State regulators on Wednesday told the new manager of a troubled wastewater treatment company operating in suburban Baton Rouge that they wouldn’t approve another rate hike.
“They paid too much for the system and you’re now trying to make up for a bad business decision,” said Foster Campbell, of the Louisiana Public Service Commission, at the regulatory board’s monthly meeting on Wednesday.
“You’re asking us to undo your mistake,” said Campbell, of Bossier Parish. “I know you’re going to ask for another rate increase ... There is no way in the world I could vote for higher rates.”
“I’ll second that,” said PSC Commissioner Clyde Holloway, of Forest Hill.
Density Utilities of Louisiana LLC has the highest rates in the state for a wastewater management company, according to Melanie Verzwyvelt, a PSC staff attorney. The plans had been for Density to secure a bond with higher rates for treating wastewater in Ascension, Assumption and other formally rural parishes that now have fast-growing populations.
The money raised from the bond would be used to improve the system, she said. But because of management and accounting problems, Density failed to secure the bond and for the past two years has been using the funds from the higher rates to patch up equipment, she said.
Neil Hertenstein, a municipal bond specialist from Chicago, was sent by Density’s board to Hammond to get the company back on track. He agreed with Verzwyvelt’s summation. “Density made some very, very bad decisions,” he told the PSC.
Hertenstein said he would be asking for another rate increase in order to secure the bonds needed to upgrade the wastewater systems.
PSC Chairman Eric Skrmetta, of Metairie, said Hertenstein should try to work with the monies from the last rate increase. He added that the PSC’s patience was wearing thin and soon he might have to suggest that the company be forced into receivership.
Density serves about 2,300 customers in seven parishes, including parts of Ascension, Assumption, Livingston, East Feliciana and East Baton Rouge. Based in Hammond, the Louisiana company, affiliated with Density Services in Macon, Ga., purchased small independently owned wastewater systems built as part of subdivisions over the years.
The infrastructure in the smaller systems, not just those bought by Density but all across the state, often were only infrequently maintained and rarely upgraded, according to a transcript of PSC testimony.
In some cases, as the subdivisions grew, the small wastewater companies did not adequately expand the pipes and machinery to keep pace.
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