(The Center Square) — Louisiana regulators approved another extension of Magnolia Water Utility Operating Co.’s rate-setting plan Wednesday, but paired the decision with a new investigative audit into the company’s broader business practices after customers described steep bills, poor service and murky communication.
Commissioners ultimately sided with Administrative Law Judge Joy Guillot’s recommendation to approve the extension, but added a separate review of Magnolia’s billing, customer service and acquisition practices.
The audit could also include outside consultants and an engineering review of the company’s systems, giving regulators a closer look at whether Magnolia’s claimed investments line up with the condition of its water and wastewater infrastructure.
Customers, particularly in St. Tammany Parish, have complained for months that bills increased sharply after Magnolia took over their systems. One customer told commissioners Wednesday that her monthly bill rose from roughly $25 to $137.
Others raised concerns about brown water, delayed repairs, boil water advisories, poor communication and the difficulty of determining how ratepayer money is being spent.
Commissioner Davante Lewis, a Democrat, asked Cox whether the company would cooperate with the audit, who said that they would.
Magnolia has defended its rates by saying many of the systems it buys are small, neglected, underfunded or already out of compliance when the company takes them over. Cox told commissioners Magnolia has invested about $410 million in Louisiana over roughly seven years and brought more than 250 systems back into compliance.
That argument has been central to Magnolia’s business model. The company buys water and wastewater systems in multiple states and says it has the capital and technical ability to repair infrastructure that local operators or small private owners cannot afford to fix.
But that same acquisition strategy has become one of the main sources of customer frustration.
In a March filing involving another proposed acquisition, Magnolia said it served about 59,500 wastewater connections and 28,800 water connections in regulated systems across Louisiana. The filing also said the company is part of an affiliate group operating small utilities in Louisiana, Missouri, Kentucky, Texas, Tennessee, Mississippi, North Carolina, South Carolina, Florida, Arizona and Arkansas.
Customers argue the company’s growth has left existing ratepayers paying higher bills while still dealing with unreliable service.
The dispute has also spilled into federal court.
Connie Norris, a Magnolia customer from the Belair subdivision in Slidell and one of the intervenors in the PSC case, filed a civil rights lawsuit in January against Magnolia-related companies, Central States Water Resources, Cox, the Public Service Commission and the Louisiana Department of Health.
At Wednesday’s meeting, Norris told commissioners she has a compromised immune system and believes the water in her subdivision has caused rashes and blisters.
