Lake Mead’s falling level leads to Henderson water company bankruptcy

Lake Mead’s falling water levels amid a 22-year drought has left Henderson’s original water supplier high and dry.

Basic Water Company, which at one point was the sole provider of water to Henderson and Las Vegas in the mid-20th century, filed for bankruptcy protection on Saturday, a move the comes as the company is no longer able to pump water from Lake Mead.

When Lake Mead dropped below 1,043 feet in early July, Basic Water Company’s intake pipe that was installed in the 1940s could no longer draw water from the lake, company President and Chief Financial Officer Stephanne Zimmerman wrote in a 27-page filing in the bankruptcy case.

But the company is still on the hook to deliver water to its four industrial customers and is now paying the city of Henderson to provide that water to the businesses instead. But that potable water from Henderson is coming at the cost that is “four to five times higher than the rate for raw water,” according to Zimmerman.

“While the Industries continue to receive water that is critical to their operations pursuant to the Interim Agreement, buying potable water from the City is not a long-term solution,” Zimmerman wrote.

Falling lake levels

Lake Mead’s level dipped to 1,040 in July but has since risen to 1,043.9 feet in elevation. The most recent projections released last month by the Bureau of Reclamation show the reservoir hovering around 1,040 feet for the next several months before falling below that mark by April 2023.

Basic Water Company explored extending the pipe further into the lake in 2007 and again in the mid-2010s, but the costs and logistical impediments were too great, Zimmerman wrote. In recent years, the company looked into selling its water infrastructure to Henderson and the water authority but those talks never produced a deal.

In 2021, Basic Water Company once again looked into extending the intake. Bureau of Reclamation’s projections at the time showed that the company had at least two years before Lake Mead would drop below the critical mark of 1,043 feet. But before the engineering firm it contracted with could finish designing the plans, the Bureau’s updated projections in October 2021 showed the reservoir’s levels falling far more quickly.

“In other words, 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,” Zimmerman wrote.

Since then, the federal government’s projections have only gotten more grim, with the latest forecast showing a 23 percent probability that Lake Mead falls below 1,000 feet in 2024. That rapid decline forced Basic Water Company to abandon plans to extend its intake pipe.

Debts coming due

The inability to deliver water wasn’t the only thing that led to the bankruptcy filing. Basic Water Company also still owes roughly $7.5 million on bonds that will mature in 2032, with interest payments due twice per year.

Katheleen Richards, a spokeswoman for the city of Henderson, said Basic Water Company had previously provided raw water to the city that was then treated and delivered to roughly 10 percent of Henderson’s residents.

The city now gets all of its water from the Southern Nevada Water Authority, she said. That water is already treated when it gets delivered to Henderson, which led to the city shutting down its own water treatment plant.

Basic Water Company’s Henderson roots date to 1941 when the Anaconda Copper Company started to produce magnesium to build airplane bodies for the United States’ World War II efforts. To supply water to the complex, a 40-inch wide water intake pipeline was installed to transport water from Lake Mead to the Basic Complex, which was the name of the original industrial complex that surrounded the magnesium production facilities.

Eventually, the company’s original water entitlements were assigned to the city of Henderson and the Southern Nevada Water Authority. But the company still continued to deliver water to customers until July 1 — right about the time the Lake dropped below 1,043 feet elevation for the first time since the reservoir was first filled during the 1930s.

Zimmerman noted in the filing that the agreement with the city is temporary, and that they are working “expeditiously towards development of a permanent solution.”

Contact Colton Lochhead at clochhead@reviewjournal.com. Follow @ColtonLochhead on Twitter.