The Spirit of Pine Valley

A Unique Community Living with Nature

Pine Valley Water Company Request for Increase

A letter from Hillary Hirche

Dear Friends and Neighbors in Pine Valley,

By now I hope through various means (a letter you should have received from Pine Valley Water Company, or a notice that I posted on one of our local websites, or just through conversations with your neighbors) you are all aware of the proposed rate increase request to the Arizona Corporation Commission.

As a concerned neighbor and PVPOA President I feel it’s important to get the facts on the table and provide phone numbers and other contact info so you can make your comments known to the ACC. An email went out to the PVPOA members, as those are the email addresses that we have, as well as posted to this Pine Valley website and also the NextDoor website for our community:

If you have friends or neighbors who are not association members, please pass the email on to them or direct them to this website or  for even more info (Pine Valley Next Door does require you sign up). Because it’s hard to put as much detail in an email as some of you might wish, these websites will have additional charts, graphs and other information generously provided by one of our home owners.

Ways to Comment

Docket# W-02181A-15-0216
Phone number 602-542-4251 or 800-345-5819
Online form
Write a letter
: AZ Corporation Commission

1200 W. Washington
Phoenix, AZ 85007-2996

The deadline for public comment would normally be tomorrow (Tuesday, July 21, 2015), (or might have been earlier depending on what date the ACC actually used). However since the original request has been rejected by the ACC auditor due to a number of errors and insufficient info, it has been extended for at least another 7-10 days, but please don’t wait to get those comments in. The docket number is required to make any comments, if you call (which is a great way to comment) just ask for the utility department and then give them the docket number.


  • INSUFFICIENT NOTIFICATION:  The PVWC request to ACC was filed on 6/26, and states that customers were notified on either 6/23/15 or 6/26/15 (depending on the page referenced).  This is important as ACC provides a 15 day window for comment.   Some, but not all customers were notified on or about July 7 with their monthly billing.  The application states that notice was posted on the community bulletin board at the entrance to the subdivision.  On July 4 and July 18, this notice was absent.  A notice was posted by a customer on July 19.   (NOTE: ACC’s 7/15/15 “Letter of Insufficiency” to PVWC effectively delays a decision until after July 30, so comments should still be submitted).  
  • OVER-DEPENDENCE BASE RATE INCREASE:  The rate proposal includes substantial base rate increases and a reduction in water use charges.   PVWC asserts that the base rate increase is necessary to equalize revenue flow throughout the year since water use revenues fluctuate seasonally.   If a water utility maintains adequate reserves for normal and unexpected expenditures, seasonal revenue fluctuations (encountered by most AZ water utilities) are usually not material to a rate increase.
  • PENALTY FOR HOMES WITH FIRE SPRINKLERS:  Following the 2006 La Barranca Fire, Sedona Fire District mandated fire sprinklers in newly built homes.   These sprinklers require a 1” meter.   The PVWC proposal triples the base rate for 1” meters from $24.80 to $75 per month, regardless of water use.   PVWC provides no rational argument for this increase.
  • PENALTY TO LOW WATER USING CUSTOMERS:  The proposed rate structure places a much greater burden on the lowest water using customers.  Based on information derived from the PVWC application, billings of less than 5,000 gallons per month in 2014 represented 19% of water use and contributed 31% to revenues.  Under proposal, these same customers will contribute 42% (an additional 11%) to revenues.  The customer group using 81% of the water will see their responsibility for revenues decrease buy a like amount from 69% to 58%.
  • INCENTIVE FOR HIGHER WATER CONSUMPTION:  PVWC proposes to reduce per-unit water use rates.  The greatest reduction is in the highest tier (from $5.98/1,000 gallons to $3.99/1,000 gallons).  This effectively encourages more proliferate water use, which is a risky strategy  given PVWC’s is dependence on a single water source.

In addition to the above facts, there is no mention from PVWC about the 30 residents that got together and gave the company $1,000 each to get the arsenic problem fixed, these residents were being “paid back” by having this up front payment deducted from their water bill, and depending on how this was accounted for could be the SOLE reason for the “loss” reported by PVWC. The “parent” company of PVWC is LEI (Lance Enterprises INC) which leases the tanks to PVWC at $1,000 per month and provides general system operation at $5,000 per month. There are other bills between LEI and PVWC that lack the normal specifics of an invoice which are not included in the application but certainly would have a bearing on the balance sheet of PVWC.

With regards to water loss, in 2014, PVWC has disclosed in their public records that they have water loss rate of 1.5 million gallons (about 11% of the water pumped) typically this number would be  5-8% of the pumped water for a company their size.  The “loss” rate would be effected by older equipment leaking, as well as water bills not being paid or charged (PVWC reported that the owners don’t pay a bill for their water usage as an example).  This loss rate of course also effects the balance sheet of PVWC and would contribute to any company profit or loss.

This is also a good time to ask the ACC to include in ANY rate increase a stipulation that PVWC has some reserves to fix equipment or guard against any future problems. The $30,000 given to PVWC to fix the more than decade old arsenic problem was something that should never have happened and should never be repeated. The ACC can compel PVWC to keep a reasonable amount of cash in reserve to handle any future issues.

Finally, however you choose to comment, please do so, this is our chance to let the ACC know how we feel about the rate increase, and in order to have the most impact, it’s best to present them with facts. Just saying I don’t want my bill to go up doesn’t help much, instead try to stick to comments like:

  • The rate increase is unreasonable as it will double, and in many cases triple users bills.
  • The rate increase is unreasonable because the rate structure penalizes low water users and doesn’t promote conservation with higher rates for high water users.
  • The rate increase is unreasonable because the “loss” sustained in the documents is effected by water users being “paid back” for upfront payments to fix the arsenic non-compliance issue.
  • The rate increase is unreasonable because the water loss rate is too high for a water company of this size and effected by the owners usage (since they don’t pay for their own water use and have a pool.)
  • The rate increase is unreasonable because the water loss rate is too high for a water company of this size and effected by older equipment that should be on a repair schedule.
  • The rate increase is unreasonable because sufficient reserves should be maintained by the water company to handle seasonal fluctuation.
  • Lastly, if an increase is granted a reserve fund MUST be required.

I hope this info is helpful, and I apologize for the length of this email, additional charts, graphs and more will be available on the two PV websites mentioned above by the end of today.

Thank you
Hillary Hirche

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