New Mexico Public Regulations Commission denies rate increase for NM Water Service Co.

RIO COMMUNITIES — An attempt by a local water and sewer company to hike rates up by more than 1,200 percent was rejected by the state, but the request can be filed again.

At the March 10 Rio Communities City Council meeting, City Manager Martin Moore told the mayor and councilors New Mexico Water Service Company, which provides water and wastewater services to the city and other parts of Valencia County, had recently filed a request to increase sewer connection fees with the New Mexico Public Regulation Commission.

“The current rates ... around $800 to $900 and they are proposing to go to about $12,000,” Moore said. “This is of great concern for the city. I strongly recommend we communicate with (NMWSC’s corporate parent company California Water Service). This is an extraordinary prohibition to folks coming in to build houses ...”

The rate increase notice of request was filed with the PRC on Jan. 16, with the request that the new rates take effect that same day. The notice was suspended by the commission on Feb. 14 and ultimately rejected without prejudice — meaning NMWSC can file the notice of request again — on March 7.

Cynthia Apodaca, NMWSC general manager, said the company is working on another application to the PRC to update its connection fees for wastewater services for new customers.

“It does take a while to prepare the case, so we probably won’t be filing for another month or maybe even six weeks,” Apodaca said on Monday, March 24.

The commission rejected the application because the new rate was proposed to take effect the date it was filed, the notice did not include direct testimony or supporting exhibits and because NMWSC failed to send a copy of the notice to ratepayers and be published, as per PRC rules.

Connection fees for NMWSC are based on the meter size, which ranges from 5/8 of an inch to 8 inches. The current fee for a 5/8 inch meter is $866, with a proposed increase to $11,688, a 1,250 percent increase. The next size up, 3/4 of an inch, would go from $1,329 to $17,532. The largest meter, 8 inches, is currently subject to a $70,880 connection fee. A proposed 1,219 percent increase would put it at $935,040.

The company’s reasoning for the increases is an anticipated doubling of average daily flows and monthly capacity at the Rio Del Oro Wastewater Treatment Plant by 2030.

According to the letter from NMWSC’s parent company California Water Service, the requested change was for its sewer utility capacity charge, which wouldn’t affect current base rates, charges or fees for existing customers.

A sewer utility capacity charge is a fee paid to support investment in the infrastructure required to serve new customers connecting to the sewer system, according to the company’s filing.

“It reflects the projected demand that each new connection will place on the sewer system and the infrastructure required to provide this service,” according to the letter signed by Greg Shimansky, director, home states rates regulatory affairs, for California Water Service. “NMWSC adopted the existing sewer utility capacity charge in July of 2002.”

Since then, costs of materials for infrastructure maintenance have increased and improvements for future flows are needed, Shimansky wrote.

The letter also notes that instead of notifying all of NMWSC’s customers, the company met with “key active developers” to share the results of an evaluation of the plant done by Water Works Engineers, and discuss the rate changes.

Water Works estimated the plant needs improvements totaling $11.4 million — $2.8 million for existing customers, $2.8 million for committed customers (connections associated with fully executed line extension agreements and additional connections projected in the near future) and $5.8 million in improvements to accommodate projected development through 2030.

The new charges would only apply to new connections and, without the increase, base customers will pay for more of the construction and investment costs of the improvements to the plant, Shimansky wrote.

Proposed increases to wastewater connection fees is of significant importance to Rio Communities residents, Moore said.

“We have a significant portion of town residents with failing septics. What happens when (NMWSC) tries to pull them into the system? That puts them out of the price range,” the manager said. “As the city manager, I recommend, as a mayor and council, this is the time to show mettle in working together. This is very, very important to every one of us who lives here and works here.”

Moore suggested contacting California Water Service for an in-person meeting with the governing body.

Mayor Joshua Ramsell said that in the past year, he and Moore have had discussions about an eventual rate increase by the company.

“We’ve reached out to (the New Mexico Department of Finance Authority) about what options we have, looking for alternate resources to move forward with a public/private partnership,” Ramsell said. “We have talked to the local (NMWSC) management team, but this is coming from the top down.”

Councilor Matthew Marquez asked why the council was just finding out about the rate increase request now, if Ramsell and Moore had discussions earlier this year.

Ramsell said the company had sent letters out with billing statements to customers over the last few years, addressing an increase and its aging infrastructure in a general sense, but nothing was ever notified directly.

“We knew it would go to the PRC, but we don’t control the water company or the PRC,” Ramsell said.

Moore said he found out about the rate notice third hand.

“This is not something we knew about. It should have been out there (publicly), not communicated from corporate to the state level,” he said.

Local realtor Loedi Silva said she has a client wanting a residential sewer hookup who is being asked to sign a contract from NMSWC obligating them to a $14,000 connection fee, even though the new rates were rejected.

“There is a (PRC) complaint process. You can become part of a public hearing, you can testify as landowners in Rio Communities and in their service area,” Silva said. “What they’re trying to do is pay for a plan that isn’t affecting Rio Communities. They are not taking into consideration our in-fill lots.”

While the PRC did reject the request, Silva said the request needed to be kept top of mind.

“They can reapply but we have time to plan,” she said.

Councilor Tom Nelson said rate changes would directly impact new business development, such as the Maverick gas station and RV park.

“Maverick is coming in on a three-inch line and the current fee is $14,000. The new price is $187,000. Connections for some businesses and manufacturing is 8 inches, and that’s almost $1 million,” Nelson said. “This is going to shut down any growth in Rio Communities.”

According to its website, NMWSC provides sewer services to Rio Communities, the Chamesa subdivision, Cypress Gardens, Las Maravillas, Monterey Park, Pasitos del Cielo, Rio Del Oro, the Tome Vista subdivision, University of New Mexico-Valencia campus, as well Desert View Elementary, Valencia Middle School and Valencia High School.