Pine Water Rate Increase Hearings Set

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Three interveners have emerged in the Pine Water Company rate increase request, causing the Arizona Corporation Commission to push back some hearing dates.

The three are John Breninger, former member of the Pine-Strawberry Water Improvement District board; Robert Cassaro, a Pine resident; and the defunct Pine-Strawberry Water Improvement District, now being operated by Gila County Manager John Nelson.

While ACC spokesperson Heather Murphy said she was surprised that the county stepped forward under the guise of the PSWID, she said interveners are just part of the process.

"Everything gets a little more interesting every day I'm here," she said, "but any individual or group has a right to file for intervention."

In a recent interview, Gila County Dist. One Supervisor Ron Christensen confirmed that "the county plans to get involved" in the upcoming hearings.

"The water improvement district is going to be involved in that," Christensen said. "We want Brooke Utilities to justify how their operations warrant a rate increase. There's a lot of intricacies in (Brooke President Robert) Hardcastle's company we don't know anything about and we would like to know more about."

Cassaro produced calculations that he said indicate the average bill for a Pine Water Company customer using 3,000 gallons per month in the summer will increase from $30.85 to $46.98, while a customer using 5,000 gallons per month will pay $72.69 instead of the current $40.10 if the increase is granted. He said he is intervening to raise public awareness.

Breninger, one of the remaining members of the PSWID board when it was dissolved, says he wants to know why Pine Water Company is not attempting to improve its capability to produce more water.

"The completion of the hydrologist's report has indicated where the water is," he said. "Pine Water Company in particular has not been producing and selling all the water the community wants to use."

The new hearing schedule leaves intact a public hearing scheduled for 6 p.m. on Monday, Dec. 8 in Pine, but pushes other hearings back, Murphy said.

"The judge set Oct. 31 for intervener testimony, Dec. 1 for rebuttal testimony by the applicant (Pine Water Company), Dec. 22 for intervener rebuttal, and Jan. 5 for rejoinder testimony from the applicant," she said. The full hearing, originally scheduled for Dec. 15, will now be held at 10 a.m. Jan. 15 at the ACC's office in Phoenix.

Cassaro would like to see more Pine residents attending the hearings in Phoenix.

"All that's going to happen on Dec. 8 (in Pine) is an opportunity for people to vent," he said.

Pine Water Company, which is owned by Brooke Utilities, filed the rate increase request on May 1. It includes a 49 percent summer rate increase of $13.42 for a customer using the summer average of 2,731 gallons per month. On top of that, all Pine Water customers would be charged a $10 a month water exploration surcharge and also would continue to pay the cost of hauling supplemental water.

In testimony included in the request, Hardcastle painted a bleak picture of a community that will most likely always have water shortages.

"There have been numerous calls by, among others, Gila County, developers, customers, and to some extent this commission, for massive capital investment by Brooke Utilities ...," Hardcastle said. "But our customers cannot drink or bathe in money, and to a large extent the lack of water is a hydrological reality no amount of capital investment can eradicate."

Since Brooke acquired the Pine system in 1996, at which time the system was "in a state of nearly total disrepair," improvements have been made, Hardcastle said. These include drilling 11 new wells, repairing more than 700 leaks, adding 270,000 gallons of storage capacity and constructing a pipeline between Strawberry and Pine. The bottom line, Hardcastle said, is that the current rates -- in effect since April 1, 2000 -- are no longer adequate to provide the company a fair rate of return. In fact, Pine Water Company experienced operating losses in each of the past three years.

If granted in its entirety, the proposed increase would generate an additional $268,993 in revenues and a rate of return of 10.93 percent.

The proposal also includes a water supply augmentation plan and an education program for the company's 2,000 customers.

Initiatives under the augmentation plan include increased water storage, a progressive rate design that puts more of the cost burden on heavy users, exploration for water on public lands, and possible legislative changes that would protect Pine's scarce water resources.

In addition to a revised curtailment tariff that imposes stronger restrictions and penalties on Pine Water Company customers, the proposed education program incorporates several initiatives. They include mailings, local sign postings, toll-free information numbers, a media outreach program, and community "coffee table" meetings.

Hardcastle also emphasized that his company alone would not be able to solve Pine's water supply problems, calling on the ACC and "various other local, state and federal government agencies to develop strategies to explore and use additional water resources.

"And, despite all that effort, very little additional water may be available to Pine Water's ratepayers," he said. "At its core, the water supply dilemma plaguing Pine, Arizona, is an act of nature, and no amount of planning, study and capital investment can change hydrological reality."

The ACC has 270 days to issue a final order and dispose of the case.

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