Sewer deal for Ascension heads to key vote by departing Parish Council; sewer rates could increase – The Advocate

GONZALES An Ascension Parish Council panel that for years has been investigating how to bring a consolidated, public sewer system to the eastern side of the parish will consider on Tuesday night whether to recommend a 30-year deal with a private partner to build and run the system.

Ascension Sewer LLC, which includes Bernhard Capital Partners and the parish's largest private sewer provider, Ascension Wastewater Treatment, is proposing a $215 million plan to eliminate dozens of community systems in Ascension Parish.

A new combined system would route the sewage of up to 19,500 customers in the first phase in Prairieville, Dutchtown, Geismar and the Gonzales area to a new treatment plant along the Mississippi River in the Geismar area and out of impaired bayous.

Another 2,800 Ascension Wastewater customers outside of Ascension, in East Baton Rouge, Iberville and Livingston parishes, would be part of the partnership and under the rate-setting authority of the Ascension Parish Council but not hooked into the consolidated system.

Ascension Sewer would design, build, operate and maintain the parish system for 30 years, earning an estimated return of 8% annually, potentially bringing the partners a few hundred million dollars in profit over the life of deal, according to a newly public Ernst & Young analysis.

Both the parish and Ascension Sewer would put up cash and debt to finance construction.

The plan proposes initial rates of $57.90 per month, a substantial increase for parish government's and Ascension Wastewater's customers, but on par, backers of the plan say, with rates in neighboring communities.

The Parish Council would be the rate-setting authority, but the deal lays out rates in the first 10 years. Rates would increase at 4% annually and reach $82.41 a month by year 10.

The deal also lays out several scenarios, such as slower than expected customer growth, under which the council could be asked for extra rate increases or end up in mediation if the two sides can't agree.

Under the deal, the Parish Council would face costly termination fees in the tens of millions of dollars or more to back out.

The Parish Council panel got a detailed explanation of the plan last month in a hearing shortly before the Oct. 12 primary, but Ernst & Young's analysis wasn't finished, putting off any vote on the plan.

Once the primary election votes were tallied, at least six of 11 council members were on the way out, including several members on the Council Utilities Committee shepherding the deal.

The incumbent for a seventh seat is headed to a runoff Saturday. The parish also will have a new parish president, President-elect Clint Cointment, with whom the private partners will have to negotiate.

Since the election, outgoing and incoming council members have offered mixed sentiments about whether the sitting council should act on a deal that would bind the parish for a generation.

Councilwoman Teri Casso, the chair of the full council, and Councilman Daniel "Doc" Satterlee, chairman of the Utilities Committee, have said they want to proceed.

Casso, who was reelected without opposition in August, said she would like the council to "finish strong" on a variety of matters, including the sewer plan. Satterlee, a two-term councilman who lost in the primary to Prairieville lawyer Corey Orgeron, agreed.

"I was elected to serve for four years, not three years and eight months, or 10 months, or whatever it is," Satterlee said.

Cointment has repeatedly declined to weigh in on the sewer plan while key details remained undisclosed but has said that once they are public, they should get a full airing before any vote.

Some councilmen-elect said they had already spoken with officials from Bernhard Capital but were still learning about the deal.

Chase Melancon, a councilman-elect from St. Amant, said the current council has done a lot work but, at the same time, the new council will be dealing with the plan, leaving him uncertain about a vote by the outgoing council.

Even before Ernst & Young's analysis became public, aspects of the plan not disclosed in the proposal's initial rollout have raised questions for some.

Officials with Bernhard Capital have said the addition of out-of-parish customers adds ratepayers, lowering the rate for all. They have simultaneously suggested the out-of-parish individual sewer systems wouldn't also present the kind of long-term regulatory concern that is helping drive the proposal to consolidate customers on similar treatment plants in Ascension.

Outgoing Councilman Bill Dawson, who has aired skepticism of that claim, told Bernhard officials last month that out-of-parish customers also would not be able to vote for any of the future Parish Council members who would set their monthly rates.

Currently, the state Public Service Commission sets their rates. Those customers have an elected representative on the state panel.

The Ernst & Young financial analysis, which has become public ahead of the utility meeting 6:30 p.m. Tuesday in Gonzales, has added more questions for Dawson.

Ernst & Young detailed a variety of uncertainties in the plan that could either improve the partnership's profits or drive up costs. But the financial analysis found a pretax rate of return of 8% is not generally out of line, though valuable.

After the first three years of construction, Ascension Sewer's partners would earn a combined $267.6 million, after taxes, over the remaining 27 years. That's nearly as much as the future system's projected operating cost over the same period.

The analysis also found aspects of Ascension Sewer's financing plan assumes a more aggressive initial construction schedule and shorter-term construction financing than might otherwise be likely.

If those time frames were stretched out, the partnership could see a higher rate of return with no way to require disclosure of those savings or share them with ratepayers, Ernst & Young found.

Dawson said he will be asking the committee to have Ernst & Young further analyze the basis of Ascension Sewer's initial rate of $57.90 and call for more thorough sewer construction design plans, moves that could delay a final vote until next year.

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