A bill now before the state Senate could remove PRC regulatory oversight of public water districts, including the Eldorado Area Water and Sanitation District.

House Bill 337 and its companion Senate Bill 384 would allow the districts' elected board to set water rates without Public Regulation Commission oversight. Under the current Water and Sanitation District Act, boards can establish rates without PRC approval unless 25 water customers or 5 percent of electors, whichever is less, protest the resolution. The commission can then intervene and review the case.

The bill, sponsored by Taos Democrat Roberto "Bobby" Gonzales, passed the House 47-20. In its current form, the measure removes the jurisdiction of the PRC over the filing of protests of rate increases and transfers that jurisdiction instead to state District Court. The threshold for triggering a review of rates remains the same: 25 individuals or 5 percent of electors must file a protest within 30 days.

A water district must provide notice of the board's intent to raise rates 30 days prior to a public hearing under the new procedures.

The Eldorado Water and Sanitation District is in favor of the bill but says it has not spent any money to support it. The district is one of five water and sanitation districts in the state to support the bill.

The Eldorado district is one of 22 in the state that have been subject to PRC oversight of rate settings. Public water and sanitation districts operate on a cash basis and therefore are not investor-owned companies. The PRC regulates investor-owned utilities only; unless a public water district elects to have PRC oversight, it is highly unusual for a state regulatory agency to intervene in the affairs of a public district like Eldorado.

"This legislation is being pushed forward because of the current PRC case," which so far has cost the district $100,000 and could rise to $150,000 before it is settled, said Jim Jenkins, district president, at Thursday's board meeting, "But the board did not initiate the bill."

One of the protestors of the rate increase before the PRC, Lucian Niemeyer, said removing regulatory oversight from the district was dangerous. "You're litigating against your own people, the electors, when you move to change PRC oversight," he said. "Shifting the process to District Court does not allow for public or expert testimony."

Currently, PRC rules for hearing-rate protests subject them to much the same treatment as for investor-owned utilities with expert testimony and opportunity for intervention. However, the new bill would limit judicial review to the record of the board meeting at which the resolution was adopted.

Should the bill become law, the board would legally withdraw the 2-year-old case from the PRC, Jenkins said, and would set new rates using the new procedures it lays out.

Raising rates to increase revenue is one of the district's top priorities — it has been in the red for too long, the board said. It currently does not have money to hire staff or make capital improvements.

Thursday's financial report was grim: The delay in new rates, the legal costs associated with the case and declining water sales have put the district way behind. More than $16,000 was taken from the district's emergency reserve fund in January in order to make payment on the bond debt by Feb. 28.

Without a rate increase, that trend would continue, Jenkins predicted. New revenue is needed immediately, the board said, and the next hearing before the PRC is not scheduled until April 27. Final rates are not likely to be approved for several months after that date.

To resolve its immediate financial squeeze, the board unanimously approved filing an interim rate petition with the PRC, which would allow the district to set the rates recommended by a PRC hearing examiner.

Under the interim relief changes, the $9.54 monthly service charge for in-district customers will increase to $11.69 and from $11.69 to $36.19 for out-of-district customers; water-usage rates will also increase some 11 percent to 88 percent for the average user based on per-gallon consumption.

The recommended rates made by the hearing examiner just gets the district by, Jenkins said; it does not create a revenue stream to make capital improvements or hire staff.

The board said it will inform the public of any new rate changes ahead of their taking effect on the district Web site and in the monthly newsletter, Water Notes.