The company that was the sole supplier of water for the City of Henderson for decades has filed for bankruptcy protection, a victim of a 23-year drought that created a problem too expensive to fix, KLAS reported.
Although Henderson no longer relies exclusively on the Basic Water Company (BWC), industries that built the city out of the desert to meet World War II demands still do. And their water bills threaten to break the bank.
When Lake Mead dropped to “Failure Elevation” — 1,043 feet in July — Basic Water Company’s 40-inch-diameter pipe stopped sucking in water at Saddle Island. The pipelines are commonly referred to as “straws.” The lake dropped as low as 1,040 feet, but it has since risen to 1,043 feet. Forecast models show it dropping under 1,040 feet again by April of 2023.
Water that’s coming to the Las Vegas valley now is coming from the “third straw,” which draws water at an elevation of 860 feet. Lake levels are expressed as an elevation above sea level.
In a 27-page declaration filed with the U.S. Bankruptcy Court on Saturday, Stephanie Zimmerman, President and Chief Financial Officer for BWC laid out the reasons for the bankruptcy. She essentially wrote the water history of the city.
Starting in 2007 and escalating in 2015 as the pending emergency grew, BWC explored ways to re-engineer the Saddle Island “straw.” Design work was even completed at one point, but by then Lake Mead’s level was dropping so fast that the fix would only buy a few years.
The company grew out of agreements made in the early 1940s, when the demand for magnesium fueled a construction boom that created the Basic Complex, unofficially known as the “Basic Townsite,” according to the court filing. “That year, the town was given the official namesake “Henderson” in honor of famed Nevadan and former U.S. Senator Charles Belknap Henderson,” the document says.
The water agreement that still exists survived separately from the Colorado River Compact, preserved by Congressional action in 1966.
But now, with the lake level headed lower according to water forecasts, BWC has become a customer instead of a provider. It is contracted to provide water for Kerr-McGee Chemical, Pioneer Americas LLC, Chemical Lime Company of Arizona and Titanium Metals Corp.
But it can’t afford to buy potable water from Henderson to provide water for these four industries because the cost is “four to five times higher than the rate for raw water” from the lake, according to the document.
With its responsibility for bond payments looming, BWC filed for bankruptcy protection. It still owes about $7.5 million on bonds that will mature in 2032.
The document also notes other payments BWC has made to hook into the delivery system that everyone else is using:
- City of Henderson: $1,006,506.46 deposit, based on 2021 water use
- Southern Nevada Water Authority (SNWA): $4,515,079 connection charge
- SNWA “System Development Charge” of $386,019
In the meantime, BWC continues to work toward a “viable permanent solution” with the City of Henderson and SNWA.