Azurix Proposes to Operate Alabama Town's Water

Had Offered to Loan Town Money

01/29/2000
By JEB SCHRENK
Staff Reporter

Azurix, the company that was in talks with the Prichard City Council about a $2 million loan to keep the city out of bankruptcy, has expressed interest in management of the Prichard water and sewer board, said board attorney Ronnie Williams.

How a possible arrangement could work is being studied, and there are other companies that have expressed interest in managing the water and sewer operations, Williams said. But any company that would take over will also inherit a slew of environmental snafus that have troubled the board for years.

Houston-based Azurix is testing water from Eightmile Creek to see whether the technology they are proposing would raise the water quality to environmental standards.

"There's no guarantee this is the way to go," Williams said about the idea of contracting out management.

At least one water board member , Don Lyons, doesn't want to contract out management to Azurix.

Time on Prichard's two-year contract with a Mobile utility for treated water is running out, however, and costly repairs need to be done to the water and sewer systems.

Facing the threat of stiff penalties, the water and sewer board agreed in 1998 to buy water from the Mobile Area Water and Sewer System while upgrading its treatment plant. For months, the Alabama Department of Environmental Management urged the board to stop using water from Eightmile Creek, which the agency ruled in the fall of 1997 was the most polluted water source in the state.

The original contract with the Mobile utility ends in August but has a provision for a one-year extension.

Azurix is a global water company that owns, operates and manages water and wastewater assets, provides water and wastewater services, and develops and manages water resources. The company declined to comment on details of its proposal to the Prichard Water Works and Sewer Board.

Azurix officials have proposed investing money into the water and sewer board for necessary repairs and managing the utility, possibly under a long-term lease, said Jack Wims, board chairman. The company would then take a cut of the utility's revenue.

Wims said such a scenario could keep the water and sewer board from floating a bond - estimated at $9.1 million - and raising already high rates to pay for repairs.

"Basically, I think that's what people are looking for - better service without any rate increase," Wims said.

There are other options under the company's proposal, Wims said. He said the utility could foot the bill for repairs and have Azurix manage board operations. The water and sewer board could also purchase equipment from Azurix and not contract out management.

There are at least three other companies that expressed interest in managing the utility, but Azurix was the only one that offered to spend its own money as an investment, Wims said. He declined to release a copy of Azurix's proposals.

Lyons said, however, Wims and other board members are going in the wrong direction.

"Something needs to be done, but not that," Lyons said. "I object to them taking over the management of the company, and I object to anything (Azurix) has to do with rehabing the plant" that treats raw water.

"It would be a matter of days before they owned it," he said.

If the management of the utility is contracted out, Wims said, no employees would lose their jobs and pension funds would not be effected. Lyons, however, is skeptical of those promises.

Lyons said the board needs to issue a bond, repair the water treatment plant and then purchase raw water from Mobile before treating it. Only after that is done, Lyons said, will ADEM consider letting the board return to Eightmile Creek.

Wims said Azurix is currently treating and testing water from Eightmile Creek. The results will be shown to ADEM with the hope the technology used efficiently cleans the water, he said.

Azurix spokeswoman Carol Hensley said the company is using a membrane filtration pilot plant to treat the water. She said the operation started in mid November and will be completed in the next couple weeks.

"This has absolutely nothing to do with the previous discussion for a loan with the city," Hensley said.

Council President Wayne Lafitte said Azurix officials were interested in backing a $2 million loan to keep the city out of bankruptcy. That plan fell through, however, and council members voted in October - many with objection - to file for bankruptcy.

The water works and sewer board offers service to about 13,000 households in Prichard and Chickasaw.