Mesa del Caballo residents face at least two more months of legally approved water hauling fees that can increase their bills by as much as five-fold, even though production reports on file with the Arizona Corporation Commission (ACC) show the wells annually can produce enough water to cover the needs of the unincorporated subdivison with about 400 homes.
So why the water hauling?
The question acquired new urgency with word that the water company will seek a rate increase not only for Mesa del Caballo, but for other communities it serves — including East Verde Estates, Whispering Pines and others. The company also wants permission to start charging water hauling fees in East Verde Estates.
The rate hearing is scheduled for Dec. 9, 2013 at 10 a.m. at the Commission’s offices, 1200 W. Washington St., Hearing Room 2, Phoenix.
Brooke Utilities initiated the request for a rate increase and the new owners, JW Holdings, will pursue the increase, which was assumed in the purchase agreement with Brooke.
Fortunately for Mesa del residents, Payson will install a water line to the edge of the subdivision this year in preparation for the arrival of the Blue Ridge pipeline in 2014 or 2015. That line will probably eliminate the need for water hauling next summer. Once the pipeline arrives, the community can receive Blue Ridge water — although it will result in a hefty increase in average, year-round bills.
Still, Mesa del’s confusing, costly, confrontation about water-hauling charges reveals the unexpected complexity of keeping a small water system running — and the details of the relationship between the water company and the regulators at the ACC, which effectively grants private water companies a public monopoly.
Mesa del residents have filed claims with the ACC on the grounds that the well production reports show the community produces enough water — without hauling a drop
However, water officials, including an engineer from the ACC, say the spikes in well production combined with heavy summertime water use complicate the issue.
In its decision to allow augmentation fees for the trucked-in water, the ACC said the Payson Water Company (aka Brooke Utilities run by Robert Hardcastle) assured the Commission it was researching how to improve water production, either by drilling a deep well or tapping into Payson’s C.C. Cragin Reservoir pipeline.
However, the sale of the Payson Water Company to JW Water Holdings has added a new layer of uncertainty, while residents continue to pay and pay and pay.
The water shortage has killed off landscaping, forced some families to leave and even triggered foreclosures on properties.
So, how did it get so bad?
It all started in 2009 when the Mesa del Caballo water system shut down when storage tanks ran dry, emptied by a demand for water that exceeded the rate at which the wells could refill the tanks.
Payson Water Company (PWC), started trucking water from anywhere it could, even from as far away as Gisela, said water officials.
That first year, Hardcastle spent almost $60,000 hauling water, according to Arizona Corporation Commission (ACC) hearing records. In its Decision No. 71902, the ACC wrote, “in its application for the emergency implementation of a water augmentation surcharge, the Company alleged that it could no longer afford to pay for bulk water purchases and water hauling for its MDC System ...”
Water officials say the ACC not only must protect customers from companies that overcharge, but also monitor business decisions to make sure companies can continue to provide services.
Therefore, given the thin margins his company ran on in Mesa del, a $60,000 outlay put PWC in danger of going belly up — one of the reasons the ACC allowed for the augmentation fees.
The ACC also analyzed the production of the Mesa del wells. The ACC decision quoted engineer Marlin Scott’s estimate that the Mesa del water system’s 105,000-gallon storage capacity and poor water production could not adequately serve 305 connections (as of 2013, that number has increased to 377).
Scott testified that the Mesa del wells produce between 19 and 59 gallons a minute. If the operator pumps the wells at full capacity for an extended period of time, the output can drop sharply until the underground water table recharges.
“However, even when the wells are producing at maximum capacity, there is insufficient water available for the customers during the peak summer months and that is what causes the Company to have to haul water ...” stated Scott in Decision No. 71902.
In 2010, Payson Water Company reported to the ACC it had nine Mesa del wells pumping an average of 42.9 gallons-per-minute over a year’s time. In July of 2010, the company reported residents used an average of 32.4 gallons of water per minute.
Those figures made residents question the need to augment the water supply. Mesa del resident Steve Gehring compared usage to well production then added the water trucked in from outside as part of the evidence he submitted with his complaint.
However, water officials say that a holiday weekend can rapidly deplete all stored water.
According to the Environmental Protection Agency, the typical American family uses 300 gallons of water at home per day. That does not include water for landscaping.
If the population of Mesa del doubled during a holiday, the community could use potentially more than 150,000 gallons of water. That would quickly deplete the scant Mesa del storage capacity.
In Decision No. 71902, the ACC labeled the augmentation fees temporary. “It is further ordered that the emergency water augmentation surcharge approved herein shall be interim and subject to refund pending the review by staff of the permanent rate application.”
Arizona Corporation Commission Executive Director Jodi Jerich said the Commission will address the chronic water shortage during a permanent rate application.
“In a permanent rate relief hearing, everything is reviewed,” said Jerich.
She said all the equipment to run the water company, the capacity of the wells and system to provide water and any suggested improvements to the system are systematically analyzed by ACC staff and the Commission to determine the best business practice moving forward.
The Commission may decide drilling a new well, increasing storage capacity or hooking up to the C.C. Cragin pipeline is the best answer. Or the Commission could decide to continue allowing the company to charge augmentation fees for trucked water.
In Decision No. 71902, the ACC ordered Hardcastle to file for permanent rate relief within one year of its emergency augmentation relief.
Hardcastle delayed that filing.