B.R. Growth Coalition wants PSC to investigate water company

B.R. Growth Coalition wants PSC to investigate water company

The Baton Rouge Growth Coalition is asking Public Service Commissioner Scott Angelle to look into the way the Baton Rouge Water Co. does business with developers, and is requesting he conduct an audit of the privately held utility.

"It is our concern that the continued unbridled practices of the Water Company … will place undue burdens on the economic development of our city," writes the coalition in a letter to Angelle Tuesday. Specifically, the nonprofit coalition—which represents the development community—says the water company's reimbursement rate to developers is insufficient to cover the cost of installing water lines.

Developers have to front the cost of installing the infrastructure and are then reimbursed $285 per tap, once customers connect to the main line.

"This amount has remained unchanged for at least 10 to 15 years in an environment when costs have increased," the letter says. "Today the reimbursement equals only about 15% to 20% of cost."

The letter also raises questions about the contractor the water company uses to do most installations. Developers are not allowed to see the firm's contracts or review its contractor's pricing structure.

"It is our concern there is little free market competition … and this erodes pricing competition," the letter says. Baton Rouge Water Co. Sr. Vice President Hays Owen says the letter contains several errors, and denies that developers are unable to review contracts and pricing structure. He says the letter took him by surprise and that he has since called Growth Coalition leaders and is scheduling a meeting with them. Meanwhile, an assistant to Angelle says the commissioner will meet with his staff next week to address the issue.

The Owen family has owned the water company for years, and it is one of the few privately held water companies in the United States. While it is regulated by the PSC like other utilities, the nature of the privately held company has raised issues about transparency, according to the Growth Coalition.

"The Baton Rouge Water Company is a privately held, family-owned utility company with little oversight other than regulatory agencies," the letter says.

That is technically incorrect, according to Owen, who says the company has more than 300 shareholders and is controlled by "a majority outside board of directors."

Owen also takes issue with the Growth Coalition's complaint about the reimbursement rate, which he claims is set by the PSC. He says the company's philosophy is "to make development pay for development," rather than to stick customers with the infrastructure cost of developing a new subdivision. He also maintains the two contractors the company has regularly used for years to install water lines—Allen & LeBlanc, Inc. and Valentine & LeBlanc, Inc.—are competitive with other contractors and, in fact, typically come in at lower prices than developers' own contractors.

"Developers at any time can look at the bids we receive or the material lists we are using for the job," says Owen. "That is not a problem. What we will not do, in all fairness to the subcontractors who are bidding, we do not disclose the bids we have received to the competing bidding contractors."

Owen says he does not understand the allegations in the letter and wants to sit down with developers to hear their concerns. That represents a far different attitude from that which developers pointed out in their letter to Angelle, which says, “There are multiple cases where the answer to the questions above has solicited a response from the Water Company either 'take it or leave it' or 'visit with the PSC.' Fearing individual retribution and with the understanding that these are two avenues that we must take for resolution, we are collectively asking for your help."

Underscoring the delicate nature of Baton Rouge's tight-knit development community and the longstanding relationship many developers have with the Owen family, the letter notes that "many of us individually enjoy personal relationships with owners, management and staff," but nonetheless asks Angelle to audit the company "to see if there is anything that can be done to bring them to the table to better serve our community."

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