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Deep Dive: PUC to decide if Suez can purchase Eagle Water Company after court settlement

After years of talks and a court dispute, the state will now decide if Suez can purchase Eagle Water Company.

The Idaho Public Utilities Commission held a public hearing Monday night about a proposed agreement between the two companies for the larger French-owned water company to purchase Eagle’s longtime independently owned water provider. If the PUC opts to allow the purchase, Eagle Water Company’s assets and customers will transfer to Suez and rates will hike over the course of seven years to match the higher prices Suez charges.

[Park no more: City of Eagle auctions off former park site]

Eagle Water Company has roughly 4,200 customers who currently pay an average of $12.35 per month. If the Suez acquisition goes through, the rates would climb up to an average rate of $40.88 per month for residential customers, the same as Suez’s other 98,000 customers in the Treasure Valley. It would reach an average of $166.19 per month for commercial payers.

At the hearing, over a dozen Eagle residents testified for nearly an hour and a half about their objections to the sale. They cited concerns over the rate increase impacting customers on fixed incomes, opposition to water pumped out of the ground in Eagle serving other areas of the Treasure Valley and worries about Suez’s new parent company’s water quality record.

The Public Utilities Commission is expected to make a decision on the sale agreement in the coming weeks. It includes a requirement that Eagle Water Company use roughly $590,000 to reimburse existing customers and help them adjust to the new rates during the first year of the hikes.

Years of talks with City of Eagle, but no deal

It’s been a long road to get to this point.

Eagle Water Company is a locally based company owned by Robert DeShazo. As he was getting on in age, he decided to sell his company and retire in 2007 after decades of business. The City of Eagle expressed interest in acquiring the company, but a failed bond to raise the money to purchase it quickly spiraled into years of talks between multiple mayors and different private investors, according to the Idaho Statesman.

The city alleges some of these talks resulted in a 2008 “right of first refusal” agreement between the City of Eagle and Eagle Water Company, requiring the company to offer the city the opportunity to buy the company before anyone else. But, a deal never closed and Eagle Water Company remains privately owned to this day.

Eagle City Hall. Photo: Margaret Carmel/BoiseDev

In September 2018, an investor who had been interested in buying the company named Norman Bangle reached an agreement between Eagle Water Company and Suez to purchase Eagle Water’s assets and flip them over to Suez for $10 million. The City of Eagle found out about the deal after Suez put out a press release and accused the company of violating its 2008 agreement to allow the city an option for purchase before a sale to a private company, the Statesman reported.

The city filed suit against DeShazo in early 2019 for violating the agreement.

Pierce backs off campaign promise to purchase EWC

The possible sale of Eagle Water Company also became a chip in the contentious 2019 mayoral election between incumbent Stan Ridgeway and now Mayor Jason Pierce. During the campaign, Pierce attacked Ridgeway’s record of overseeing the city during failed negotiations to buy Eagle Water Company and vowed to work with DeShazo to purchase it.

Pierce took the helm of the city in early 2020 while the lawsuit was delayed several times due to COVID-19 and other issues. But, Pierce’s tune on buying the company changed in early 2021 when the city announced it reached a $1.75 million settlement with Eagle Water Company and it would not be buying the company.

In a statement after the settlement, Pierce said that after the state of Eagle Water Company’s assets he opted not to purchase. He said the system required $8.5 million in upgrades, including $500,000 in “immediate system upgrade costs.” City spokesperson Ellen Matilla told BoiseDev information about the cost of the upgrades was provided by Suez, not a city-hired engineer or consultant.

“Going into the mediation of the lawsuit, I really wanted the City of Eagle to own Eagle Water Company,” Mayor Jason Pierce said in a press release. “But after doing our due diligence, we realized that this solution is the best for all of the residents of Eagle.”

Residents pushing back against purchase

Some residents are not pleased with this course change.

Two groups of residents, the Citizens Allied for Integrity and Accountability and Eagle Water Customer Group, and the City of Boise filed paperwork to intervene in the process and attempt to sway the commission’s decision.

CAIA and EWCG both asked the PUC to deny the terms of the settlement agreement due to concerns from customers. CAIA, a nonprofit headed by Democratic legislative candidate and Eagle resident Shelley Brock, called the proposed settlement agreement “not transparent, is not equitable and is not in the public interest.”

Shelley Brock

The group objected to the acquisition due to the rate impacts, but also Suez’s use of chlorination to treat water because their system uses a combination of wells and the Boise River. It also raised concerns about the loss of local control of the water system, the undisclosed purchase price and the three-step transaction where Eagle Water will sell its assets to a Wyoming-based corporation H20 Eagle who will then sell the assets to Suez.

H20 Eagle is based in Sheridan, Wyoming and is run by a commercial registered agent called Northwest Registered Agent Service, according to the Wyoming Secretary of State’s office. The address the company uses is home to 21 registered agents that run LLCs on behalf of multiple businesses. Northwest Registered Agent Service represents 53,267 businesses, according to the Sheridan Press.

“H2O Eagle, incorporated in May, 2018, appears to exist for the sole purpose of being a middleman in this transaction,” CAIA wrote to the PUC. “The public has a strong interest in knowing why this transaction necessitated a middleman whose financial interest and profits from the proposed transaction remain obscure. Public confidence demands transparency to ensure that transactions costs will not be passed on to Eagle Water or Suez customers.”

City of Boise weighs in, hoping for more transparency

In its filings at the end of October, the city of Boise wrote that it is “generally in support” of the settlement agreement for the purchase, but it raised some questions.

The city of Boise is concerned the purchase of Eagle Water Company will add more projects to the company’s long list of capital projects, which could delay work to address persistent issues with brown water on the Boise Bench. The company is currently in the middle of adding a new filtration system at the well on Taggart Street, but pipe replacement and other mitigation measures continue.

Veolia, another French company and Suez’s longtime rival, purchasing Suez is another point of concern for Boise.

“Boise City is concerned about how and whether the purchase of SUEZ SA by Veolia Environmental SA is going to affect Idaho customers,” the city’s filing said. “Even updated testimony is wholly silent on whether and how the international asset purchase will affect the capital improvements projects, the costs of the SUEZ system in Idaho and future rates, the customer service in this area, as well as other matters.”

Residents at the hearing raised concerns about complaints against Veolia, including the company’s involvement in the Flint water crisis.

If the deal goes through, the city of Boise requested that the PUC require Suez take a “forward-looking planning approach” to addressing weather events and droughts, implement a bigger public outreach campaign on projects that could impact rates and a requirement that the company make an annual report to the PUC on its use of groundwater and the Boise River.

Boise also requests the PUC be required to report how new customers will be served and with what water rights.

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Margaret Carmel - BoiseDev Sr. Reporter
Margaret Carmel is a BoiseDev reporter focused on the City of Boise, housing, homelessness and growth. Contact her at margaret@boisedev.com or by phone at (757)705-8066.

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