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FARMINGTON — The New Mexico Public Regulation Commission has fined AV Water Co. and its owner $1 million and ordered the company to start delivering drinking water to residents in the Harvest Gold subdivision who have been on a boil water advisory since June.

The PRC unanimously approved the fine during a meeting today in Santa Fe that was streamed live on the commission's website.

AV Water is managed through a layer of other companies that are also included in the order fining AV Water. Mark Iuppenlatz testified during a public hearing in Aztec that he is the controlling member of the partnership that owns AV Water. He is also being fined under the PRC's order. Because Iuppenlatz and the other companies were not included in the original order, they will have 30 days to provide the PRC reasons why the fines should not apply to them.

AV Water has 30 days to pay the fine, according to a PRC press release.

The commission can also waive the fines, either partially or in full. Commissioners said they included the option of waiving fines to prevent discouraging another entity from taking over the Harvest Gold or Morningstar systems.

Both systems are owned by AV Water and were issued boil water advisories at the beginning of June. The boil water advisory for the Morningstar system, which serves Crouch Mesa, was lifted in September, but Harvest Gold customers are still under a boil water advisory.

In February, the PRC approved AV Water's Certificate of Convenience and Necessity, or CCN, which gave the company its status as a utility. Commissioners during today's meeting said they were not aware of the condition of the systems when they approved the certificate.

"I would not have supported the CCN if I had known there were all these problems," said Valerie Espinoza, the commission chairwoman.

Espinoza requested requiring the company to deliver bottled waters to residents in Harvest Gold starting immediately. PRC counsel Russell Fisk said he would have to see if it was in the PRC’s power to order delivery of water.

Commissioner Sandy Jones said the CCN requires clean water to be delivered to customers and suggested using that requirement to order AV Water to deliver the bottled water to the Harvest Gold residents.

"It has been a long time since they’ve had water," he said. "They should be entitled to drinking water."

AV Water attorney Germaine Chappelle told commissioners Harvest Gold water users have running water but the water is still under a boil water advisory.

Earlier this month, AV Water sent out a notice announcing turbidity levels were within compliance and the company would begin flushing lines.

After today's meeting, Chappelle told The Daily Times in a phone interview that a spike in turbidity after the notice was sent delayed when officials can flush the lines. Chappelle said the problem stemmed from high turbidity in the source water, which, she said, is an issue outside of AV Water's control.

She said AV Water does not have a timeline of when the residents can expect the boil water advisory to be lifted.

Chappelle also said she is researching the best way to comply with the PRC order to immediately begin delivering clean drinking water to customers. She said it will be difficult because the company has been struggling to even bill its customers.

During the meeting, Jones expressed frustration with how long residents have been without potable water and how long the commission has been discussing the utility.

"We've done more talking about them than it would take to run the 500-foot line over to them and provide them with water," he said, referencing the possibility of connecting the Harvest Gold subdivision to Bloomfield's water system.

AV Water is looking to connect to another system to address the issues facing its Harvest Gold system. Chappelle said it is continuing negotiations with Blanco Mutual Domestic Water Users Association to transfer ownership of the system.

The PRC was initially scheduled to have a hearing about the transfer earlier this month, but that hearing was postponed and a new date has not been set. Chappelle said the Blanco MDWUA wants to ensure it can receive public funding to fix the system.

"We're all working together to come up with a solution as quickly as possible," she said.

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

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