P/S Water Board Looks At Utility Purchase

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Pine Water Company customers will soon be paying more for water, but the day may come when they make their payments to another company.

While the Arizona Corporation Commission (ACC) voted unanimously Tuesday to grant Pine Water Company the interim rate increase it requested, the Pine-Strawberry Water Improvement District (PSWID) board voted Saturday to hire a consultant to evaluate purchasing both the Pine and Strawberry water companies from Brooke Utilities.

The evaluation, which will not exceed $10,000 in cost, will be funded 50-50 by the PSWID and the Industrial Development Authority of Gila County (IDA). It will be conducted by Economist.com, a Texas company that specializes in such evaluations, according to PSWID chairman Gary Hezel.

"I interviewed the gentleman from Economist.com that is going to be doing this," Hezel said. "He is well versed in the water business. He has been doing things like this for water companies and I'm satisfied we'll get an honest evaluation and forecast."

Hezel cautioned that the decision to move ahead with the evaluation, approved by a 3-1 vote with three board members absent, does not necessarily mean PSWID will purchase the two water companies.

"We were formed by a petition of property owners and a resolution of the Gila County Board of Supervisors ... to search for a long term source of water," Hezel said. "We can be a provider of water to water companies and domestic water improvement districts, but not to the end user.

"If we were selected as the one to buy out Pine and Strawberry water companies, we would have to go to petition again and the county supervisors would then pass a resolution to form us again as a domestic water improvement district."

The IDA, which proposed the evaluation, is a government-sponsored agency that can issue bonds for economic development ventures at a tax-exempt interest rate, according to Gila County Administrator John Nelson.

"Normally they request some kind of match from somebody," Nelson said.

Brooke Utilities is opposed to the evaluation and possible purchase of the two water companies.

"Myndi (Brogdon) represented Brooke Utilities at that meeting and they were basically not in favor," Hezel said. "They are not prepared to sell the companies."

Local Realtor Ray Pugel, one of five IDA board members, believes Brooke Utilities is not maintaining the Pine and Strawberry systems efficiently and that the travel and other expenses Brooke incurs because it is a California company could be saved if the two water companies were locally owned.

Corporation Commission public information officer Heather Murphy says she understands and respects "local control," but questions some of Pugel's assumptions.

"Over the years, a number of people have owned those systems, and over the years the problems have been exacerbated," Murphy said. "The thing that's changed is that the communities have grown, and just trying to keep pace with the number of hookups is a challenge. I guess time will tell whether an ownership change solves the problem of too little water and too many users."

Murphy believes Brooke's size and expertise offset the travel expenses the company incurs by being based in California.

Interim rate increase

The amount of the interim rate increase granted by the ACC will be determined by a formula based on the actual costs incurred hauling water to supplement local supplies during the summer months. Pine Water Company originally requested an increase of 95 cents per 1,000 gallons.

In granting the increase, the ACC accepted the recommendations of administrative law Judge Dwight Nodes with one exception -- Pine Water Company will not be required to notify its customers of conservation stage changes by mail.

"The method we have to use is e-mail and the 800 number," Brogdon said. "The theory behind that is, by the time we get it in the mail, the stages could have changed again. It just didn't make sense and it was costly."

The ACC also approved a revised curtailment tariff submitted by Pine Water Comapany that imposes stronger restrictions and penalties on Pine Water Company customers in order "to ensure the equitable distribution of water in times of water shortages."

"We will be mailing out the new tariff and curtailment orders," Brogdon said.

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