New Mexico Water requests to dismiss application for connection fee increase

RIO COMMUNITIES — A request for sewer connection fees increases by a local utility provider seems to be at an end, but the company is still waiting for a decision from the state on its request to withdraw its application.

In early September, New Mexico Water Service Company asked to withdraw its application to the New Mexico Public Regulations Commission filed in May to increase its sewer connection fees and dismiss the case so it can file a general rate case in the first half of 2026.

To date, the PRC has not made a decision on the company’s request to withdraw.

“The withdrawal of the application and dismissal and filing of a general rate case would facilitate determination of the appropriate rates for all NMWSC sewer customers, existing and new development, including a UCC (Utility Capacity Charge), if any, and allow all issues in this case, and as related to rates and charges for all sewer customers to be determined in a holistic fashion,” the company’s withdrawal request reads.

The company filed its rebuttal testimony in September, said Laura Florez-McCusker, external communications manager for California Water Service, NMWSC’s parent company.

“This demonstrates our efforts to protect existing customers from bearing the expense of new growth, along with a motion to withdraw our application for the increased sewer connection fee,” Florez-McCusker said.

“While our position has not changed — we still believe that new growth should pay for new growth — we have decided to include the choice of how the expense is borne in our next general rate case filing, where all aspects of the impact of growth and expansion can be considered and appropriately allocated.”

By withdrawing its current request and shifting to a general rate case, NMWSC will have time to complete its cost assessment for needed upgrades/expansion on the Rio Communities wastewater treatment plant before going before the PRC.

Those costs would “reflect the true cost of providing safe, reliable wastewater treatment for our customers, served by both the Rio (Communities) and Rio del Oro plants,” she said. “Also, as a result of our filing, we will refund the seven Rio Communities individuals who paid the Rule 19 charge that we collected for the sewer capacity expansion in Rio del Oro.”

In early May, New Mexico Water filed a request with the PRC 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.

The proposed increases would have taken 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 Mexico Water hasn’t increased its sewer connection fees from the $866 since it acquired the former Rio Grande Utilities Corporation in 2002.

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, which NMWSC general manager Cynthia Apodaca said would be recouped through the increased fees.

“It’s strictly a cost recovery mechanism,” Apodaca told the News-Bulletin in June. “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.”

Dale Tafoya, NM Water superintendent, said new connection costs haven’t increased since the 2002 acquisition because there just haven’t been a significant number of new connections requested.

When NMWSC acquired RGUC in 2002, Rio Grande had gotten approval from the PRC for a utility capacity charge-sewer for improvements and upgrades for both sewer plants, estimated at a cost of about $3.15 million over a five-year period.

According to filings in the current rate increase, NMWSC has collected $988,077 in UCC revenues since 2002, but has invested more than $6.8 million in the plants.

The request to revise the connection fees was to serve “imminent new development of 240 residential” users which had requested connections earlier this year.

The company had initially broken down plant improvements into three phases — Phase 1 to address the capacity needs for the Rio del Oro Plant due to the 240 requested new connections; Phase 2 to improve infrastructure for existing customers and Phase 3, to add capacity for an additional 577 customers.

The rate increase NMWSC has asked to withdraw would have only addressed Phase I.

A master plan for the Rio Communities plant is expected to be done by the end of 2025, and once that is complete, along with the projected schedule for design and construction of the Rio del Oro Master plan phases, “NMWSC will have the data and information regarding the necessary capacity for new development and/or improvements for existing customers for both plants, and the associated cost of the necessary investment.”

The company argues any revised rates to address capacity upgrades for the 240 new customers “is better addressed in the context of a general rate case and not in isolation in this case as a stand-alone phase. Rather, any revised UCC should be addressed holistically in the context of the entirety of the upgrades and improvements relating to sewer plant in the Rio district.”

Following withdrawal of this case, NMWSC will file a general rate case within the first half of 2026 to address all issues regarding the appropriate rates for existing customers and new connections within NMWSC’s Rio District as to both the Rio and Rio del Oro plant, the company says in its request to withdraw.

In the interim, NMWSC proposes to charge new sewer connections in the Rio (Communities) District the existing connection fee of $866, and will not charge any additional connection fee for Rio wastewater plant connections, absent an unexpected change in circumstances at the Rio plant.

For new connections to the Rio del Oro plant, if NMWSC proceeds to construct the additional capacity necessary to accommodate the 240 pending new connections, NMWSC will charge the $866 and “the remaining portion of the actual connection cost via Rule 19 special contracts to provide for the actual cost of connections...”

In response to consumer complaints by some intervenors in this case and others concerning the special contract fee in NMWSC’s special contracts, the PRC’s consumer relations division determined “NM Water is authorized to determine the cost” to provide service to new developments, including by charging the special contract fee.

The CRD found no violation by the company for every complaint.