The Public Utilities Commission recommended approving many of the requests in the Utilities Inc. rate increase, but scolded the company for double billing some expenses for reimbursement in a draft order issued last Friday.

Utilities Inc. of Central Nevada serves 4,464 water and sewer customers in Pahrump.

It requested a 78 percent increase in water revenues and a 16.9 percent decrease in sewer revenues, partly by doing away with the widely-criticized $23.19 per month sewer charge per fixture levied on businesses.

The present water rate is 99 cents per 1,000 gallons for the first 8,000 gallons, then $1.67 per 1,000 until 30,000 gallons is used. Then the rate climbs to $2.54 per 1,000.

Utilities Inc. requested permission to charge $2.16 per 1,000 gallons for the first tier of rates, lowering the level of the second tier of rates from 8,000 gallons per month to 7,000 gallons, after which customers would pay $2.84 per 1,000 gallons. The top rate would be $3.71 per 1,000 gallons for using over 30,000 gallons per month.

The PUC went further, reducing the level at which the second tier of rates kicks in to 6,000 gallons, which it said was closer to the average monthly residential use from November to March.

"The commission finds that the significant rate increase in this case will increase the incentive for customers to maximize conservation and produce more risk to UICN's ability to recover its cost and return on investment," the PUC order said.

The PUC recommended approval of an increase in the monthly base water rate for most residences from $9.90 to $22.28. The per-gallon consumption rate is being evaluated.

Among other charges, the PUC approved a service fee of $53 to new customers; a $39.50 fee for more than three visits to a property in one year; increased charges to turn water on or off during business hours from $25 to $39; a monthly fee for seasonal customers who resume service less than nine months after it has been disconnected; increases in disconnecting or reconnecting service; establishing a 65-cent-per-gallon water supply fee for new customers to pay the cost of new wells; and a fee for developers using video to inspect sewer lines.

The PUC approved a whopping increase in water service connections for most residences from $750 to $2,510. It agreed that Utilities Inc. of Central Nevada didn't collect enough to cover the connection costs, making other ratepayers pick up the tab.

The PUC said Utilities Inc. of Central Nevada, or UICN, could continue charging Willow Creek and Lakeview golf courses an irrigation rate of 60 cents per 1,000 gallons, which would allow the company to continue discharging effluent from sewer plant No. 3.

But the PUC wants UICN to have a backup plan in case it can no longer discharge effluent onto the golf courses.

UICN will be allowed to defer $203,712 in litigation costs with the Willow Creek Golf Course owners -- now $203,712 and expected to rise significantly -- until the next rate case.

The company will be required to provide a water conservation plan by March 1, 2011.

A two-month deposit for new service is appropriate, but not a six-month deposit for customers who were previously disconnected, the PUC ruled.

PUC staff said Utilities Inc. should be ordered to reopen its Pahrump billing office.

"Staff does not believe UICN gave customers proper notice that the office would close for receiving payments because notification was only posted on the door of the office," the staff wrote.

The commission overruled staff and said PUC policy didn't prevent the company from closing its office for bill payments, but commissioners said the company needs to submit an application for approval if it wants to charge third party fees for collecting bills.

The PUC order rejected some requests from UICN in the company's attempt to recoup costs from the last three years for the rate increase.

* It disapproved $36,750 for painting the Utilities Inc. logo on the Mountain Falls water storage tank;

* Commissioners said UICN should recover from developers the $318,723 cost of oversizing water lines on Blagg Road beyond what was required for the Celebrate Homes subdivision.

PUC staff said putting the lines in the ground without a thorough analysis of growth amounted to pure speculation, but the commission said installing the backbone of infrastructure for future growth was necessary to prevent a repeat of the situation in 2005 when a delay in expanding sewer plant No. 3 led to a temporary moratorium on new construction.

* A $39,766 refund to Home Depot for part of a line extension was disapproved.

* Emergency repairs to water lines at Pahrump Valley United Methodist Church should be removed from the rate request.

* The PUC removed $115,338 the company claimed for flooding at the new Mountain Falls sewer treatment plant due to unusually cold weather in January 2007 a few days before the plant was dedicated to UICN. The commission said UICN was reimbursed by the developer.

* The majority of the cost of the 2005 master plan was already recovered in the last rate case.

* A $42,185 contract with an independent Reno lab for water tests duplicated company testing. But the PUC approved a $168,627 contract with the same company for a water rights review to address the over-appropriation of water, though PUC staff felt that was a duplication of work.

* A $51,000 request for normal repair and maintenance of 1,000 fire hydrants was described as double counting expenses granted during a test year.

* A request to bill the cost of a Pahrump Valley Boulevard looping project was rejected, which the PUC said was a normal cost of business. But they allowed UICN to add the $900,000 expense of building a water tank for the new federal detention center.

Among other recommendations:

* PUC staff recommended that UICN market 21 unused parcels worth $604,000; UICN countered, saying it didn't receive a single offer on 17 of them and plans to use another four for future growth.

* PUC staff criticized the high cost of the rate applications, saying it wasn't reasonable to pass on $670,937 in legal costs for the 2006 case to ratepayers. Commissioners found the rate case investigation had to be lengthened due to extremely flawed filing and documentation by UICN.

The PUC suggested UICN use in-house attorneys instead of spending $1.7 million annually on outside attorneys for their utilities in Nevada.

"The amount of legal costs for UICN is a staggering amount of money for a system with so few customers," the Bureau of Consumer Protection said.

UICN will be allowed to seek reimbursement for installing a $793,326 supervisory control and data acquisition (SCADA) system, designed to monitor and control an entire utility system from a central command site.

Utilities Inc. of Central Nevada is an affiliate of Utilities Inc., which operates in 15 states and has over 291,000 water and sewer customers, according to the PUC report.