Artesian buys Delaware City water system for $2.1M

DELAWARE CITY — Artesian Water Company has bought Delaware City’s water system for $2.1 million, adding yet another municipal water system to its expanding network in the First State.

“We are very pleased to continue our long-standing relationship with Delaware City and we believe this will be a seamless transition for our customers,” Artesian Water Company Chief Operating Officer Nicki Taylor said.

The purchase symbolizes Artesian’s continuing commitment to Delaware City, as the company has operated the town’s water system for the past 17 years on a contract basis. Under the contract, Artesian operated water treatment plants, maintenance and repairs of equipment as well as handling billing and running 24/7 emergency dispatch.

The purchase also marks Artesian’s second purchase in 2020, as the company bought Frankford’s water system for $3.6 million in April. Combined with the Delaware City’s sale, this will bring about 3,000 customers into Artesian’s network.

The company has acquired five other municipal systems in the past seven years, including Slaughter Beach Water Company, High Point, Cantwell, Odessa and Historic Fort DuPont.

“We are not moving away from contracting to manage services for municipalities, but it is within our strategic plan to buy systems in locations where it makes sense – and connect them to larger services where it makes sense to,” Taylor said. “That way we can provide more reliable services and high-pressure water for our customers.”

Delaware City has been looking for a company to buy its water operations since 2018, after town officials realized the system needed major improvements that it could not afford with its current debt service. Delaware City Mayor Paul Johnson said it was clear the water system needed major improvement after one of the town’s two wells had a pump failure in July 2019.

“We had a back-up, but if we lost that we would be in a very scary position to be in,” Johnson said. “We knew the second well would fail sooner or later, and we were looking at $600,000 in water tower improvements at some point.”

Artesian, which supplies 8.3 billion gallons a water per year to roughly a third of all Delaware, plans to invest $2.4 million in Delaware City’s water system. That will include upgrading water meters, replacing aging water mains and services, installing more efficient pumps and treatment systems.

Artesian is also looking to connect Delaware City’s water system to the Historic Fort DuPont operations, which could serve a rising development in that area. For years, Fort DuPont has been considered for a 600-unit waterfront community with shops and other businesses.

But in the immediate future, Taylor said the goal of connecting the two systems would be to provide a better Delaware City users with better service. Right now, it’s estimated that users have a water pressure of 45 psi (pounds per square inch), compared to the average of 60 psi.

“It will help in terms of maintenance for possible outages and it will provide more access to serve our customers as well as higher water pressure,” Taylor said. “It’s good municipal and business sense.”

Delaware City chose continuity of service over a larger pay day. Wilmington-based SUEZ Water submitted an offer of $3.5 million for the town’s water operations, but ultimately the town decided to turn it down.

“I can’t speak for the council, but I can say we have a longstanding relationship with Artesian,” Johnson said. “This would keep the system internally as we had it, and any options would have meant we need to make capital investments to the system,” he said. “Throughout this process, one thing spoke loud and clear, and that was the feedback from our residents on Artesian and its aquifers and filtration system.”

Looking south, Artesian also plans to make sizable investments in Sussex County. The company has connected water systems in Frankford, South Bethany and Dagsboro, with engineers now working on plans on a future water treatment plant.

“We’re seeing tremendous growth in Sussex County,” Taylor said. “The number of houses being built there is incredible, and the demand is increasing with it.”

-Katie Tabeling

ktabeling@delawarebusinesstimes.com