CITY OF EAGLE, SUEZ, AND EAGLE WATER COMPANY REACH AGREEMENT ON SALE OF WATER SYSTEM
Resolution Allows Idaho Public Utilities Commission (PUC) Review of Proposed SUEZ Purchase of Eagle Water Company System to Proceed
The City of Eagle’s lawsuit challenging the sale of Eagle Water Company’s assets to SUEZ has been resolved through mediation. A major component of the resolution is an innovative Water Management Agreement between the City and SUEZ, whose application to obtain Eagle Water Company assets has been on hold before the PUC pending the City’s lawsuit. The agreement allows the PUC’s review to go forward.
“The Agreement protects residents’ long-term interests,” Eagle Mayor Jason Pierce said. “Going into the mediation of the lawsuit, I really wanted the City of Eagle to own Eagle Water Company. But after doing our due diligence, we realized that this solution is the best for all of the residents of Eagle.”
The Water Management Agreement will:
- Provide certainty over the service area boundaries between SUEZ and the City as the City continues to grow
- Spread out, subject to PUC approval, the rate increase phase-in from 3 to 5 years, for current Eagle Water Company customers as the system transitions to SUEZ ownership and operation
- Maintain current customer rates for City of Eagle municipal water customers
- Avoid the need for a bond vote and levy to fund the City’s purchase of Eagle Water Company
“This is a win for everyone involved, but especially Eagle Water Company customers who will be able to enjoy a sustainable, modernized water system that will continue to deliver high-quality water for many years to come,” SUEZ General Manager Marshall Thompson said. “We have come together to cooperate on the best way to serve Eagle residents now and in the future.”
If the acquisition is approved by the PUC, customers will benefit from several system improvements and upgrades, including:
- Around-the-clock system monitoring to ensure safety and reliability of the system and the ability to react to emergencies more quickly
- The skill and expertise of certified water quality, production and distribution personnel
The Eagle Water Company currently serves 4,200 customers in the City of Eagle, while the City’s municipal water department serves over 2,900 customers within Eagle and the adjoining areas. SUEZ presently serves 98,000 customers across the Treasure Valley, including 3,200 in Eagle.
Published February 24, 2021
Key Factors in the City of Eagle's Decision
The litigation resolution and Water Management Agreement protect the City residents’ long-term interests and provide a resolution that is the best for all of the residents of Eagle.
For reference, here is the timeline of events that led up to this Water Management Agreement:
- In July of 2008, EWC and the City made the intertie agreement, which included the Right of First Refusal.
- The City filed the lawsuit over the Right of First Refusal in February of 2019.
- The trial date was originally set for April of 2021.
- In January of 2021, the court reset the trial date to begin on November 30, 2021, due to the pandemic and other scheduling delays. It was going to be a 10-day trial.
In the process of mediation, the City of Eagle learned some critical information regarding the status of the water system:
- There is no excess water or water rights available from the Eagle Water Company (EWC) system.
- The City does not need to obtain additional water from the EWC system.
- The City’s water resource portfolio and plan now provide adequate resources for the City’s current and future anticipated needs, a change from 2008 when the Right of First Refusal was obtained.
Not pursuing the EWC system purchase results in substantial cost savings to the City of Eagle because the EWC system needs significant maintenance work, including:
- $8 million in upgrade costs per SUEZ calculations in the PUC application
- $500,000 in immediate system upgrade costs.
There would be additional costs to interconnect the City’s water system and to obtain PUC approval of the City’s acquisition of EWC and the cost of a bond and bond election for the EWC purchase price.
Other benefits for the City and its residents are:
- Spreads out, subject to PUC approval, the rate increase phase-in, from three years to five, for current Eagle Water Company customers as that system transitions to SUEZ ownership;
- Maintains current customer rates for City of Eagle municipal water customers
- A $1.75 million payment from the lawsuit defendants to the City, contingent on PUC approval and closing of the sale of the Eagle Water Company water system assets to SUEZ
- Certainty for water service area boundaries with SUEZ as the City grows, without the need for multiple, separate proceedings before other agencies.
We reached the mediated resolution with the assistance of our litigation counsel at Holland & Hart (Newal Squyres and Murray Feldman) and the City’s water rights attorney, Norm Semanko, at Parsons Behle & Latimer. Norm was a member of the Eagle City Council when the City first obtained the Right of First Refusal. Norm brought that background to lawsuit resolution.
The City is pleased to reach this outcome. We look forward to working with SUEZ on implementing the Water Management Agreement provisions. This outcome is an excellent example of how local government and regulated utility providers can work together to serve the community’s needs most efficiently.