An outside party will take over the Valle Verde Water Co. if staff of the Arizona Corporation Commission has its way.

The ACC issued the water company an Order to Show Cause, a rare and last-ditch effort used to bring private utilities into compliance with laws and state regulations.

The measure will be taken up at the next meeting of the ACC, said Commissioner Kris Mayes in a telephone interview on Monday. If approved, an outside firm will be asked to come in and run the company properly and address any deficiencies.

The order came following the latest in a long line of problems. Last week, customers experienced outages and drops in pressure that in some areas lasted for six days. Frustrated residents and business owners called the company for information either to no avail or to be misinformed that the City of Nogales was to blame or was taking measures to fix the problem.

According to the order, "The Company's service outages, poor water quality and inadequate water pressure requires an order by the commission for the safety and preservation of health of Valle Verde Customers."

The company serves more than 800 connections or about 3,000 consumers in Valle Verde, Linda Vista, Chula Vista, and Firestone Gardens subdivisions as well as an area south of Valle Verde near Apache Boulevard. A newer part of the system has experienced no problems and provides service to customers in Coronado Estates and Pena Blanca Estates east of Valle Verde.

Plagued with issues such as a broken well pump, contamination in at least three wells, and running afoul of state operating regulations, the ACC action came on the heels of two "Notices of Violation" issued to the company by the Arizona Department of Water Quality.

According to the commission's staff analysis, "Valle Verde's water system is unable to adequately serve all customers in its certificated service territory. The company has insufficient potable water supply due to shut down of three of its wells on the basis of contamination. As of May 2005, the company has not provided proper water testing to determine if they are providing potable water to its customers."

In January, the city agreed to provide water to the areas affected by the contaminated wells through a temporary interconnection, which in itself is questionable legally, officials said. It connects the water system via two hydrants using a 2.5-inch fire hose strewn above ground and subject to leakage.

After receiving assurances of legal indemnity and repayment on Thursday from William Wissler, Valle Verde's attorney, Deputy City Manager John E. Kissinger and City Attorney Jan Smith-Florez authorized city crews to connect a second hose to the system at Apache Boulevard.

The assurances came in the form of a letter at about 7 p.m. Employees from the water and fire departments worked until after 11 p.m. disinfecting a fire hose connecting it to the Valle Verde system and installing backflow protection on a city hydrant under the direction of Utilities Director Flavio Gonzalez. The hook-up, as well as valve adjustments by Mario Torres of Valle Verde at other locations along the system, ensured that residents regained pressure.

Another area south of Apache Boulevard was without water due to a broken pump that was scheduled to be replaced over the weekend.

The Order to Show Cause "is a process we use when there is a belief that companies have dramatically failed to serve customers," Mayes said, adding that company representatives will have an opportunity at the hearing to respond to the allegations in the order.

ACC officials "have been surveying the landscape" to see what other companies would be in the position to take over Valle Verde if the commission votes to affirm the order. Among those is Algonquin Water Services, which bought Rio Rico Utilities in 2005, she said.

Algonquin provides water for 6,300 connections, or 22,050 users in Rio Rico beginning in an area adjacent to Valle Verde Water Co.'s northernmost certificated service territory.

Mayes explained that if another company were to take over, all revenue from Valle Verde would be used strictly for maintenance and operation as well as remediation of any infrastructure deficiencies although Valle Verde owners will retain title to the system.

With an "interim operator" in place, the ACC can then request to tap into money from the Water Infrastructure and Finance Authority for such projects as providing a permanent connection to the City of Nogales system, officials said.

City Utility Director Gonzalez said that most water companies that are contiguous to each other have permanent interconnections so that they may provide each other water in times of emergency.