LAS VEGAS—One of southern Nevada’s oldest private water companies has gone bankrupt due to worsening drought in the area.
The 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 “failure level” at 1,043 feet, causing a 40-inch-diameter intake pipe to fail at Saddle Island.
The company said it could no longer pump water to the town of Henderson, which has a population of 291,346, and four commercial industries, as it had done for decades.
In a 27-page statement filed in U.S. bankruptcy court in Las Vegas, BWC president and chief financial officer Stephanne Zimmerman said the company could not meet its contractual obligations with its customers.
As the 2000 drought worsened, Zimmerman said, the company investigated various technical ways to extend the intake pipe, called a “straw,” including a floating barge that proved unfeasible.
The company also considered extending the water intake to a lower depth of 995 feet above sea level. However, several contractors believed the undertaking would be too risky and cause damage, leading to failure of the the water intake.
Zimmerman said Basic Water had proposed in 2021 that the system be acquired by the Southern Nevada Water Authority (SNWA) or connected with a third straw at 860 feet above sea level, which turned out to be too much. expensive.
Early projections had Basic Water continuing to operate until April 2023, when the Federal Office of Reclamation (BOR) predicted Lake Mead would reach failure.
Despite these projections, “it became clear in May 2022 that circumstances had become even more dire,” Zimmerman said in the statement.
“The surface level of Lake Mead reached breach elevation on or about July 1, and the water intake structures stopped pumping raw water from the lake.”
In the meantime, Basic Water is looking for a “permanent viable solution” for its customers.
Basic Water has been the sole supplier to the town of Henderson, about 17 miles south of Las Vegas, for the past 70 years. The company began supplying water in 1941 when the Anaconda Copper Co. built Basic Magnesium to supply magnesium to the Allied effort during World War II.
The water company became part of the “Basic Complex”, informally known as the “Basic Townsite” before the town changed its name to Henderson, in honor of former U.S. Senator Charles Belknap Henderson (D -Nevada).
City officials, however, said filing for bankruptcy would have “no impact” on the city’s water supply.
The Basic Water intake pipe delivered raw water to the Henderson Water Treatment Plant and, when treated, distributed potable water to approximately 10% of the town’s customers.
“For decades, the city purchased about 90 percent of its drinking water from the Southern Nevada Water Authority. [SNWA]Kathleen Richards, Henderson’s public information officer, told The Epoch Times.
“With the closure of the Basic Water Co. water intake, we seamlessly transitioned to purchasing 100% of our drinking water from SNWA,” Richards said.
Henderson is a member of SNWA, a cooperative agency of seven local water and wastewater agencies established in 1991 to address regional water issues.
The agency serves 2.2 million residents of southern Nevada, providing water treatment and distribution.
Water emergency declared
Thanks to conservation efforts, per capita water use in southern Nevada has decreased by 47% between 2002 and 2020, even as the population has increased by 52%, Richards said.
In 2015, SNWA built a third water intake capable of pumping water from lower elevations.
According to SNWA, drought and climate change have lowered the surface level of Lake Mead by about 170 feet.
Southern Nevada is currently under a federal declaration of Tier 2 water shortage on the Colorado River, which feeds Lake Mead, reducing the amount of water drawn from the lake by 8%.