Ed Archuleta, President & CEO, El Paso Water Utilities

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1 Ed Archuleta, President & CEO, El Paso Water Utilities Story by David Crowder To Ed Archuleta, the president and CEO of El Paso Water Utilities, it's all about water. And, if you think about it, he's probably right. In his 23 years on the job, he's seen El Paso go from a city that the Texas Water Development Board said would run out of water by 2009 to a boomtown that is weathering a decade-long river drought without having to worry about water. Other cities look at El Paso, isolated in the desert, with the biggest inland desalination plant in the world and some of the lowest water rates in the Southwest - and marvel. Many credit Archuleta for managing a city's most important resource in a way that has persuaded the Pentagon to invest billions expanding Fort Bliss and erased all the old doubts about the El Paso's future. Though Archuleta is known to be cranky, impatient and controlling at times, city officials and the people he works with regard him as an able leader and something of a visionary. "I would say he has done an amazing job for the city when it comes to water management," said Joyce Wilson, El Paso city manager. It all began one day in the early 1960s when, as a second-year civil engineering major at New Mexico State University, he visited a sewage treatment plant and somehow knew he had found his calling. "Yeah, sewage," he said. "You know, I never thought about it before. Rather than study structures and highways and the other things available in civil engineering, I thought water is interesting." Now 70, Archuleta plans to retire next year. He is the city's longest-serving department head among active employees and ranks at or near the top in El Paso's history. He has not received an increase in salary, per se, since he signed his first contract with the city in 2000 when, with a bundle of awards to his name, he found himself being courted by headhunters nationwide. To keep him, the Public Service Board agreed to set his salary at $225,000 a year. But if he stayed on the job five more years, he would receive an extra $50,000 a year while working and into retirement, until he turns 79 in So when he retires next year, he'll get that $50,000 a year plus his city retirement pay. The hunt for his replacement is already well under way.

2 The seven-member Public Service Board, which oversees El Paso Water Utilities and the Stormwater Utility, has hired a search firm, advertised and received 42 applications, including several from managers inside the utility whom Archuleta has groomed for leadership. Archuleta, who holds a number of outside positions that include a presidential appointment as chairman of the three-member Pecos River Compact Commission, plans to keep his hand in water after he leaves. That's because, after family, water is and will always be the most important thing in his life. Archuleta talked with El Paso Inc. about how the city secured its water supply, the bad ol' days with Fort Bliss, and why City Council shouldn't control PSB land. Q: The city relies on water from the Rio Grande and more particularly from Elephant Butte Reservoir for about half of its supply annually. Neither the farmers nor the city got much this year and now Elephant Butte is about 95- percent empty. If there's not a good runoff from the Colorado snowmelt next spring, it could mean little or no water coming down to El Paso. How will the city and the water utility cope with that? We've been preparing for a long time, realizing that first of all we don't get a lot of precipitation and don't count on it like a lot of Texas cities. We do count on the river, but we knew when we expanded the Jonathan Rogers Water Treatment Plant in the early 1990s that there would be droughts on the river that we would have to contend with. So we started diversifying our water portfolio. First of all, we start off with an aggressive conservation program. That's done very well. Citizens here are very familiar with conservation. We've invested in that and a lot in reclaimed water, which reduces demand for potable water and diminishes peak demand in summer. We've got two ground water resources, the Hueco and Mesilla Bolsons. We've got the wells we have drilled and the new ones we're going to drill and we have the desalination plant. So we have prepared and we are prepared for it. Q: Could we be looking at water restrictions next summer? We're preparing ourselves as if we may have to. This year, we were prepared to do that, but we didn't have to because we got some river water. We expect we'll get some river water like that next year. Restrictions are a possibility. But we think with the programs we've got, we'll be able to meet the demand without having to do anything other than what we do now. Q: And if the river drought were to continue for some years, is it sustainable for El Paso to rely only on ground water without more water restrictions? Yep. If you look at just the amount of water we have stored at the Fred Hervey Plant, close to 100,000 acre-feet since 1985, by injecting it into the ground. We've been banking water over the years and the elevation of water in the aquifers has actually increased.

