AV Water owner: Company is 'strapped for cash'

Mark Iuppenlatz told the Public Regulation Commission selling the Harvest Gold, Morningstar water systems would likely be the best solution

Hannah Grover
  • AV Water's controlling member Mark Iuppenlatz discussed the company's finances during a PRC hearing.
  • Iuppenlatz said he supports selling the Harvest Gold and Morningstar water systems.

FARMINGTON — AV Water Co. controlling member Mark Iuppenlatz told the Public Regulation Commission that the company is strapped for cash.

New Mexico Public Regulation Commission members Valarie Espinoza, left, Sandy Jones and Karen Montoya inspect sludge gathered by AV Water Co. customer Roberta DeField's water system, Wednesday during a meeting in Aztec.

About 12 hours into the PRC meeting Wednesday, Iuppenlatz took the witness stand to discuss AV Water's financial situation and possible solutions for the issues facing the two water systems the company owns.

During the meeting, he praised the company's decision to connect the Morningstar system, which serves Crouch Mesa, to the city of Farmington and to close its water treatment plant.

"The decision to buy water from the city (of Farmington) was really — although it's a tremendous financial burden to the company — it is in the best interest of the residents of the system," Iuppenlatz said. "And it gets us out of the water treatment business, and the water will be provided by a municipality with more resources and a more effective plant then we could ever hope to have."

Iuppenlatz told commissioners the connection to Farmington and the other steps the company took to get the Morningstar system off of a boil-water advisory issued by the state cost $700,000.

AV Water has not paid the contractors and engineers who worked on the project. Iuppenlatz said the company is trying to sell assets so that it will have the money to pay the contractors.

AV Water company customer Bernie Volz addresses members of the New Mexico Public Regulation Commission Wednesday during a meeting at the San Juan County Commission chamber.

In addition to owing contractors and engineers money, AV Water also has a $2.7 million loan to pay off, Iuppenlatz told the PRC.

He also addressed customers' complaints about inaccurate meter readings and poor customer service.

"I would like nothing better than to have a company that runs with exemplary customer service and responsiveness and a high level of accuracy," Iuppenlatz said. "But the fact of the matter is that the company is losing money in its current state. Every gallon of water we sell, we're losing money, and we're strapped for cash."

Iuppenlatz said the company has not had a rate increase in seven years, despite increasing expenses. He told the PRC the company has subsidized the water system by selling real estate.

"The real estate market in Farmington has really dried up," Iuppenlatz said.

He told commissioners the Harvest Gold system, which serves a subdivision east of Bloomfield, is difficult to run efficiently.

"I think the best thing for all concerned is for us to basically give it to (the) Blanco (Mutual Domestic Water Users Association)," Iuppenlatz said.

Lloyd Ayliffe, the operator of the Blanco MDWUA, told commissioners earlier Wednesday that the association is looking at acquiring the Harvest Gold system for only the cost of the water rights.

Becky Whinery addresses audience members during a New Mexico Public Regulation Commission meeting Wednesday at the San Juan County
Commission chamber in Aztec.

Iuppenlatz said he could not give away the water rights because the company still owes money on them.

If the Blanco MDWUA took over the Harvest Gold system, it would look for funding to connect the system to its water tank, Ayliffe said. He said a connection to Bloomfield's system could provide a quick resolution to the boil-water advisory that was issued June 3.

Once the system is connected to the Blanco system, the rusted and leaking Harvest Gold water storage tank could be abandoned, and Blanco would provide drinking water through its 250,000-gallon storage tank located on the mesa above the subdivision, Ayliffe said.

Earlier in the week, AV Water attorney Germaine Chappelle told The Daily Times that the company is also looking at potential buyers for the Morningstar system.

"It's always been the objective of ... the owners to not be in the water business," Iuppenlatz said during the hearing. "It's been the objective to sell the water system."

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