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Texas Company Buys Hudson Utilities

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By CHRISTIAN M. WADE

The Tampa Tribune

Published: March 21, 2008

HUDSON - A large regional water provider is buying out a private west Pasco County utility in a deal worth more than $5.6 million, company officials said.

Hudson Utilities Inc., which serves 2,574 residential and 144 commercial wastewater customers, is being acquired by Houston-based Ni America, which has been buying up small private utilities across the South.

The purchase, which represents the company's first foray into Florida's heavily regulated utilities market, was approved by the state Public Service Commission on Tuesday.

Company officials said they expect to close on the deal during the next week.

"We see tremendous potential in Florida's utilities market and we're very excited about this new acquisition," said Rick Melcher, director of public relations for Ni America.

He said the utility plans to invest heavily to upgrade Hudson's infrastructure but does not plan to seek a rate increase from state regulators before the improvements are done.

"That is not something we are considering at this point," Melcher said.

In the late 1990s, Hudson Utilities feuded over demands from state and federal regulators that it replace hundreds of failing septic tank systems in the Signal Cove and Sea Forest subdivisions.

After years of delays, the utility borrowed about $1.8 million to build a centralized sewer system. The project was completed in 2003, and residents were billed for a $2,400 connection fee.

This week's purchase comes at a time of increasing competition between the county and regional utilities over the acquisition of a patchwork of small, privately owned water and wastewater providers.

County officials have pushed for years to tie small utilities into regional public water systems amid customer complaints about service and concerns about water quality.

In most cases, the county has fallen short.

Recently, the county commission enlisted the Florida Governmental Utilities Authority, which buys and sells utilities for governments, to negotiate potential purchases.

Pasco officials are discussing possibly aquiring Aloha Utilities in Trinity and Seven Springs; Lindrick Service Corp., which serves the Gulf Harbors area; and Mad Hatter Utilities in central Pasco.

Meanwhile, big players such as Aqua America, Utilities Inc. and Ni America have entered the local market in recent years, gobbling up many of the small utilities.

More than 350 utilities were selling drinking and wastewater services in the county in 2000, a figure that has shrunk to about 100, most of them in west Pasco.

Along with customers and territories, the large corporations also are acquiring water and sewer lines, and equipment in desperate need of upgrades.

Additionally, government pollution-control regulations have become rigid and complex, while the high cost of water treatment is becoming too prohibitive for many utilities.

Mark Myers, vice president of business development for Ni America, said he thinks private companies like his are better positioned financially to buy and operate utilities than local governments, which pay too much and then pass that along to customers.

"These days, things are getting tougher and tougher for municipalities and counties to find the funds to make these repairs," he said. "And this is not a get-rich business."

County utilities officials couldn't be reached for comment.

Myers said his company is looking to acquire more private utilities in Florida, specifically in Pasco, but has found itself competing against the county for a larger market share.

"If the county would get out of our way and allow us to participate, they would find we are good corporate citizens," he said. "We act as a bridge between them and the taxpayers."

ABOUT NI AMERICA

NAME: "Ni" is the Osage Indian word for water.

MISSION: To acquire, develop and operate water and wastewater systems

RESULTS: "Over the last 10 years, our team members have successfully closed over 100 acquisitions in 17 states representing approximately 160,000 customers."

RATES: "Many of our new customers want to know if we have plans to increase rates. We look only for a fair and reasonable return on our capital investment. When systems require renovations or upgrades to meet regulatory standards, it may be necessary to request increases to recover the cost of these improvements."

CONTACT: 10913 Metronome, Houston TX 77043; (281) 304-7441; fax, (281) 373-1575; info@niamerica.com

Information is from www.niamerica.com. Reporter Christian M. Wade can be reached at (727) 815-1082 or cwade@tampatrib.com. Information is from www.niamerica.com.

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