3 Q: When might El Paso have to resort to the importation of water from outside the county? We prepare a state water plan with all the other counties of Texas as part of the Far West Texas Planning Group. It shows right now that we would import some water by We had it at 2030, but we've pushed it back a decade and I think it could be pushed back another decade based on our conservation, reuse and desalination. It's a 50-year plan, at which point the population of El Paso would be about 1.5 million people. In order to serve them around 2040, it's possible we might have to import water. What I have been pushing is this: If you want to delay or even stop the need for importing water, the way to do it is to stop Eastside growth because there's no water out there. If there is, it's saline, brackish water. Instead we need to develop the Northeast and the Westside. Q: The city bought a couple of so-called water ranches and some property in the Dell City area years ago when it looked like water importation might become necessary.would you tell us about them and what is the status of that plan? We own two ranches and several farms. We purchased Antelope Valley Ranch, which is right next to Valentine in about It's about 25,000 acres. Then, we purchased the Wild Horse Ranch north of Van Horn in 1993, I think. It's about 24,000 acres. Both are being leased for ranching purposes, so there's a little revenue, but not much. The farms are not in Dell City but just to the east in the Capitan Reef area. We've got several small farms and they're about 26,000 acres total. One in particularly is a very active farm. We're getting pretty good revenue from that. That would be the first place we would take water. It's fresh water there, about 100 miles from here. Q: How do El Paso's rates compare to other major cities in Texas? The highest is in Austin. Right now, our combined average water and sewer bill is about $42. In Austin, it's more than twice that. Santa Fe last year was 132 bucks, Albuquerque $55. Q: So we still have the lowest water rates of any major city in the state and region? Yes. It's lower than most Southwest cities as well. Tucson is very comparable to us in per capita use but they're very high on the rates. Q: You were hired as general manager of the PSB and El Paso Water Utilities in What was the state of the utility then? I was the deputy manager of Albuquerque's public works department when I came here. There were a lot of challenges. We had the lawsuit with New Mexico. The board wanted me to find a way to solve it, which we did, in March 1991, and to look at other options. That led us to our first 50-year master plan that we did with the El Paso irrigation district, starting with a two-year plan. That's been the blueprint of everything we have done for the past 20 years. We were relying almost entirely on ground water. The aquifer was dropping a foot and a half to three feet a year. The day I came to work, I had an administrative order to show up at an EPA hearing within 30 days because we had been violating the industrial pre-treatment program. We ended up paying a $300,000 fine because a lot of our

4 industries were putting a lot of heavy metals and pumice from the jeans washing plants into the sewer system and it was affecting our wastewater treatment plants and our discharges downstream. The first summer I was here, we had major restrictions on both the Eastside and Westside. We couldn't meet the demands of the Coronado Country Club or the Eastside because we didn't have the capacity. Q: What did you do about the capacity problem? We implemented our water conservation program in 1991, which involved a new rate structure and new enforcement. We were using ground water mostly. We didn't have the Jonathan Rogers plant in the Lower Valley. In two years, I planned and designed the Bustamante water treatment plant. We weren't doing much with reclaimed water. We built Jonathan Rogers and Bustamante plants and started working with the farmers rather than fighting them and ended up with some good agreements with them for surface water, water rights and leases of water rights. We bought land in the Upper Valley where we're pumping wells we have there now. Q: You also had to deal with the colonias outside El Paso. That's one of the things I'm most proud of. We had this mess out there. But we weren't doing anything to serve people outside the city, yet we had these lenient laws that allowed people to go out there and try to build a house without any water or sewer service. The county started working with the state. I was able to convince the water development board to make us the regional water agency. The PSB had been fighting EPISO at that time, and I didn't see EPISO as someone we should fight. I thought we should embrace them because they had the right idea that people ought to get water. How can you have any kind of standard of living if you don't have at least water in your home? So with state and federal money we were able to get water into Socorro, San Elizario and all of the Eastside along Montana and Westway on the Westside followed by Canutillo. Q: That was a complete reversal of the city's position, wasn't it? Yes. Q: In 1979, the Texas Water Development Board warned that if El Paso kept using water at the rate it was and didn't increase its supply somehow, the city would be out of water in 30 years. What effect did that pronouncement have on the city? It was huge because it was well known. El Paso was known as a city that was running out of water. We were just using the Hueco and Mesilla Bolsons. When I first went to the Pentagon and the Army to talk about the desalination plant, they were not happy to have a post next to El Paso that was deemed not developable because we were running out of water. Q: It is said the expansion of Fort Bliss would never have taken place were it not for the Kay Bailey Hutchison Desalination Plant. Is that true?

