VERNON — Troubled Lord Arizona Water Systems, Inc. won an emergency increase in the rate it charges its customers. A decision by the Arizona Corporation Commission (ACC) on June 27 allows the company to charge an Emergency Water Augmentation Surcharge Tariff of $10.76 per month for every connection for 18 months, on top of the $22.00 monthly fee it has charged its customers since 1991. It also charges $2.48 per 1,000 gallons to a typical household.
Lord Water is broke, insolvent, says the ACC because of recent emergency repairs to its systems of aging wells. The company serves 382 customer connections near Vernon and has been the subject of many customer complaints recently, primarily about low or no water pressure. In fact, in April, The Arizona Department of Environmental Quality served a Notice of Violation on Thomas V. Lord, the company’s owner, for failure to maintain pressure of at lease 20 pounds per square inch as required by regulation.
That wasn’t news to Lord Water’s customers — in a span of 28 days in March and April, the company’s pumps from its three wells broke down four times leaving the customers without water.
The problem according to the company and members of the ACC’s staff, a group of analysts who concern themselves with such things, is a combination of three old wells, the dormancy of a fourth, electrical problems and the low amount of water bought from a neighboring water company leftover after that company takes care of its own customers.
Lord company has three operational wells; two on the north side of Highway 60, and one on the south side. Water from all the wells are pumped out by motors of only 5 or 10 horsepower. The “permanent well casings” are only four to five inches in diameter and cannot accommodate larger pumps, according to the ACC. The company is trying to bring online a fourth well, powered by a 20 horsepower engine, but testing has so far not been successful. Inconsistent electrical power (not the fault of the company) not only hampers the effort, but may actually cause damage to the existing machinery needed to get water to the customers, according to ACC staff.
Utility companies are considered monopolies — not subject to natural economic laws such as supply and demand. Therefore, says the law, they have to be regulated by government agencies like the ACC. A utility must apply for permission to raise its rates through a lengthy “rate case” process and Lord’s rates were set in 1991. In its June decision, the ACC required Lord to bring a rate case before June, 2020, but in the meantime, agreed to the emergency remedy.
The final amount ordered was the result of typical government sausage making. Lord asked for an amount which would bring in $59,961 to pay for a $1,000 biweekly salary and payroll taxes for Thomas Lord, and $27,961 for repair bills owed to Vernon Equipment and Supply, “a well-drilling company that is also owned by Mr. Lord,” wrote the ACC. After an analysis by ACC staff and a site visit, staff identified repair costs of far more than the company asked for — $47,974 to be exact.
Staff recommended the ACC include in its emergency tariff amount $28,000 for Mr. Lord’s salary citing the fact that he is the only company employee who isn’t being paid, bringing the total monthly charge to $16.14 per connection. Newest member of the ACC, Lea Marquez Peterson, proposed a total monthly increase of $8.07. The ACC finally settled on a total of $10.76 monthly: $6.11 for salary and $4.65 for repairs.
The emergency tariff is to last no more than 18 months or until a new rate case is decided, whichever happens first and any repair costs not covered by the emergency tariff will be considered as part of the new rate case.