Battle over water rate hikes really about control

It was clear things were getting heated in Carson City on Monday when Senate Minority Leader Michael Roberson, R-Henderson, took the microphone and said tartly: “I’m going to try to be as respectful as I can in my response.”

Oh, don’t hold back on our account, senator. Tell us how you really feel.

Roberson’s frustration was evident midway through the hearing on Senate Bill 232, which proposes to subject the Southern Nevada Water Authority to the oversight of the Public Utilities Commission.

Roberson’s legislation is vehemently opposed by the authority and its general manager, Pat Mulroy, who testified that PUC oversight was unnecessary, unwanted and potentially even unconstitutional. (Full disclosure: My wife works for a public relations firm that numbers the water authority among its clients.)

Roberson said the current process — wherein local elected officials from cities and Clark County review and approve rate increases — was an “insular system,” “undefined and ad hoc” and an example of “unmitigated power.”

In this, the senator speaks for the business community, which unsuccessfully objected to 2012 rate increases. The increases were deliberately tilted in favor of low-income residents. The business community’s frustrations clearly birthed SB 232, which would mostly take rate hikes out of the hands of local officials and leave decisions with the PUC, thereby ensuring they are apportioned fairly among customers. Best of all, Roberson says, there would be a consumer advocate reviewing rate increases and arguing against those it determines are unfair. Currently, there’s no such person. “We need a consumer advocate,” Roberson says, noting that local officials frequently see things Mulroy’s way. Claiming elected officials provide independent oversight is a canard, he says. “History and experience shows otherwise.”

Indeed, in the wake of the last rate increase, one Clark County commissioner who’d been publicly informed of potential bad consequences publicly said he didn’t realize the impact of his yes vote.

But Mulroy is adamant — while she says she’s willing to entertain compromises, she’s drawn a line in the desert sand over authority. Only local elected officials may have the final say over rate increases, not unelected gubernatorial appointees.

On top of that, she points to the fact that the water authority is a public agency. Unlike private, investor-owned utilities regulated by the PUC (such as Southwest Gas or NV Energy), the water authority’s financial documents are entirely public and available for review. Finally, she says, PUC oversight could interfere with bond contracts, violating the U.S. and state constitutions.

To an extent, the debate is part of the hangover left by the recession. For a long time, Southern Nevada dined at a really nice restaurant on food subsidized by new customers. But now, with growth at a crawl and a large tab delivered to the table, we’re arguing over how much of the check each of us should pay.

The business community wants the PUC process, believing it will make future rate hikes more fair. The environmental community likes it because it believes the authority isn’t sufficiently concerned about damage from planned water projects. (And let’s be honest: Liberals hope PUC oversight will present another opportunity to kill the planned water pipeline to siphon water from rural Nevada to Las Vegas.)

Insiders such as Roberson see Mulroy as having too much influence over elected officials, who only devote a small portion of their time to water issues. PUC oversight is a way to take local politics — but also local control — off the table and ensure a measure of objectivity in fashioning future rate hikes.

But Mulroy argues inevitability — rate increases are necessary, because the money is already spent. And if ongoing drought forces Lake Mead’s level to drop much farther, the in-state pipeline will go forward, lest Las Vegas’ economy grind to a halt. Having local leaders in charge of mitigating those inevitabilities is the best way forward, she argues.

Either way, the battle is joined, and it’s a battle of titans.

Steve Sebelius is a Review-Journal political columnist and author of the blog SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at (702) 387-5276 or ssebelius@reviewjournal.com.