Brooke Denies Fraud Charges

Water company insists state corporation commission dismiss ‘absurd’ claims


Claims that Brooke Utilities inflated water hauling charges this summer in Mesa del Caballo are “absurd allegations” lodged with the corporation commission by a customer “with a long history of irrational and libelous complaints,” according to a response from the company filed with the Arizona Corporation Commission (ACC).

Stephen Gehring, a local store owner, claimed in his complaint that the company charged the 400 homeowners in the unincorporated subdivision more than twice as much as it should have to cover the extra costs of buying water from Payson and hauling it to the community in water trucks.

The water company’s response called on the corporation commission to immediately dismiss the complaint, which had “defamed and libeled” company officials.

ACC spokesperson Rebecca Wilder confirmed that the commission staff is investigating several complaints against the utility, but declined to discuss the merits of those complaints or guess at when the commission would act.

Gehring staunchly defended his figures and his complaint.

Moreover, he said a group of homeowners last week launched an effort to form a water improvement district, partly to make sure that the homeowners retained control over rights to about 70 acre-feet in Payson’s Blue Ridge pipeline that could end water shortages in the struggling community.

He said a preliminary survey of about 100 homes had revealed “overwhelming” support for the formation of a water improvement district and said he thought a group of homeowners would start to circulate petitions soon. Backers must get the approval of 51 percent of the property owners to form the district, which would then gain the power to seek voter approval of a property tax.

However, Brooke Utilities “vehemently” denied the accusations and insisted that the company had fully complied with corporation commission rules, which limit charges for the water hauling to the amount necessary to cover the direct costs of the operation.

“This complaint has no merit and should be dismissed. The company will allow the complainant to apologize to the company and dismiss the subject complaint or, otherwise, the company will direct its legal resources to seek all legal remedies available to it against the complainant and the parties connected with publishing the newspaper story of Aug. 26.”

That was apparently a reference to a front-page story in the Roundup detailing the information in Gehring’s complaint.

The company’s response continued with the statement that if Gehring refuses to withdraw the complaint, “the company will not participate in any further proceedings. The commission is not the proper forum for Mr. Gehring’s baseless complaints, which represents an abuse of the administrative process that drains time and resources, not only of the company but of the commission as well.”

Brooke Utilities officials did not return phone calls seeking comment on the complaint.

Gehring’s detailed complaint filed with corporation commission alleged that the company imposed the water hauling charge on all the water it sold during several months of the summer, not on just the water it bought from Payson at a water main near The Home Depot.

Gehring’s complaint also attacked a community group formed to work with Brooke Utilities to secure water from the Blue Ridge pipeline and to end the water shortages that have resulted in expensive water hauling for the past several summers.

Last year, the company sought and received clearance from the corporation commission to impose the water hauling charges because the company’s network of wells couldn’t keep the water storage tanks full and keep up with demand in the peak summer months. The company has an ACC-regulated monopoly on selling water in the subdivision — and many other communities along the East Verde River.

Gehring’s complaint comes in the shadow of the company’s effort to determine what residents want to do to increase the water supply. Brooke Utilities President Robert Hardcastle has hosted a series of sometimes-stormy meetings in the subdivision to lay out the options.

He said the company could obtain rights to water from the Blue Ridge pipeline for roughly $1 million, which would result in an average increase in water bills of about 130 percent but provide a stable, long-term, assured water supply.

The company could also spend about $862,000 to drill two new wells, although it would have no guarantee those wells would tap into a sustainable supply of water sufficient to end the shortages.

Finally, the company could strike a deal with Payson to buy water every summer through a temporary pipeline the Forest Service would have to approve anew every summer. Such a temporary pipeline might cost less than Blue Ridge, but would leave the community at the mercy of Payson, which would have no legal obligation to sell Mesa del the water.

Gehring said the people who want to start a water improvement district hope that the district could initially negotiate with the Salt River Project to gain control of water rights to the Blue Ridge pipeline, even if Brooke Utilities continued to operate as the water provider.

In addition, Gehring said that a public water improvement district might have an easier time landing federal grants and loans to cover the cost of connecting the community to Blue Ridge than could a private company like Brooke Utilities.

Several other communities have also grappled with complicated water rights raised by the allocation of some of the 500 acre-feet reserved for northern Gila County communities besides Payson — which will receive 3,000 acre-feet annually through its $34 million pipeline.

For instance, residents in Whispering Pines last year formed a water improvement district with the same idea in mind. Residents there want to take Blue Ridge water from the creek and filter it for home use and some worry about letting Brooke Utilities negotiate for the water right without the involvement of the homeowners.

The town of Star Valley, meanwhile, has opened negotiations with Brooke Utilities to buy a 300-customer water company Brooke operates there, in part driven by a desire to ensure the town winds up with the water rights rather than a private company.

Brooke Utilities also served homeowners in Pine and Strawberry, until they formed a water improvement district and bought out the company. The water district then moved quickly to secure additional wells, which ended a building moratorium and costly summer water hauling charges. However, Pine and Strawberry sit uphill from the proposed Blue Ridge pipeline, which means it would be prohibitively expensive for that community to buy into the Blue Ridge water.

SRP officials participated with Brooke Utilities in the recent community forums on connecting to the Blue Ridge pipeline. Those officials have long said that they want to sign agreements with established water providers like Brooke, which have a way to pay the cost of hooking up to the pipeline.

SRP has spent about $15 million upgrading an existing pipeline atop the Rim and Payson estimates it will cost $34 million to build a 15-mile-long pipeline along Houston Mesa Road from Washington Park to Mesa del.

The $1 million cost of providing 70 acre-feet annually to Mesa del stems from the proportionate share of both SRP’s pipeline on top and Payson’s proposed pipeline.


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