Complaint Claims Brooke Defrauded Customers

State corporation commission asked to investigate Brooke Utilities charges in Mesa del


Brooke Utilities defrauded nearly 400 Mesa del Caballo customers by charging two to four times as much as it should have to recover the cost of hauling water this summer, according to a complaint by Stephen Gehring filed with the Arizona Corporation Commission.

The complaint claims that Brooke Utilities manufactured a water crisis, then inflated the costs of hauling water and finally applied the water hauling charges to every gallon used instead of just the water hauled.

Moreover, the complaint alleges that the company harassed and intimidated its customers by shutting off their water and imposing steep reconnection charges, sometimes without even mailing them a bill.

Brooke Utilities President Robert Hardcastle said he could not comment on Gehring’s complaint because he had not heard about it. When he does, Hardcastle said he would contact the paper with a comment.

Hardcastle met with Mesa del residents Thursday night in a third and final community meeting on alternative water solutions. Options include water conservation, water hauling, a pipeline with the U.S. Forest Service, drilling two new wells and tapping into the Blue Ridge pipeline.

Costs range from $147,600 a year pipeline, $862,300 for two wells and $1.07 million for Blue Ridge. For residents with an average monthly bill of $23, that means an increase of 143 percent per month if they go with the Forest Service, 87 percent increase for the new wells and a 130 percent increase for Blue Ridge.

While none of the options are a definitive solution, Blue Ridge is the most likely to last the longest and deliver the best results, Hardcastle said. A story on the Thursday night meeting will be in Tuesday’s newspaper.

Gehring’s complaint called on the corporation commission to consider revoking the company’s right to sell water in the unincorporated subdivision and force the company to refund the overcharges and reconnection fees.

The company “intentionally defrauded customers who cannot be held to the arbitrary and deceit ful business practices, predatory fees and rates, misrepresentations

and abuses of Brooke Utilities/Payson Water


ACC Spokeswoman Rebecca Wilde said the corporation commission staff has not yet reviewed the complaint and so the agency could not comment at this time. She said the commission, which last year authorized the new, water-hauling charges, would investigate.

Gehring’s 17-page complaint was supplemented with about 30 pages of documentation, including many summertime water bills showing that the “water augmentation charge” increased many bills three- to four-fold.

Brooke Utilities has hauled water to the development’s water storage tanks for the past three years, saying it needed to interject the extra water because the output

of the seven wells couldn’t keep up with the demand.

The company had to absorb the cost of the water hauling in past years since its rates are regulated by the corporation commission in return for a monopoly on water selling in the subdivision. But this year, the corporation commission

allowed the company to charge extra for the water hauling,

although the charges are supposed to simply cover the extra costs. Brooke bought water from the Town of Payson’s water department, which went into a 6,000-gallon water truck in the parking lot of The Home Depot for the roughly two-mile drive to Brooke’s twin, 20,000-gallon water storage tanks.

Gehring’s complaint included several invoices from Payson for the extra water, including $863 for 135,000 gallons on June 1 and $1,221 for $190,000 gallons on July 1.

Gehring also claimed that the trucking company told him that it charged about $187 for each 4.4- mile round trip to deliver the water. Gehring’s complaint indicated

the company made 54 round trips to deliver 325,000 gallons of water in June and July at a cost of

about $12,000.

During that same period, water company records showed that residents used about 1.8 million gallons, which means the hauled-in water accounted for about 18 percent

of the usage.

The report presented elaborate, sometimes confusing calculations that compared the estimated cost of the purchase and delivery of the water from Payson to the per-gallon surcharge the company added to all the bills.

Gehring claimed Brooke Utilities charged customers 200

percent more than it actually spent to buy and deliver the water. Moreover, the company applied the water hauling charge to every gallon sold instead of just the

extra water hauled by truck.

As a result, in many cases the water hauling charge was at least three times higher than it should have been, he concluded.

The report also suggested that Brooke Utilities had effectively created the water shortage in order to make the windfall profits.

The number of wells the company operated had declined from 11 to seven and the company ended some of its water-buying contracts, presumably from homeowners

with their own wells, Gehring claimed. The resulting decline in output created the shortage that required the water

hauling, he insisted. He also claimed the repetition of exactly the same well production numbers from one annual report to another suggested the results might have been copied from one year to the next instead of recorded

from meters.

The water committee has worked with Brooke Utilities and

helped sponsor a series of meetings, which were supposed to have focused on the costs of obtaining Blue Ridge water, but which have been dominated by residents’ anger about water hauling charges and disconnections. Gehring’s complaint blasted both Hardcastle and the water committee. He dismissed the committee as “a hand full of mindless ‘sheepeople’” and said, “Hardcastle is the Preacher and the (water committee) are his blind faith parishioners and missionaries selling Hardcastle’s religion to people who don’t care to worship or contribute to his

Church of the Holy Water Dollar.”


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