Monday, April 1, 2013 | 3:56 p.m.
Las Vegas water czar Pat Mulroy foretold financial calamity for the Southern Nevada Water Authority should lawmakers decide to hand rate-making oversight to the state Public Utilities Commission.
Mulroy, testifying against Senate Minority Leader Michael Roberson’s measure to increase state oversight over water rates in the Las Vegas valley, said the agency would encounter significant problems with its current and future bonds if it had to jump through more regulatory hoops when it determines how much to charge its customers.
And that could endanger infrastructure projects critical to supplying the region with water as Lake Mead continues to drop to dangerous levels, Mulroy said.
“Who is going to buy bonds if someone can pull the plug and say ‘No, you can’t charge for this. No, you can’t recover the costs for this,’” Mulroy said. “That kind of a process will throw all our bonds currently outstanding into question and a serious impact (on future bonding).”
Roberson’s move to give the state PUC oversight over SNWA’s rate-making decisions comes in the wake of the water authority’s decision last year to increase rates to cover its debt payments on water infrastructure needed to meet explosive growth in the Las Vegas valley. That growth has evaporated, and so has the connection fees previously relied on to finance those projects.
Last year’s rate increase needed to make up the difference hit the business community hard, with some businesses experiencing as much as a 300 percent hike.
Roberson said the rate hike decision was rushed, lacked transparency and “allowed short-term political consideration to overwhelm economic factors.”
A second rate increase is expected in 2016 to help pay for the so-called “third straw” into Lake Mead to continue providing water to the Las Vegas valley.
Roberson, however, described Mulroy’s contention that PUC oversight would endanger the agency’s ability to borrow money to pay for that infrastructure as a “sky is falling” approach.
“I agree. Rates will have to go up,” Roberson said. “That’s not the issue. The issue is how you get there and how you allocate that burden amongst the various members of the community.
“We need independent oversight.”
He also accused Mulroy of having undue influence over the elected officials that must approve the rate increases she recommends.
“This is an example of the unmitigated power that one person holds over the water rates of Southern Nevada,” Roberson said.
Mulroy immediately responded, accusing Roberson of a “fallacious” statement.
“These elected officials put their careers on the line when they approve these rate increases,” Mulroy said.
The Senate Government Affairs committee took no action on Roberson’s measure Monday and most members remained largely silent.
The exception was Sen. Pete Goicoechea, R-Eureka, who said lawmakers have taken the blowback from the businesses bearing the brunt of the SNWA’s decision last year and who are worried about the upcoming rate hike.
“We need to have some way to establish a rate case for those people, because as you said yourself, it’s down the road and it’s going to be ugly,” Goicoechea told Mulroy.
Mulroy argued the public had plenty of opportunity to participate in the decision. Three open houses were held to take testimony. Customers were notified via a SNWA newsletter. A public notice was placed in the newspaper.
“There was no attempt whatsoever to hide the ball on this rate increase,” she said.
The water authority initially went to the gaming industry and the Las Vegas Chamber of Commerce for advice on how to structure the rate increase, allowing business interests the first input in narrowing down the options for raising money last year, Mulroy said.
Roberson’s measure prompted an unlikely pairing to testify in support of the bill.
Both the Progressive Leadership Alliance of Nevada and the Las Vegas Chamber of Commerce—two organizations traditionally at odds over issues debated by the Nevada Legislature—testified in support of the bill.
“This bill isn’t personal it’s about improving that process,” said Brian McAnallen, lobbyist for the Las Vegas Chamber of Commerce. “The proposed rate increases need to be fair, equitable and not unduly burdensome.”
PLAN’s Howard Watts echoed that sentiment.
“Money for the most part can only come from one place and that is the ratepayers,” Watts said. “We need to make sure the collection is fair and the proposed new expenditure of funds is both justified and most effective.”
The PUC testified as neutral on the measure. Anne-Marie Cuneo, director of regulatory operations, said the agency has economists on staff that could provide rate-making expertise.
She noted a $1.2 million fiscal note on the bill would “disappear in its majority” if the PUC was needed only for rate-making approval and no other regulating activities.