Rate hike approved for Tacna Water
Tacna residents will now be paying a base rate of $28 month to the local water company as managers and state regulators try to straighten out the badly tangled knot that is the Tacna Water Management Company.
The Arizona Corporation Commission unanimously approved the rate hike on Tuesday, a key step toward helping right the small, private utility that its new manager calls “insolvent” and “broken.” The commission also OK'd raising the commercial rate to $100 and adding new deposit fees and late charges. The previous base rate for all residential and commercial customers was $7.
Commission Chairman Bob Stump said a recommended order and opinion penned by ACC administrative law judge Belinda Martin “is probably the most nightmarish (order and opinion) I've read in my four years here. I mean, it's like something out of ‘Mad Max,' frankly.”
Tacna Water's facilities are in need of major repairs. The owner's debts to suppliers, creditors and tax authorities piled up over several years, and customers routinely did not pay their bills. The facilities have also drawn the attention of the Arizona Department of Environmental Quality over arsenic levels and reporting violations.
Stump asked ACC utilities director Steven Olea if it's in the public interest to even allow the company to provide water in the area.
Olea said it's hard getting qualified operators at the water companies in this part of the state. In rural southwestern Arizona, many water companies were created to further land development, not to be in the utilities business, he said.
Given Tacna Water's woes, the new rates are probably not even high enough, Olea added.
About a year ago, ACC staff filed a complaint against Tacna Water, concerned that the inadequate management would lead to the company's failure, and ordered an interim manager be put in place.
That's where Nancy Miller came in. Miller, of Yuma's Sunstate Environmental Services, had been Tacna Water's billing and operations partner for many years. She promptly filed a request for an expedited emergency rate increase.
At the ACC's Tuesday meeting, she said that in February, when she stepped in, customers owed $14,000 in past due payments. By the end of May, the deficit had closed to about $3,000. She said customers started coming forward once she came on board and she's developed relationships with them.
Debt still plagues the company. Although Miller said she has paid many bills and delinquent taxes, Tacna Water still owes various parties about $263,000. That includes what it owes on its 2005 loan from the Water Infrastructure Finance Authority of Arizona, or WIFA, for upgrades to meet federal arsenic standards. Repairs to the neglected system will cost an additional $250,000.
Monthly expenses are about $3,900, not including the WIFA payment of $1,782. But with its previous $7 base rates, the company only generated about $2,500 to $3,500 in income.
That Tacna Water is also facing enforcement action from the ADEQ – which has ordered the utility to bring the water to standard within the year – made Miller deem a daunting task impossible. Her voice cracked when she said she didn't know how she could make it happen, and if she could continue as the interim manager.
Olea suggested that all agencies involved – the corporation commission, ADEQ and WIFA – would work with Miller as she makes an effort to rehabilitate the company.
Commissioner Gary Pierce suggested tacking an additional $6 surcharge to the higher rate to help pay off the WIFA loan (monthly bills already included a $6.78 fee toward the loan). Miller said they were already going from a $7 residential base to $28, plus usage.
“It's taken years for it to get this bad,” she said. “It's going to take years for it to get better, unless somebody drops money out of the sky or somebody takes it over.”
Pierce said he realized that Tacna residents may be low-income, but water is a necessity.
“What's their option if the company can't provide? They're going to pay the freight. At some point they're going to. So we can keep nickeling this and diming this or we can decide that we're going to make sure they pay their bills and that everybody survives this,” he said. “If I were a customer on that line and I understood all the facts around it, I'd make sure my water company stayed operating.”
The commission approved the rate case as originally presented, with the $28 and $100 bases. The rates also include a new deposit fee of $75 and late fees of $5 for residential customers and 10 percent for commercial customers. The WIFA loan surcharge stayed at $6.78. The new rates go into effect July 1.
Hillary Davis can be reached at email@example.com or 539-6857. Find her on Facebook at Facebook.com/YSHillaryDavis or on Twitter at @YSHillaryDavis.