LAS VEGAS (KLAS) — They could see the problem coming, but the Basic Water Company (BWC) didn’t act fast enough to extend the water intake at Lake Mead’s Saddle Island to avoid financial disaster.
Now the Henderson company is looking at a water bill expected to average $268,000 a month — and as high as $342,000 at its peak. That’s quite a change for a company that used to make a lot of money reselling water that it pulled from Lake Mead under an entitlement for 39,036 acre-feet each year — about 12.7 billion gallons. On top of that lost income, BWC and another holding company, SPE, are responsible for bond payments — $7.6 million with a 5.3% interest rate — that continue until the bonds mature in 2032.
Times are changing for the industrial complex in the heart of Henderson. BWC, which is a wholly owned division of BMI, has filed for Chapter 11 bankruptcy protection, and a “viable permanent” solution is being explored.
“Basic Water and its predecessors have continuously delivered water to the City and Industries in accordance with their respective allocations for almost 70 years,” according to a document on file with U.S. Bankruptcy Court provides insight into questions on everyone’s minds as the Las Vegas valley watches Lake Mead nervously.
What did BWC do as the drought deepened? The bankruptcy filing shows that the BWC considered several possible solutions, but rejected them when it became clear that they weren’t enough to guarantee a solution.
Among the efforts described in the document:
- Around 2007, the company brought in a national engineering firm to study options for extending the water intake structure, and a proposal for a floating barge with a wet well was studied. The idea was rejected because of “too many logistical impediments to implementation of the design.”
- Sometime around 2014, another engineering company drafted a proposal to retrofit the intake and extend it by 84 feet, which would lower the intake level to 995 feet — about 48 feet lower than the present level. The design was completed in 2016. In 2018, bids for the project were sought from three contractors, but all three bids came back with proposed changes that would cost “significantly more” than the original design. “All three contractors also expressed reservations about the project because modification of the 80-year old structure would cause damage that might lead to a failure of the structure,” the court document shows. Engineers recommended pursuing other options, and the project was stopped.
- By 2019 and 2020, communication began about the possible sale of the water pipeline, pumps and other facilities to the City of Henderson. The city rejected that plan.
- In early 2021, the Southern Nevada Water Authority was approached with the possibility of acquiring the water facilities or connecting them to SNWA’s “third straw,” which taps into the lake at 860 feet above sea level. The cost of those proposals were not “commercially viable.”
- In 2021, Kiewit Corporation was brought in to explore alternate ideas to extend the intake. An unusually dry year and revisions to forecasts for Lake Mead’s level cut short exploration of those options. “Given the accelerating pace of the decline, none of the designs could be constructed before the surface level of Lake Mead reached the Failure Elevation,” the document states.
The race against time ended with a June 16, 2022, interim agreement for the City of Henderson to deliver potable water to the industries.
The government’s deep pockets allowed construction of the “third straw” at Lake Mead, ensuring a steady supply of water as long as the lake lasts. But there was no rescuing the 80-year-old Henderson water delivery system, and bankruptcy became the best option in the face of mounting bills.