. Everything they've done to date has been positive."

But Couch himself is embattled. On May 2, residents who live within BS-EACD's boundaries will vote on a proposal to dissolve the district. If that happens, Mid-Tex, AquaSource, or any other entity that wants to tap into the Barton Springs segment of the Edwards Aquifer would be able to do so with little governmental oversight.

And therein lies the rub. If Travis County, Hays County, and other counties in the region want to manage growth, Kelley believes that they must have a say in when and where water and wastewater services are provided. With the advent of AquaSource, Kelley says, "You are taking critical decisions about growth patterns and putting them with a private water and wastewater company that's there to make a profit. Usually we view water and sewer services as not very sexy public policy issues. But in this case, they are driving the growth. And the bus is leaving."


Springs Cleaning

The U.S. Fish and Wildlife Service will hold a hearing on a proposed permit that will allow the City of Austin to continue its cleaning and maintenance work at Barton Springs Pool. The city suspended regular swimming hours at the pool a few weeks ago after a local attorney threatened to sue the city because it did not have a federal permit to do its bi-weekly cleaning regimen at the pool. A permit is needed because the Barton Springs Salamander, which is found only at Barton Springs pool and two adjacent springs, is a federally protected endangered species. The hearing is scheduled for 6pm Saturday, April 7, at the Zilker Clubhouse. Call 490-0057 for more info. Written comments on the permit will be accepted until April 15. Mail them to USFWS, 10711 Burnet Rd., Suite 200, Austin 78758.

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