As Crises Grow for Rural AZ's Small Water Companies, Corporation Commission Pushes Emergency Aid
Ryan Randazzo, The Republic | azcentral.com 5:01 a.m. MST June 25, 2016
Arizona utility regulators took the first steps Friday toward making it easier to help small water companies facing a crisis, including appointing new company leadership if needed.
The Arizona Corporation Commission regulates 256 water companies in the state, and 18 of them have faced emergencies in the past decade. Five of them have run into supply crises so far this year, including from arsenic and uranium contamination, and one event where taps went dry for nearly a week for about 28 residents.
Most of the small water companies serve rural areas. Large municipalities such as the city of Phoenix run their own water operations and are not served by small water companies, but communities such as Tacna, Anthem and Sanders often rely on small water operations.
The five elected commissioners on Friday began passing resolutions designed to help keep customers' taps flowing in such emergencies, though their work on the subject will continue at another meeting Sept. 8.
Chairman Doug Little called it a "historic day," as the commission has grappled with small-water-company troubles for about 18 years.
Commissioner Andy Tobin submitted proposals on behalf of a state working group. The group includes about 50 water companies, and the proposals would allow faster rate hikes, interim managers to take over in emergencies and grants for needed repairs, among other ideas.
After several amendments, the commissioners voted 5-0 in favor of proposals from Tobin and Little.
'This is a historic reform here'
A group called the Water Utilities Association of Arizona representing about 50 water companies also filed policy suggestions. The group's representative, Paul Walker, said the reforms are intended to give the companies stability.
Following the Friday vote, Walker said the changes would alter the industry in Arizona, attract investment to the state, and serve as a national model for utility regulation.
"This is a historic reform here," Walker said. "This will lead to significant decreases in rate-case expenses. I just wanted to say on behalf of the industry, you all are to be incredibly commended for what you have achieved."
The problems for small water companies are expected to get worse, especially if Arizona's allotment of Colorado River water is reduced in the next few years as anticipated.
The commissioners first discussed the emergency measures in May, but put off a decision until this month's meeting.
'We have people who are out of water'
Little decided to put off the vote until this month's meeting, which drew a strong rebuke from Tobin, who has frequently complained about procedures at the commission since being appointed to a vacant seat by Gov. Doug Ducey.
"This isn't rocket science," Tobin said last month. "We have people who are out of water."
The commissioners also heard last month from Doug Dunham, representing the Arizona Department of Water Resources.
Arizona's then-Gov. Jane Hull declared a drought in the state in 1999, which was reissued by then-Gov. Jan Brewer, meaning the state's drought is 17 years old, Dunham said. He said the state is not facing "an immediate crisis," but that demand is predicted to outpace water supply in the next 25 years.
He said the only solution would be a major water-importation project, likely from ocean desalinization, and likely from Mexico, not California.
If the water level in Lake Mead continues to drop, Arizona's allocation of water from the Colorado River will be reduced in the next two years, he said. But conservation efforts today can mitigate how that affects the state.