Mayes vows to make private water companies more accountable
The plan is too expensive and will increase rates, said her political opponent
by Kathleen Stinson

NEW RIVER – Arizona Corporation Commissioner Kris Mayes has a plan to make privately owned water companies more accountable–before they develop substantial problems and leave customers high and dry. 

Rick Fowlkes, one of her opponents in the upcoming November election, says Mayes’ plan is too costly and will end up causing water rate hikes.

Mayes thinks the commission should require private water companies to undergo an infrastructure and financial audit every five years. As the law stands now, the commission can only conduct a review and audit when those water providers request approval to increase their rates.

A number of privately owned water companies in Arizona are so‑called mom‑and‑pop businesses, many of which never anticipated or planned for 21st Century growth.                      

“This is so we don’t have to wait until we get calls from the customers that there is a problem; at that point it is almost too late,” Mayes said.

Mayes’ comments, made early last week during a public meeting in New River, come as the commission is considering slapping Desert HillsWater Co. with up to $500,000 in fines. An Arizona law judge earlier this month recommended the fines after concluding the water company violated state laws, utility regulations and public service obligations in failing to provide adequate water service to more than 200 of its customers.

Mayes said she hopes stepping up the commission’s oversight will help it police troubled water companies before they start to fail. “We’re seeing a lot of small (private) companies smack dab in the middle of explosive growth,” she observed.

Requiring water companies to submit to periodic audits “could prevent a future Desert Hills (Water Co.) from happening,” Mayes said.

Mark Manoil, another of  five candidates vying for two commission seats, also thinks a periodic review would be costly to water companies and customers. But he says he supports some type of “fast‑track” hearing process for distressed water companies that experience problems as a result of mismanagement.

Another way to assist troubled water companies, Mayes suggested, is for the corporation commission to conduct a statewide survey of private water companies to determine which ones are the most likely candidates for consolidation.

Some distressed companies are in such bad shape that they have a “zero rate‑base level and their goodwill is even worse,” she said. Mayes points out that some small providers fall into disrepair to the extent that their book value is so low, no one wants to purchase them.

According to Mayes, the commission can provide an incentive for purchasers to buy these companies. By setting the purchase price at a higher level, the commission can raise the rate‑base level, making the company more attractive to buyers, she said.

Fowlkes advocates expanding and overlapping the boundaries of these water companies in order to create a competitive market. The result, he says, would be better customer service and lower rates.

This year the commission came to the aid of the McLain water company in Hereford, Ariz., Mayes related. It was “such a disaster,” she said, the only choice was to create a positive value for the company. McLain is in the process of selling the utility to Algonquin Water Co.

Out of the 350 privately owned water companies in Arizona, about 10 to 20 are distressed and on the verge of serious problems, according to Mayes. The objective of the commission is to find buyers that will provide “safe and reliable service to the customers,” she said.

Mayes plans to submit her plan to fellow commissioners in the next few months.

If they adopt her audit plan, the commission may have to ask the state for additional personnel in order to implement it. The commission already has a “significant workload,”

Mayes admits. Commission candidate Gary Pierce told The Desert Advocate he would “insist that regulatory agencies, including the commission, ensure that consumers are delivered a reliable, consistent water supply without interruption.”

Candidate Richard Boyer did not respond to a call seeking comment.

Reach the reporter at kathleen@thedesertadvocate.com.