5 Exactly. I believe it. When we started working on the desal plant, the Base Realignment and Closure process had just begun. We had started the discussions with Fort Bliss. We showed them how their wells had become brackish and if they didn't do something, they would have problems. We had started hydrological modeling of the aquifers. I said I wanted to know where best to put the desalination plant and we approached Fort Bliss about building on their property. The Corps of Engineers was against it and several other Army segments were against it because they had never allowed a utility to come on their post and take water. Q: Fort Bliss is likely to keep growing. Will that pose a problem for the city down the road when it comes to water? No. The water they're using is not a huge amount relative to what the city uses. Q: It was proposed recently, not for the first time, that the sale of city land the PSB controls should be handed over to the city. That recommendation was pretty much dismissed. What would you say giving control of the 26,000 acres PSB still controls over to the city and City Council? That would be a terrible mistake. You have to keep the land with the water. None of this economic development - the baseball stadium, a water park or anything - can happen without water. A lot of times when new politicians come on the City Council, it takes them a while to understand that. Every four years now we have to re-educate people about why the land is there, why it was acquired back in 1952 and why you have to keep the land with the water. You asked about our injecting water into the ground. A lot of Texas cities would like to do that, but one reason they don't is because that water may travel into an adjoining city or county. But here, we own all the land and it's not going anywhere. If it goes anywhere, it's on PSB land. Call it what you may, but if you control the water and the land, you're going to be in good shape for a city. I'm biased, but I don't care where you go in this country, in this world, there's nothing more important than water, and you have to take care of it. Q: There are a lot of interests competing over water in this corner of the state: the city, the farmers, Juárez, Mexican farmers, Texas, New Mexico and two nations. What do you see happening down the road? To me, if I were going to talk about long term, this region has to come together. El Paso and the El Paso irrigation district need to get into a new partnership, like they did at the Salt River project and Phoenix. That started out as an irrigation district and now it's a huge water supply program for the city of Phoenix and surrounding areas. But they still have preserved their agricultural base. That's something that I think will have to happen here. Q: How did you get into the water business in the first place? I was a sophomore or junior studying civil engineering when I went to my first wastewater treatment plant. I was just amazed at what happens in a wastewater plant. Q: You fell in love with sewage? Yeah, sewage. You know, I never thought about it before. Rather than study structures and highways and the other things available in civil engineering, I studied water. In my junior and senior years, I took all the water courses that

6 were available at New Mexico State. Then, I went on to graduate school and got a full (scholarship) ride to study water resources. I went to an Albuquerque engineering firm and after a few years, I was offered job in city's engineering department as an assistant engineer in the wastewater department because the wastewater manager was going to retire. I thought it might be interesting. I was there 14 years until Then I came here. Q: Your contract with the city expires next July and you'll be retiring as CEO and president of El Paso Water Utilities. What do you plan to do then, and will you stay in El Paso or move away? I'm going to stay in El Paso. My grandkids are in Las Cruces and maybe after a while we might move there. But for now, we're staying in El Paso. I haven't told anybody what I'm going to do. I've thought a lot about it. I probably will do some consulting and maybe some teaching at UTEP or NMSU. I'm 70 and in good health and I want to do other things. I want to travel and spend time with family, but I still want to work. Q: Is the search on already for your replacement? Do you expect that person to come from inside the utility or outside? The PSB hired a search firm. They received 42 applications. There's a three-member search committee and Dr. (Richard) Schoephoerster is the chair. They will be interviewing candidates before too long. When they bring candidates here, then their names can be divulged, but prior to that it's confidential. I think they'll probably interview people late this month or early next month. I've committed to be here through the transition. If it's an internal person, that transition probably won't be lengthy. Q: Are there people here who could step up? Yep. I started working on a transition plan five years ago. One of the things I wanted to do was not to leave the organization the way I took it on. There was no transition plan. It was, "Here's the keys, you're it."