AV Water owner ordered to testify before PRC

The state Board of Finance approved up to $85,000 for construction of a pipeline from the Harvest Gold subdivision to the city of Bloomfield's infrastructure

Hannah Grover
Farmington Daily Times
A water tank sits above the Harvest Gold subdivision east of Bloomfield on Sept. 2.
  • The New Mexico Public Regulation Commission will have an open hearing Jan. 4 regarding AV Water Co.
  • The state Board of Finance approved up to $85,000 to connect Harvest Gold to Bloomfield.
  • A request for Community Development Block Grant emergency funds for Harvest Gold has been denied.

FARMINGTON — The New Mexico Public Regulation Commission plans to question AV Water Co. officials at a hearing on Jan. 4 in Santa Fe.

AV Water owns two water systems in San Juan County that were issued boil water advisories in June due to high turbidity levels. The water systems include Morningstar, which serves Crouch Mesa, and Harvest Gold, which serves a subdivision east of Bloomfield. The Harvest Gold system remains on a boil water advisory.

"I just want to ask (AV Water owner Mark Iuppenlatz) every question on the book," said Valerie Espinoza, the PRC chairwoman, when reached by phone after today's PRC Wednesday's meeting in Santa Fe.

AV Water attorney Germaine Chappelle could not be reached for comment today. Wednesday

Espinoza, who requested the public hearing, said she wants to see AV Water's complete financial statements, including cash receipts and disbursements starting June 1.

The order the PRC issued at today's Wednesday's meeting outlines several questions Iuppenlatz should be prepared to address during the hearing and states that other questions may also be asked.

The other questions are:

  • Why did AV Water have a negative cash balance during Thanksgiving week?
  • Since June, has AV Water ever failed to bill customers? If customers have not been billed, how many customers did not receive bills and when did the customers not receive the bills? Iuppenlatz will also be required to answer questions about why customers were not billed.
  • In a previous case before the PRC this year, Fred Whistle, the general manager of AV Water, told commissioners the company had received insurance proceeds for repairing and replacing the Harvest Gold water tank. The commission will ask Iuppenlatz how the proceeds were used and why the tank was not replaced or repaired.
  • What does AV Water's insurance policy cover and what are the policy amounts?
  • What efforts are being made to improve the Morningstar system and to find a buyer for the system?
  • What efforts are being made to improve the Harvest Gold system and end the boil water advisory?
  • Does AV Water have a plan for providing a reliable source of water to the Harvest Gold customers if Blanco Mutual Domestic Water Users Association does not acquire the system?
  • Has AV Water delivered water to Harvest Gold residents?

"A lot of this revolves rather around AV Water’s profess lack of funds," said Michael Smith, counsel for the PRC, during the meeting. An audio recording of the Santa Fe meeting was provided to The Daily Times.

New Mexico Public Regulation Commissioners Lynda Lovejoy, center, and Valerie Espinoza, right, listen to complaints from AV Water Co. customers on Oct. 12 at the San Juan County
Administration Building in Aztec.

The company has told the PRC it cannot comply with commission orders due to financial strains. On Nov. 23, the commission ordered AV Water to deliver potable water to the Harvest Gold subdivision. Residents did not receive water until the first week of December. The PRC also approved fining the company $100,000 for every day after Nov. 23 that customers did not have potable water.

Commissioner Lynda Lovejoy, who represents San Juan County, attended a Tuesday meeting in Bloomfield about water issues. After the meeting, she said the PRC has been frustrated with the AV Water situation and the fact that Harvest Gold residents remain on a boil water advisory.

She praised a state Board of Finance decision Tuesday to approve up to $85,000 of emergency funds to connect Harvest Gold to the Bloomfield water infrastructure. The request was made by the Blanco Mutual Domestic Water Users Association.

Lovejoy said the association, as well as letters of support from various entities, showed the board of finance that "if the funding doesn't go through, the residents in Harvest Gold will continue to suffer."

AV Water employee Joe Moya adds pumice to a filtration system in the Harvest Gold subdivision east of Bloomfield on Sept. 27.

When reached by phone today Wednesday, Lloyd Ayliffe, Blanco's operator, said the Blanco board is concerned about the possibility of delivering water to Harvest Gold without being able to bill customers. Blanco is concerned if it does not acquire Harvest Gold, AV Water will not pay it for water delivery from the city of Bloomfield.

Espinoza said if Blanco takes over the Harvest Gold system, the PRC would ensure fines levied against AV Water do not transfer to Blanco.

Blanco was also seeking Community Development Block Grant emergency funds for a second project that would connect the Harvest Gold system directly to the transmission line from Bloomfield to Blanco. San Juan County submitted the request to the state on Blanco's behalf because the mutual domestic water users association was not able to request the funding itself.

The county received a letter Monday from Rick Lopez, director of the local government division of the New Mexico Department of Finance and Administration. In the letter, Lopez stated the water issues in the Harvest Gold subdivision do not qualify for emergency funding. 

The letter states "San Juan County has the necessary financial resources to remedy the water issues."

Both Espinoza and Lovejoy said water is an important issue everywhere. They said the commission will continue working toward a solution.

"It’s a national issue," Lovejoy said Tuesday. "It’s not just a community issue."

Espinoza said she feels bad for Harvest Gold residents who have been on a boil water advisory for months.

"I realize how important it is to have clean drinking water. … I see a light at the end of the tunnel … and I’m not going to let the ball drop now," she said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652.