The Public Regulation Commission has stepped in to decide how much money Eldorado-area customers should pay for their water service.

The commission does not ordinarily set rates for publicly owned entities such as the Eldorado Area Water and Sanitation District. But because of a protest filed to the PRC by water customers, the agency is expected to issue a ruling on water rates in Eldorado before the end of the month. The district passed the increase in May 2007, but it was stopped a month later by the protest.

Board members say the financial picture for the district is bleak without a rate increase.

At a public meeting Thursday, Vice President Jerry Cooper said the district had a long list of capital improvements it needed to complete during the time it has taken the PRC to decide on the increase. The district has $500,000 in state grants and about $120,000 in capital reserve, Cooper reported.

The board approved an increase in order to create "a funding stream of about $625,000 a year for capital improvements." According to state law, money from rates covers repairs and replacement parts. While the PRC's decision is expected soon the agency's staff report has called part of the district's proposed plan "unnecessary and above what a public water district may legally charge customers."

The PRC staff recommended approval of a rate hike totaling about 19 percent, compared to the water district's proposal of a 30.5 percent rate hike.

In a May filing, staff said the district should fully evaluate its approach to expenses and take measures to reduce operating and maintenance costs — especially its management costs with a private contractor

The report concurred with testimony of the lead protester in the case, Lucian Niemeyer. Both Niemeyer and PRC staff identified potential operating-cost savings of about $600,000, which is approximately one-third of the annual operating cost the district reported.

Attorneys for the district said the PRC staff did not take into account that customers cannot take on more debt to pay for improvements to the system.

District attorneys Charles T. DuMars and Stephen Curtice argue that customers had an unusually high amount of debt because of the cost in acquiring the utility.

The PRC has not decided a rate case for a public utility since the mid-1980s.

District officials say they have used residual amounts of borrowed money to pay for emergency repairs — like the water leak in June, which knocked out service to some for three days. But without money coming through rates, grants or loans, Cooper said, "We can't do anything."