Rate hike asked for struggling Tacna water firm
Tacna Water Management Company is seeking a base rate increase as it tries to pull itself out of debt and repair infrastructure that have led its new manager to term the small, struggling utility “insolvent” and “broken.”
Nancy Miller of Yuma's Sunstate Environmental Services is the new interim manager of Tacna Water. She's familiar with the utility as Sunstate has been Tacna's billing and operations partner for many years.
In an application to the Arizona Corporation Commission for an emergency rate increase, Miller says the company hasn’t paid invoices for more than three years, is about $200,000 in arrears and needs new meters, meter boxes and other repairs.
She said the well site has not been maintained in years and will need much cleanup to begin repairing broken piping and electrical components, or even to get an idea of how much those repairs will cost.
“Meters are broken, lines are broken, and this company is broken,” wrote Miller in her rate increase application.
Because the company has not paid creditors in so long, many of them will no longer extend the credit for materials and parts. Without the repairs, meter readings are incorrect or nonexistent, which causes customer bills to be inaccurate.
“Tacna Water Company is in such disrepair and mismanagement that it is on the verge of total collapse, if some financial help is not forthcoming,” Miller told the ACC.
Tacna Water is a private utility that serves roughly 240 people in the rural community about 40 miles east of Yuma. The current base rate for all residential and commercial customers is $7 and was set in 2006.
The proposed new base rate is $28 for residential customers on a 5/8-inch meter. Miller also seeks a base rate of $100 for commercial customers, a new deposit fee of $75, and late fees of $5 for residential accounts and 10 percent for commercial customers.
Miller said failed infrastructure, non-paying customers and a declining economy have made it impossible for Tacna Water to keep up its obligations to creditors. She said the monthly income averages $3,328, with more than $14,000 past due. The rate increase would bring the monthly income up to $5,000 to $6,000, allowing for on-site maintenance, the purchase of parts and the payment of normal monthly bills.
Tacna Water has for some time been on the radars of both the ACC and the Arizona Department of Environmental Quality. In January, ADEQ announced that it had issued a compliance order to the company over arsenic levels and reporting violations.
Arsenic is a naturally occurring element that can be potentially hazardous at high levels over an extended period of time. The federal Environmental Protection Agency lowered the maximum allowable amount of arsenic in drinking water from 50 ppb to 10 ppb in 2001 — in other words, no more than 10 molecules of arsenic for every 999,999,990 molecules of water.
Water systems had to be in compliance with the new standard by 2006. In 2005, Tacna Water sought a $195,000 loan to upgrade facilities to meet the cutoff. At around this time, its two wells were showing arsenic levels at about 30 ppb.
Tacna Water planned to quit using the wells and purchase — and treat — surface water from canals run by the Wellton-Mohawk Irrigation & Drainage District in Wellton.
By June 2009 Tacna was buying and treating the surface water, which brought arsenic levels down to the acceptable range. But by January 2011, Tacna stopped buying and treating the Wellton-Mohawk surface water and returned to its old wells.
Samples taken between February 2011 and April 2012 showed arsenic ranging from 16 to 22 ppb.
In July 2012, ACC staff said in a complaint it was “concerned that Tacna's inadequate management will result in the imminent failure of the Company's operations and facilities and leave Tacna's customers without any water service.” That August, the commission issued a decision that included an order that Tacna appoint a new manager.
Miller became that new manager in February.
“I am willing to accept full management of the company and attempt to make it a prospering, viable utility company for the customers,” Miller said in her rate increase request, filed a few days after she took over the company. “But this will be possible only if the ACC is able to assist in raising the rates to allow a more suitable income. We are not asking for funds to pay off all debts, just enough to try to get this company back on its feet.”
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.