Nevada Water Company files for bankruptcy amid worsening drought

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LAS VEGAS—One of southern Nevada’s oldest private water companies has foundered financially amid the region’s worsening drought.

Basic Water Company filed for Chapter 11 bankruptcy in early September with approximately $50 million in reported assets and more than $7 million in bond debt.

On July 1, the company ceased operations when the Lake Mead Reservoir reached the “Failure Level” at 1,043 feet, causing a 40-inch-diameter intake pipeline to fail on Saddle Island.

The company said it could no longer pump water to the city of Henderson, population 291,346, and four commercial industries as it had for decades.

A sunken boat sits on cracked earth hundreds of feet from shore at Lake Mead National Recreation Area on May 10, 2022, near Boulder City, Nevada. (John Locher/AP)

In a 27-page statement filed in US Bankruptcy Court in Las Vegas, BWC’s president and chief financial officer, Stephanne Zimmerman, said the company was unable to meet its contractual obligations to its customers.

As the 2000 drought worsened, Zimmerman said, the company looked at various technical ways to extend the intake pipe, called “straw,” including a floating barge that proved unfeasible.

The company also considered extending the entrance to a depth less than 995 feet above sea level. However, several contractors thought the venture would be too risky and cause damage, leading to a failure of the shot.

Zimmerman said that Basic Water in 2021 proposed either the Southern Nevada Water Authority (SNWA) acquiring the system or connecting with a third straw at 860 feet above sea level, which proved too costly.

dire predictions

Previous projections were that Basic Water would continue to operate until April 2023, when the Federal Bureau of Reclamation (BOR) anticipated that Lake Mead would reach a failure level.

Despite these projections, “it became clear by May 2022 that circumstances had become even more dire,” Zimmerman said in the statement.

“The surface level of Lake Mead reached fault height around July 1, and the intake structures stopped pumping raw water from the lake.”

Meanwhile, Basic Water is looking for a “viable permanent solution” for its customers.

Basic Water has been the sole supplier to the city of Henderson, about 17 miles south of Las Vegas, for the past 70 years. The company began delivering water in 1941 when Anaconda Copper Co. built Basic Magnesium to supply magnesium for the Allied effort in World War II.

The water company became part of the “Basic Complex”, known unofficially as the “Basic City Site” before the city was renamed Henderson, after former US Senator Charles Belknap Henderson (D-Nevada).

City officials, however, said the company’s bankruptcy filing would have “no impact” on the city’s water supply.

Basic Water’s inlet pipeline delivered raw water to the Henderson water treatment plant and, once treated, delivered drinking water to approximately 10 percent of the city’s customers.

mead lake arizona
Lightning strikes Lake Mead near the Hoover Dam that holds back water from the Colorado River at Lake Mead National Recreation Area in Arizona, on July 28, 2014. (Photo by John Locher/AP)

“For decades, the city has purchased approximately 90 percent of its drinking water from the Southern Nevada Water Authority. [SNWA]Kathleen Richards, Henderson’s chief public information officer, told The Epoch Times.

“With the closing of the Basic Water Co. entry, we seamlessly switched to purchasing 100 percent of our drinking water from SNWA,” Richards said.

Henderson is a member of SNWA, a cooperative agency of seven local water and wastewater agencies formed in 1991 to address regional water issues.

The agency serves 2.2 million residents in southern Nevada, providing water supply and treatment.

Declared water emergency

Due to conservation efforts, per capita water use in southern Nevada fell 47 percent between 2002 and 2020, even as the population grew 52 percent, Richards said.

In 2015, SNWA built a third hydrant capable of pumping water to lower elevations.

According to the SNWA, drought and climate change have caused Lake Mead’s surface level to drop about 170 feet.

Southern Nevada is currently under a Level Two federal water shortage declaration on the Colorado River, which empties into Lake Mead, reducing the amount of water withdrawn from the lake by 8 percent.

Alan Stein

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Allan Stein is a reporter for The Epoch Times who covers the state of Arizona.

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