No Decision On Pine Water Issues

After two days of hearings, they are continued until November

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PHOENIX -- Residents in the Pine and Strawberry area, hoping for a quick resolution to the latest issue before the state on the Pine Water Company, should probably sit back. It might not be over until sometime in 2008.

At the most recent round of hearings, held Sept. 27 and Sept. 28, arrangements were made to continue taking testimony on Nov. 9 and Nov. 19.

Robert Hardcastle, president of Brooke Utilities, spent both Thursday and Friday responding to questions from several attorneys and two Arizona Corporation Commissioners Kristin Mayes and Chairman Mike Gleason.

Hardcastle and Brooke Utilities' Pine Water Company are before Judge Dwight Nodes, administrative law judge for the ACC, arguing against a request by a number of property owners to leave the company's service area.

Ray Pugel, Robert Randall, Brent Weekes, Jim Hill and others are seeking to be separated from the utility's area of service.

They have their own water available to serve planned developments, and are not interested in letting the utility have or buy their water, or in continuing existing water sharing agreements.

Hardcastle was asked about discussions to sell the Pine Water Company for $4.3 million. He said Pugel was not interested; nor was another individual who had expressed some initial interest.

"It has not been a good business for us," Hardcastle said. "But we will continue to meet our regulatory obligations and serve our customers the best we can."

"If your best isn't good enough, what's your plan? In three years, you have not done anything," Mayes said.

In a brief interview with Pugel, he said he found it interesting that PWC drilled two wells in the Strawberry area to supplement the Pine water supply, but at no time in 2007 did the company send water to the community through its Magnolia Project pipeline -- which was constructed a number of years ago, to address shortages during high-use times.

Attorney David Davis, representing Jim Hill, asked Hardcastle to explain why PWC was not a good business, and what he would expect to make it a good business.

"Pine and Strawberry are both high risk. A 12- to 15-percent return is what we'd like to get."

Davis asked if Hardcastle would lower the $4.3 million price in order to sell the business. Hardcastle said the $4.3 million was a good price.

"I don't believe the community would be better served with another water improvement district," Hardcastle said.

Currently there are five other districts in the Pine and Strawberry area, including the Pine Strawberry Water Improvement District, which does not produce water. It has entered into an agreement with PWC to develop a deep well in Strawberry to serve the utility's customers in Pine.

Hardcastle testified that another water improvement district would reduce the PWC's customer base, making service to the remaining customers eventually more expensive, as upgrades were made and the cost had to be spread among fewer clients.

Hardcastle was asked how many customers Brooke Utilities serves in Pine and Strawberry. He said a few more than 3,000 meters in the two communities. Davis then asked him to estimate the number of customers that might be lost with the development of the Pugel, Randall and Hill projects. It was estimated that between 60 and 160 meter connections would be lost by PWC, if the projects were fully developed.

"I think the case could be resolved if they signed the ‘will serve' letters and applied for variances on the moratorium," Hardcastle said.

Hill was asked to make a $10,000 deposit when he signed the ‘will serve' letter with PWC, before negotiations could start on connecting his well to the system.

Hardcastle will face additional questions in November, as will the staff of the ACC, regarding its recommendations on the issue.

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