(The Center Square) – Rate hikes are necessary to cover millions of dollars in investments required to bring long-neglected water and wastewater systems into compliance, say the leaders of a Louisiana utility company.
Executives from Magnolia Water Utility Operating Company this week appeared before the Louisiana Public Service Commission at a hearing on rate increases.
Josiah Cox, CEO of Central States Water Resources, Magnolia’s parent company, told regulators the company has inherited failing systems often absent of investment in decades. Many, he said, were under federal or state consent decrees for chronic environmental violations.
“When we buy these systems, you have got to remember, they often had not had rate increases for decades,” Cox said. “It was a chronic lack of investment.”
He pointed to one Slidell system where “residents mentioned they still had Hurricane Katrina debris in the lift stations and the lines in the plant.”
Magnolia entered Louisiana in 2020 with the purchase of four systems in St. Tammany Parish. By 2025, it had expanded to 501 systems serving more than 270,000 customers statewide.
A major expansion came in 2022, when Magnolia acquired more than 200 wastewater systems from Total Environmental Solutions, Inc. under a federal consent decree.
Cox said Magnolia has since removed 30 systems from EPA consent decrees and secured compliance status from the Louisiana Department of Environmental Quality for 74 systems.
“The majority of the projects have been completed,” Cox said. “We’re down to the last 38 or 39 that are actually being constructed right now.”
Commissioners mentioned customer complaints about water quality in neighborhoods such as Greenleaves in St. Tammany Parish.
Cox responded that Magnolia had invested in new treatment systems and that issues were resolved, citing a “chronic lack of investment” from the system’s previous owners.
He also pointed to efforts in Slidell’s Meadows system, where a sudden well failure forced the company to connect to a backup source and begin drilling a new well slated for completion by December 2025.
While Magnolia insists its improvements have stabilized troubled systems, residents have been hit with steep bills. In Lafayette Parish, rates have risen by 200% or more since Magnolia took over, with some customers reporting increases of 300%. Frustrated residents have organized on social media to vent about frequent boil advisories, billing disputes, and what they view as unrelenting hikes.
Cox said the increases are unavoidable given the costs of compliance.
“Since starting operations here, going on six years ago, we’ve run at a cash loss the entire time,” he said. “Even with the rate increases we’ve had, we still have a $9 million cash loss that has not been recovered from this state. We’ve invested $400 million in this state and not pulled $1 out.”
Current rates reflect a 5% increase for sewer customers and an 8% increase for water customers tied to 2024 investments. Cox said those adjustments were part of the commission’s formula rate plan, which allows regulators to review capital spending annually.
Commissioners expressed mixed reactions. Some praised Magnolia’s progress in reviving long-neglected systems, while others said they could not support the latest increase despite acknowledging the company’s investments.
Magnolia, meanwhile, shows no signs of slowing its growth. The company is pursuing acquisitions in St. Tammany, Lafayette, Pointe Coupee, Calcasieu, Livingston, and Caddo parishes that would add thousands more customers across Louisiana.
