AV Water pursues 27% rate increase that it says is needed to cover operations and debt

Hannah Grover
Farmington Daily Times
AV Water, as seen Friday July 22, 2016, at 31 County Road 3900.

AZTEC — AV Water is continuing to pursue a rate increase and is seeking approval from the New Mexico Public Regulation Commission.

The company has been seeking a rate increase for nearly a year, and the increase was placed on hold in December when more than 10% of the customers filed protests.

AV Water serves Crouch Mesa and surrounding areas. It received statewide attention in 2016 when a boil water advisory was issued and thousands of customers remained without clean water for several months.

On March 9, the PRC ordered AV Water to file an application for approval of the increase on or before April 6. AV Water did so on April 6. In the April 6 filing, the company asks for approval of at least an approximately 8% rate increase, but preferably the 27% increase.

According to documents filed by AV Water with the PRC, the 8% increase covers operating expenses, including repairs and maintenance. The company currently operates at a loss, AV Water states.

The last rate increase was approved in 2016 shortly before a boil water advisory was issued for the system.

The system is currently in a receivership after AV Water defaulted on loans. The PRC issued an order on April 22 that will allow the receiver to represent the company in the rate case.

While the 8% increase would cover operating expenses, AV Water states that it would not be enough to cover the debt service and would leave it with a cash deficit.

AV Water states the 27% rate increase would cover both operating expenses and the debt service.

“This level of rate increase would put the Company on firmer footing and allow the Receiver to move forward to secure a sale of the utility to a capable operator and enable the Company to emerge from receivership,” the company states in documents filed with the PRC. “Approving the 27% rate increase would also delay the immediate need for another rate case, which would be likely in the event the Commission approves only a 7.99% rate increase.”

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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