A small water company serving the growing far-southeast side may have to refund nearly $2 million to its customers.

Arizona Corporation Commission staff wants the Vail Water Co. to refund the money because of its failure to meet a state deadline to produce a plan to convert from pumping groundwater to bringing in Central Arizona Project water from far away.

The company instead seeks an extension of the Dec. 31, 2010, deadline - set more than a decade ago - that would let it produce a plan by 2013 to use CAP by 2015.

Those options will be looked at over the coming months by an Arizona Corporation Commission administrative law judge and the commission, which must make the final decision. The next hearing will be Feb. 29.

However it turns out, the case underscores the longstanding difficulty of putting this region's 193,000 acre-feet of CAP water to direct use, about 20 years after the canal water from the Colorado River became available.

customers paying extra

Vail Water is one of nine suburban public and private water utilities in the Tucson area, out of 11 with CAP rights, that aren't directly using any of the water. That's largely because building the needed pipelines and other infrastructure has proved too expensive.

Water experts say using the CAP is preferable due to the risks to the aquifer, such as higher costs and poorer water quality, from continued overpumping. In the Tucson area, barely half of the CAP water is being used on homes and businesses. The rest is being recharged in basins far from where utilities such as Vail Water pump.

Vail has a groundwater well that at 575 feet deep ranks 11th lowest of any of 1,337 Tucson area wells, and its water table drops 3.4 feet yearly, says the U.S. Geological Survey.

In 2000, the water company persuaded the Corporation Commission to let it charge customers 35 cents per every 1,000 gallons to pay for a system to bring in CAP water.

Vail Water officials declined to be interviewed about this issue, and possible refund figures per household aren't available. But that extra 35-cents-per-1,000-gallons charge would translate to about a $2.50-a-month tab for the typical Tucson Water household.

According to Vail Water officials' testimony at a recent hearing, the CAP canal, running west of the Tucson Mountains, lies about 40 miles from the unincorporated Vail community near the Rincon Mountains.

Since 2000, Vail Water has bought rights to additional CAP supplies but still has no plan to use the water.

In testimony, water company officials traced the failure to meet the deadline in part to Tucson Water. Vail officials have hoped the city utility would put Vail's CAP water into Tucson Water pipes to bring it to the southeast side.

At a hearing last month, Vail Water attorney Michael Hallam said Tucson Water for many years wasn't prepared to enter discussions with Vail Water. "The city is willing and eager to work with Vail now to get the water into direct use," Hallam said, pointing to recent letters to that effect from Tucson Water. "Progress is being made, very recent progress, but it is very good news," Hallam said.

If the company is forced to refund money, "it's very unlikely if not impossible that direct use will come into fruition. The work gone into this and the funds expended for recharging CAP will be wasted," he said.

On their side, commission staffers said the company hadn't done enough to meet the 2010 deadline.

"Vail was to file final plans by a set date," said commission attorney Bridget Humphrey at the same hearing. "Had Vail come to the commission prior to that date and said, 'We can't do this, we'd like an extension,' we'd probably not be here today."

"Ten years is a very long time to be collecting monies from your customers that may or may not be used," Humphrey said.

Customers frustrated

For some Vail Water Co. customers, the question of how to deal with the water company's missed deadlines presents a quandary.

On the one hand, some originally fought the 2000 rate increase and are now frustrated the money hasn't yet been used to bring CAP to their community, which continues to grow despite the housing market collapse.

At the same time, they understand that if the money is refunded, Vail Water may never get CAP water.

One such customer is Marilyn Herb, who has watched subdivisions rise around her in several directions almost continuously since moving into her home in the Vail area nearly 18 years ago. She said she believes the water company deserves a deadline extension but also should be penalized for failing to act on time.

"If the economy turns around and the expansion continues as it was doing before the housing market fell through, I have doubts that they can provide water here for 100 years with groundwater," said Herb. She was referring to a state law requiring that water companies and cities prove a 100-year assured water supply to keep developing.

"The water company has told us religiously, 'Oh yes, we have water for 100 years,' but I feel they may have water for 5,000 people but not 20,000," she said.

By the numbers

Vail Water Co. customers


in 1999

About 3,900


Vail-area population

About 2,500

in the 2000 census

About 10,500

in the 2010 census.


projected population by 2040

Sources: Arizona Corporation Commission records and hearing testimony; Pima Association of Governments.

Contact reporter Tony Davis at tdavis@azstarnet.com or 806-7746.