Edmonton’s Epcor could be last hope for Arizona suburb cut off from water supply

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Residents of an Arizona suburb are collecting rainwater to flush toilets and wash dishes while praying to a higher power for help after being cut off from the neighbouring municipal water supply since the beginning of the year.

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“We have a weekly prayer group where we pray for rain and a water solution,” Rio Verde Foothills resident Karen Nabity said. So far, there’s been some rain, but not much else. “As of right now, we still have no water solution.”

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More than 500 homes in the suburb northeast of Scottsdale have been without water after the city followed through on a pledge to stop private water haulers from delivering to customers outside city limits amid an acute water shortage in the Colorado River basin.

The community’s best remaining hope for securing a reliable water supply may now lie with a Canadian utility company, though it will be two to three years before Epcor Utilities Inc.’s subsidiary in the United States is able to resolve the problem.

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The headline-grabbing crisis in Rio Verde Foothills has put Edmonton’s municipally owned Epcor into the spotlight at a key moment since it has been rapidly expanding into markets in Arizona and Texas.

“This isn’t Epcor’s first time serving a community that’s been cut off from their municipal supply through water haulers,” Epcor USA president Joe Gysel said, acknowledging the situation in Rio Verde Foothills is much more urgent than the company’s past forays assisting residents in far-flung suburbs north of Phoenix.

Rio Verde Foothills was warned in 2019, and again in 2020 and 2021, that Scottsdale intended to ban commercial water haulers from delivering its water outside city limits, before following through on it.

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“Now we’re in a situation where that notice has expired,” he said. “They’ve been cut off since Jan. 1 and now we’re in a bit of a challenge for those people there.”

The unincorporated community in Maricopa County — which doesn’t have a municipal-piped water supply — relies on water drawn from wells or hauled in on trucks. Thanks to a loophole in state law, so-called “wildcat” housing developments such as Rio Verde Foothills have circumvented rules requiring developers to prove 100 years of assured water supply before building.

For decades, private water haulers were allowed to fill up at neighbouring Scottsdale stations, but unprecedented drought conditions in the Colorado River basin prompted the city to implement a strict new drought-management plan.

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Even before Scottsdale’s warnings, Nabity and her neighbours were trying to find an alternative supply for Rio Verde Foothills, but their efforts to set up a domestic water improvement district (DWID) faced stiff opposition from neighbours who were suspicious of the proposal to create a new public board with the authority to set water rates.

Community infighting ended with the county’s board of supervisors voting down the proposal last August, leaving residents to languish as the clock ticked down to Jan. 1. Now, Nabity watches the water levels in her tanks descend.

“I haven’t gotten a delivery of water since before Christmas,” she said, adding that she and her husband have perhaps four or five months of water left. “You’re flushing the toilet once a day, you’re using less than a quarter cup of water to wash your hands, that kind of thing. We’ve learned all kinds of ways to make the water go further.”

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As local and state lawmakers scramble to come up with an interim option to prevent residents from running out of water, Maricopa County and some homeowners are looking to Epcor’s U.S. subsidiary — now the largest private water utility in Arizona — to step in to provide a long-term solution.

Some Rio Verde Foothills residents haven’t given up on the possibility of setting up a DWID, but Arizona’s unique political culture has predisposed others to take a dim view of quasi-public bodies.

“We believe Epcor is the solution. We don’t need another layer of government between us and our water,” Rio Verde Foothills resident Mark Reeder told a Jan. 23 hearing of the state’s private utility regulator. “I personally have about 1,100 gallons of water left in my water tank right now. That’ll last us till the end of this week, and I have no idea where I’m gonna get more. We need a solution and we need it now.”

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Epcor said it’s willing to help and filed an application last October with the Arizona Corporation Commission for approval to provide standpipe water service to residents in Rio Verde Foothills, though the company has warned it could take years to secure the water supplies in an already water-constrained area and to construct the necessary infrastructure. The upshot, the company has warned, is that water rates are bound to increase for homeowners.

“There’s gonna be no gouging, there’s no excessive markups, it’s just the situation they’re in,” Gysel said. “It’s not a big community, so there’s no scale. There’s not a million people (to) amortize all these costs over. This is on a very small population. And those costs have to be recovered.”

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Epcor’s U.S. operations provide water services to some of the American Southwest’s most water-challenged areas. It’s also recycling wastewater, and, increasingly, constructing pipelines between water resources and water-scarce areas with high-population growth.

Since breaking into the U.S. market more than a decade ago, the company has focused its attention on acquiring larger, privately-owned water systems in Arizona, with at least five deals since 2016 totalling US$137 million, according to data from Bluefield Research.

“We look at water scarcity a little bit differently than a lot of people would look at it,” Gysel said. “A lot of people look at that as, ‘Oh my gosh, there’s no way we can do it.’ We look at it as an opportunity. We have a lot of expertise in excessive water treatment. Wastewater is a new water, if you think of it that way.”

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He said Epcor’s wastewater plants turn out a potable standard and the company recharges the aquifer or uses the water for other purposes including serving commercial, industrial and recreational facilities.

Epcor’s U.S. operations have grown significantly, posting $341 million in revenues in the third quarter of 2022, the company’s highest revenue-generating segment in that period.

“If you look at the U.S., two of the hottest markets that we have going right now, Arizona and Texas, have extremely strong (economic) growth,” Gysel said. “(There’s) a lot of onshoring for (chip fabrication) and other manufacturing that’s being brought back to the U.S. and these are very aggressive states that are attracting a lot of new businesses, which means opportunity for companies like Epcor, which we’re taking advantage of.”

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In Rio Verde Foothills, residents are urging the state’s private utility regulator to quickly approve Epcor’s application so the company can begin securing a reliable water supply for the community.

In the meantime, a pitched battle is underway between local and state lawmakers over who is to blame for the suburb’s predicament and who should be responsible for helping hundreds of residents through an acute water crisis that has no clear end in sight.

“It’s truly political and it shouldn’t be,” Nabity said. “We just want water for our homes. We shouldn’t be in this scenario.”

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