Payson Pipeline Hookup Allowed For Mesa Del Caballo

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Despite numerous protests from Payson Water Company customers about a proposed jump in water rates, the Arizona Corporation Commission (ACC) board gave its blessing to the Payson Water Company to hook up Mesa del Caballo customers to the Town of Payson water system on Oct. 25.

The ruling likely means an end to the water hauling charges that each summer have raised average water bills by 100 to 500 percent in Mesa del Caballo. But it starts a process that could double or triple bills year-round.

The ACC order said, “it is therefore ordered that Payson Water Co., Inc. is hereby authorized to borrow up to $275,000 from WIFA (Water Infrastructure Finance Authority) ... for the purpose of financing the construction of a new water transmission line to connect its Mesa del Caballo system to the Town of Payson’s water system.”

Documents on file with the Corporation Commission make it clear that the Mesa del customers will have to cover the full cost of hooking up to the Blue Ridge pipeline, starting with a $7.55 month surcharge this spring. Other Payson Water Company customers won’t pay any part of that cost. However, in a separate action, Payson Water Company has asked for a roughly 118 percent increase in water rates for all the communities it serves.

This decision last week marks the first step in the process of connecting Mesa del customers to the C.C. Cragin/Blue Ridge pipeline. Officials from the Town of Payson and Payson Water Company estimate the pipeline to connect Rim Country to the Cragin/Blue Ridge reservoir water will be completed by 2016.

That fact concerns numerous Payson Water Company customers who have filed complaints with the ACC. Most complaints accuse the Payson Water Company of making other communities help pay the $1.2 million cost of Mesa del’s connection to Payson’s Blue Ridge pipeline.

“The two cases pending .... should be dismissed as unlawful ... I am in possession of evidence that proves an agreement was entered into last December (2012) to tie into the Town of Payson’s new water treatment facility currently under construction for access to Cragin Reservoir water,” wrote Kathleen M. Reidhead in her complaint. “If Payson Water Company (PWC) wanted to pursue this expensive proposal, they should have held public meetings and properly advised the rate payers of the eight small communities that will be affected, allowing for full public disclosure and discussion of possible alternate solutions, cost/benefit analysis, etc.”

However, documents filed with the ACC indicate that Mesa del water users will have to cover the cost of the pipeline hookup themselves. Many customers found themselves confused because the water company has filed two different rate increase requests, one to cover the cost of connecting Mesa del to the Blue Ridge pipeline and another to raise the rates for the whole system.

This first proposed rate increase to go before the Corporation Commission centers on solving the immediate problem Mesa del water customers have with water hauling charges each summer.

The second, separate request for a rate increase would affect all the communities served by the Payson Water Company. PWC will have a rate hearing for all its Rim Country customers with the ACC in January.

From the filings, it appears that Mesa del Caballo residents will not only face a near doubling of rates to hook up to the pipeline, but also the same 118 percent base rate increase everyone else faces.

This first, Oct. 25 decision, affects only Mesa del customers. Mesa del residents made the decision to connect to the Cragin pipeline in 2011.

Former Payson Water Com­pany owner Robert Hardcastle met with residents of Mesa del in the summer of 2011 to explain their options for a secure source of water.

“We have been talking about three projects,” said Hardcastle to Mesa del residents at a meeting on Aug. 25, 2011. “We have been talking about the pipeline, deep-water wells and we’ve been talking about Cragin water. The pipeline is different from the other two in that it is a repetitive annual project. It is not a project we build and start taking water from and we just pay for it over time. (The contract) happens year after year.”

Hardcastle had paid for a 2009 report on water supply alter­natives for the Mesa del Caballo system, a 2010 audio-frequency magnetotelluric survey performed by Zonge Engineering and Research Organization, Inc. and a 2010 report by Southwest Groundwater Consultants. All of those reports were filed with the ACC by Jason Williamson, who bought the water company from Hardcastle.

Those reports show that Mesa del sits on a shelf of granite. Wells could hit water at 1,200 to 1,600 feet down. But such a well would cost an estimated $862,000, with no guarantee the well would produce enough water to fulfill the community’s needs. By contrast, hooking up to the Blue Ridge pipeline would provide 75 acre-feet annually and guarantee an ample water supply for $1.2 million.

By Labor Day of 2011, enough Mesa del residents had signed off on the Cragin pipeline solution that Hardcastle and PWC committed to working on that solution to solve Mesa del’s water woes.

In spite of the concerns of customers like Reidhead, the Oct. 25, 2013 decision from the ACC board simply addresses the first phase of Mesa del connecting to the Cragin/Blue Ridge pipeline.

The Corporation Commission acted on the recommendation of Administrative Law Judge Dwight D. Nodes, who warned that approving the $275,000 needed to run a water line from Mesa del to Payson’s existing system would essentially commit the community to the full cost of connecting to the pipeline.

Williamson explained that the 364 Mesa del customers will not see an increase to their bills until the spring. “Mesa del customers will see a surcharge on their bill starting early next year that will offset the costs of servicing the WIFA debt. The estimated monthly surcharge is $7.44, and this will not impact any other Payson Water Company customers,” he wrote in an e-mail.

The ACC said in its decision that Payson Water Company already has approval from federal WIFA for a long-term, low-interest-rate loan to cover the full $1.2 million cost of connecting to the pipeline, which includes the first $275,000 project.

If all goes as planned, Mesa del customers should have a base rate of $23.44 plus an additional per-gallon charge for the water they use.

Next, the Corporation Commis­sion will consider Williamson’s request for a 118 percent increase in the base rate for all the communities served by Payson Water Company, including Mesa del Caballo, East Verde Estates, Whispering Pines and others.

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