New Mexico Water hopes proposed increased fees will help expansion

RIO COMMUNITIES — Growth pays for growth.

That’s the approach a private wastewater company is taking to handle the cost of expanding capacity at one of its local wastewater treatment plants in order to meet the demand for more than 200 new connections.

Since New Mexico Water Service Company acquired the systems that provide sewer services to the city of Rio Communities and several other subdivisions in Valencia County in 2002, it has implemented regular rate increases, NMWSC general manager Cynthia Apodaca said, but hasn’t increased fees for new sewer connections.

“Some years, we’ve had no new connections. Other years, we might get five, sometimes 80. It’s very sporadic,” Apodaca said. “We can’t make the investment prospectively, so when we need to accommodate growth, developers have to pay for the cost of that.”

In early May, the company filed a request with the New Mexico Public Regulations Commission to increase its one-time fees for new sewer connections after getting requests for 240 new connections to its Rio del Oro plant, south of the University of New Mexico-Valencia campus in Tomé.

NMWSC operates two wastewater treatment plants in Valencia County — the Rio del Oro plant and a second plant in the city of Rio Communities. The RC plant has about 1,250 customers within the city and in the Rio Grande Industrial Park south of the city, while the RDO plant serves about 1,550 customers in communities such as Eastland Hills, Las Maravillas, Pasitos, Manzano Vista and Cypress Gardens.

Increasing the capacity of the Rio del Oro plant for the new connections will cost about $2.8 million, said Dale Tafoya, NM Water superintendent. The work is planned to happen later this summer and should take about a day.

Apodaca pointed out the company won’t turn a profit from the increased connection fees.

“It’s strictly a cost recovery mechanism,” she said. “We’re going to spend $2.8 million and we’re going to collect $2.8 million. The cost causers need to pick up the cost for expansion, not the existing customers. It shouldn’t be a burden to existing customers. Growth pays for growth.”

The proposed increases will take a 5/8 inch residential connection from $866 to $11,688, a 1,250 percent increase. Sewer connections for the company are provided in a range of sizes, up to 8 inches, with the largest size proposed to increase from $70,880 to $935,040.

New connection costs haven’t increased in the last two-plus decades because there haven’t been a significant number of new connections requested, said Tafoya.

“There’s no point in overbuilding infrastructure then telling your customers, ‘You have to pay for it, but we don’t really need it,’” he said. “What we’ve done over the years is tried to gradually do modest rate increases to avoid ‘rate shock.’ We’ve been really, really successful, and now we’re at the point that we need to expand capacity if we’re going to accommodate the new houses we’re seeing.”

NMWSC operates a consolidated service district, meaning wastewater customers pay the same service rates whether they are connected to the Rio del Oro treatment plant or the Rio Communities plant. Those rates are what cover the day-to-day operation and maintenance costs of the plants, Apodaca said, but major system upgrades, especially when they are tied to demand for new connections, are put on all new customers across the service district.

If new connection fees aren’t paid directly by developers, she said the other scenario is to pass the cost onto existing customers and spread the expense out through increased rates.

Tafoya said the idea of separating the new connection fees by community had been considered, but it’s something that would most likely be temporary.

“It sounds great, but ... the plant in Rio Communities needs its own upgrade soon. We have a study underway right now,” he said.

To offset costs of plant upgrades, Apodaca said the company is looking into grants and low-cost loans. They are also meeting with Rio Communities City Manager Martin Moore on a weekly basis to keep the city up to speed on the projects and hear its concerns.

“We understand the city’s concern, but we have to protect our existing customers, for sure,” she said. “We have encouraged the city to get involved in the (PRC) case.”

At a special city council meeting on May 5, the Rio Communities city councilors voted unanimously to petition the PRC to let the city become an intervenor in the case.

While NMWSC waits for the PRC to hear its application, it has filed a motion for interim relief so it can charge the new connection fees now. The interim rates would be subject to a refund if the commission doesn’t approve the full amount of the new fees or construction costs for the RDO plant improvements come in less than estimated, Apodaca said.

“There are negotiations that happen during the request process with the PRC, so a different fee could potentially be approved,” she said. “We need to remember, the more we lower that fee, the more we have to add to rates, which is what we’re trying not to do.”

A hearing examiner has been assigned to the case, Apodaca said, and they will issue a procedural order which will spell out details such as hearing dates and notification to rate payers. As of Monday, June 2, that order has not been issued.