The Arizona Corporation Commission this week sidestepped one of the hottest issues in the Rim Country by refusing to decide if Pine Water Company can spend money on the controversial K-2 well.
If ACC had approved the Brooke Utilities request at the Dec. 17 meeting in Phoenix, Pine Water Company could have begun drilling the deep K-2 well, which the company says can ease a critical water shortage.
The ACC’s choice to postpone any decision in the case drew mixed reviews in the two mountain hamlets.
Supporters of the Pine Strawberry Water Improvement District’s bid to buy out the two private water companies said the ACC’s nondecision will strengthen PSWID’s position in arbitration challenging its decision to cancel a $300,000 contract to drill the well.
However, others criticized the ACC’s decision to not rule on the company’s request to encumber the money for the well.
“The ACC staff and Judge Nodes have both recommended that the encumbrance request be approved,” said Sam Schwalm, an unsuccessful candidate for a board seat in the past election. “The request meets the guidelines that the ACC uses to evaluate requests by utility companies and those guidelines should be applied equally to all, Pine Water Company included.”
However, PSWID board secretary Richard Dickinson contends the most important development at the ACC meeting was Brooke’s decision to withdraw its original request for the encumbrance. The ACC refused to allow Brooke to withdraw it — then postponed a decision on the request itself.
“PWCo fought hard to seek approval for encumbrance from the ACC and now wanted to withdraw (it),” Dickinson said. “Their position was that ACC approval was no longer necessary given the fact the previous PSWID board had waived that requirement of the Joint Well Development Agreement and funded the escrow account anyway.”
By contrast, Schwalm believes the commission simply didn’t wish to make a potentially controversial decision.
“It is clear the ACC has decided to remove themselves from the questions surrounding the K-2 agreement and allow the arbitration process to resolve whether the agreement will go forward,” he said. “It is unfortunate the commissioners injected themselves into local politics.”
The arbitration hearing is set for Feb. 9 through 12. A panel of arbitrators will hear evidence from both sides, then issue a binding ruling on whether the district had the legal right to cancel the contract.
Also at the ACC meeting, the commissioners passed a motion requiring Brooke Utilities to amend by Dec. 19 its 2007 financial report to the corporation commission.
“The commissioners learned that Pine Water Company was severely delinquent in reporting their data to the ACC,” Dickinson said. “Although the company had submitted the 2007 financial report, several pages of important information were blank.”
That report was due in May of 2008.
“It is important information that impacts the appraisal process and our ability to secure reasonable financing for the acquisition of the water companies,” Dickinson said.
Brooke Utilities spokesperson Myndi Brogdon said the missing information was “only operational data and has no impact on PSWID’s ability to secure financing.”
Some in favor of PSWID’s proposed buyout contend the water company didn’t file complete reports in order to stall the forced sale by the district.
“As this data is due (today), that delay tactic has been circumvented,” Dickinson said.
Brogdon denies the missing data was a delay tactic.
“We knew about the oversight and were already working with the ACC staff to have the information in by the year’s end,” she said.
Dickinson says that’s nonsense because ACC staff at the meeting said Brooke had not responded to several requests for the information.
The PSWID board was scheduled to hold its monthly meeting last evening, Dec. 18, but it was cancelled.
The PSWID Web site reported it was called off because no immediate tasks needed to be accomplished.