State regulators expand inquiry into AV Water

By Brett Berntsen, originally posted on August 5, 2016


FARMINGTON — The New Mexico Public Regulation Commission is requesting more information on the AV Water Company’s business practices during a months-long boil advisory affecting nearly 7,000 residents in Crouch Mesa and areas outside Bloomfield.

On Wednesday, the state regulatory agency voted to expand its order to show cause, requiring AV Water to explain why it should not be held liable for failing to provide services to customers. Commissioners agreed to seek further details on whether the company has improperly charged residents and how it plans to compensate those who have experienced intermittent water shortages during the boil advisory.

The PRC issued its original order on June 29. AV Water issued a response about two weeks later, stating it had not violated any regulations and that many of the problems with the water system date back to before the company purchased the infrastructure in 2008. After reviewing the response, the PRC has determined more information is required to make a decision on imposing penalties.

“The commission decided that they needed to look into this matter more,” PRC spokesman Carlos Padilla said.

Customers of the company’s Morningstar and Harvest Gold water systems have been under a boil advisory since May 25, due to failures at AV Water’s treatment plants. The Morningstar facility experienced problems filtering water from the Animas River, and the facility since has been abandoned in favor of a connection with the city of Farmington. The Harvest Gold treatment plant also encountered turbidity issues after its water source, the Bloomfield Irrigation Ditch, breached in mid May.

AV Water representative Germaine Chappelle said the request from the PRC is reasonable and necessary.

“It’s information that folks should have,” she said. “We don’t have any objections.”

The order requires AV Water to submit a response within 15 days.

While customers have complained about paying for water they can’t drink during the boil advisory, concerns over charging practices extend farther back. Kalee Chivers-Grothe, an organizer of the Animas Valley Water Protesters group formed in response to the crisis, said that monthly bills from the company have a history of suddenly skyrocketing. She said residents will receive an unexpectedly high bill, then become buried in late fees. Members of the protest group have urged customers to begin monitoring their own meters to hold the company accountable.

Despite the issuing of the PRC’s regulation, Chivers-Grothe said she doesn’t think the latest order will carry much weight.

“I don’t think that it’s as good as the paper it’s written on,” she said.  “We’re not seeing any action.”

The water systems were built by a local developer in the 1970s, but only recently became regulated as a utility. The system was sold in 2008 to a group of a Chicago-based investors who formed the Animas Valley Land and Water Co., which was organized under a string of parent businesses registered in the state of Delaware. Shortly after the sale, the company sought public utility status from the PRC. Controlling member Mark Iuppenlatz testified in 2011 that he became aware of the “potential that the water systems should have been regulated by the (PRC) all along.” The case moved slowly before the commission, however, and finally was approved in February.

Chivers-Grothe said the PRC’s investigation comes late in the game and simple refunds can’t make up for the damage done.

“It’s not even compensation,” she said. “Its money they stole from us.”

As the PRC process continues, efforts are underway to lift the lengthy boil advisory. The Morningstar system has been connected to the city of Farmington, and crews are working to flush the remaining unacceptable water from the lines. According to an update issued by the company today, crews have purged the water mains in multiple subdivisions, including Star Heights, Vista Heights and Anasazi Estates. The remainder of the system will be flushed next week, the update states. The company anticipates the delivery of a new filter for the Harvest Gold treatment plant on Monday and will determine the additional steps needed to lift the boil advisory for that system early next week, as well.

Chappelle said the company is appreciative of the water conservation measures taken by customers during the flushing process.

“They did a great a job,” she said. “We’re looking forward to getting past this issue.”

For information on the boil advisory, visit the San Juan County Office of Emergency Management website at

Brett Berntsen covers government for The Daily Times. He can be reached at 505-564-4606.

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