Water on the brain

Tis spring, and the familiar sound of lawn sprinklers has begun around the Truckee Meadows. That noise and the accompanying rivulets running down the gutters raise awareness of water-conservation issues. So, too, do the reports of people like Kelly Redmond, regional climatologist at the Atmospheric Sciences Division of the Desert Research Institute, who, in spite of a very snowy winter, have said that our drought isn’t over.

There must be something in the air besides tree pollen because last week at the Nevada Legislature, Assemblywoman Heidi Gansert, R-Reno, called for an investigation into the Truckee Meadows Water Authority’s rate-setting practices.

Assembly Bill 323 would require the Bureau of Consumer Protection in the Attorney General’s office to conduct an audit. The costs of the audit and investigation must not exceed $100,000 and must be reimbursed by TMWA.

Gansert’s logic, as presented in the bill’s text, seems pretty solid in support of an audit:

On Oct. 1, 2003, TMWA implemented its first rate increase, which raised substantially more money than TMWA had estimated it would.

The Truckee Meadows Water Authority then approved a second water-rate increase effective March 1, even though a committee established by the TMWA to review its rate-making process and a national expert on water utility rates recommended no rate increase.

The expert also found that the rates and related rate design proposed by TMWA were not consistent with well-established rate-setting principles.

Finally, TMWA has declared an intent to raise our water rates again next year.

OK, so the agency has raised rates without correctly assessing the revenue the rate hike would generate. That shows poor accounting practices. The agency then raised rates again, despite being told by an independent expert not to. That shows a disregard for the customer.

Do any of these facts suggest an agency that doesn’t need an audit? That couldn’t use a little help with oversight and rate-setting policies?

The bill continues with the rationale for having the Bureau of Consumer Protection do the audit. Basically, the idea is that since the bureau has specialized expertise as a consumer advocate for utility customers, it has better experience than say, a regular government auditor. And make no mistake, TMWA is a public-owned utility and should have the oversight any utility has.

A case also can be made that the Public Utilities Commission would be the best forum because it has both expertise and is not an advocate but an objective panel. But this is an arguable issue that can be settled by legislative negotiation.

There is, of course, a carp in the koi pond. The $100,000 cost of the investigation and audit would have to be paid by TMWA customers. Still, when it is considered that some of the reasons for March’s rate increase include a new $10 million headquarters and a $7 million rate-payer-funded contingency fund, a hundred grand seems like a small kettle of fish.