Arizona Water Company - 2012 Northern Group Rate Case

Docket Number
Assigned Staff
Dan Pozefsky, Chief Counsel
Robert Mease


Case Information:

On August  1, 2012, Arizona Water Company ("AWC" or the "Company"), filed an application ("Application") with the Arizona Corporation Commission ("ACC" or "Commission") requesting a permanent rate increase for the Company's Northern Group systems. 

AWC's Northern Group is comprised of the Company's Navajo system (which provides service to Lakeside and Overgaard), and the Verde Valley system (which serves customers in Sedona, Pinewood  and Rimrock).  During the test year ended December 31, 2011, AWC's Northern Group Systems provided water service to approximately 19,700 customers.

AWC is seeking a total revenue increase of $2,829,974 or an increase of 27.95 percent over test year revenues for the Company's Northern Group.  The revenue increases by system are as follows:

                  System                         Revenue Increase                      Pct. Increase

                  Navajo                               $ 778,281                                   21.65%

                  Verde Valley                      $2,051,496                                  31.42%

In addition to the requested increases in revenue, AWC is also requesting that the Commission approve a  Distribution System Improvement Charge ("DSIC") for the Northern Group that would allow for recovery of routine plant improvement costs outside of general rate case filings, and an Off-Site Facilities Fee to cover costs of off-site water production, treatment, delivery, storage and pressure facilities for new customers in the Sedona System whose water supply requirements make such plant additions necessary.

Under the Company-proposed rate increase, 5/8 x 3/4 - inch meter customers of the Company's Northern Group systems would see the following change in their monthly rates:

Name of System                  Average               Present       Proposed        Dollar           Pct.
                                            Consumption        Charge       Charge         Increase       Increase                                                (Gallons)

Navajo (Lakeside)                 3,200                   $26.24         $31.57          $5.33           20.31%

Navajo (Overgaard)              3,200                   $26.24         $31.57          $5.33           20.31%

Verde Valley (Sedona)          8,800                   $39.47         $53.76         $14.28          36.19%

Verde Valley (Pinewood)       3,000                  $33.42         $33.59          $0.17             0.52%

Verde Valley (Rimrock)          3,000                  $33.42         $33.59          $0.17             0.52%

On Friday, August 31, 2012, ACC Staff issued a letter of sufficiency(link is external) informing AWC that its  Northern Group Application meets the filing requirements of A.A.C. R-14-2-103.

On Tuesday, September 11, 2012, the Administrative Law Judge ("ALJ") assigned to the case issued a Procedural Order(link is external) scheduling a procedural conference at 1:00 p.m. on Tuesday, September 18, 2012, at 1200 W. Washington in Phoenix.

On Wednesday, September 12, 2012, RUCO filed an Application to Intervene(link is external) with the ACC.

During the procedural conference conducted on Tuesday, September 18, 2012, the ALJ assigned to hear AWC's rate request granted intervenor status to RUCO and discussed a dual track litigation/settlement procedural schedule with the attorneys to the parties to the case.  

After taking the parties recommendations under advisement, the ALJ assigned to the case issued a Procedural Order(link is external) on Wednesday, September 19, 2012, that schedules the evidentiary hearing on the matter for 10:00 a.m. on Monday, May 13, 2013, at 1200 W. Washington in Phoenix. 

On Thursday, February 14, 2013, the ALJ assigned to the case issued a Procedural Order(link is external) that modified the original dates that the hearing would be held on after it begins on May 13, 2013, and the hearing rooms that it would be conducted in.

On Thursday, February 21, 2013, ACC Staff filed a request(link is external) seeking an extension on the filing date for direct testimony on required revenue until Friday, March 1, 2013.

On Friday, February 22, 2013, the ALJ assigned to hear the matter issued a Procedural Order(link is external) granting ACC Staff's request for a filing extension.

Pursuant to the February 22nd Procedural Order's litigated schedule, RUCO filed its direct testimony on required revenue and cost of capital on Friday, March 1, 2013. 

Direct testimony on cost of service and rate design was filed on Tuesday, March 5, 2013.

On Wednesday, March 13, 2013, ACC Staff filed a Notice of Settlement Discussions(link is external) informing interested parties that AWC had approached Staff with the possibility of attempting to settle the case.

After a full day of negotiations on Tuesday, March 19, 2013, a tentative settlement agreement was reached between ACC Staff and AWC.

On Thursday, April 4, 2013, AWC filed a request for modification of the filing dates for the Settlement Agreement and written testimony on it that were established in the ALJ's Procedural Order dated September 19, 2012.

On Monday, April 8, 2013, the ALJ assigned to the case issued a Procedural Order that granted the Company's request to modify the procedural schedule.  A copy of the proposed settlement agreement will now be filed on Friday, April 12, 2013.

On Friday, April 12, 2013, AWC filed a notice of status(link is external) informing the Commission that the signatory parties to the settlement agreement were unable to to execute a final form of a proposed settlement agreement by the filing deadline.  AWC stated in its filing that it still expected to file testimony on a proposed settlement agreement on Friday, April 19, 2013.

On Monday, April 15, 2013, ACC Staff filed a copy of the proposed settlement agreement(link is external) ("Settlement Agreement").

On Tuesday, April 16, 2013, RUCO filed a motion to extend(link is external) the filing dates for testimony on the Settlement Agreement.

On Thursday, April 18, 2013, the ALJ assigned to the case issued a Procedural Order(link is external) granting RUCO's request to modify the filing dates for testimony on the Settlement Agreement.  The Procedural Order also rescheduled the pre-hearing conference on the matter from 1:00 p.m. on Friday, May 10, 2013, to 10:00 a.m. on Wednesday May 8, 2013, at 1200 W. Washington in Phoenix.

On Friday, April 26, 2013, RUCO filed its direct testimony in opposition to the Settlement Agreement.

RUCO's main points of contention with the Settlement Agreement deal with the adoption of a System Improvement Benefits ("SIB") surcharge mechanism and a declining usage adjustment to AWC's test year billing determinants. 

RUCO's responsive testimony on the Settlement Agreement was filed on Friday, May 3, 2013.

On Monday, May 6, 2013, RUCO filed a motion(link is external) to incorporate the record of the recent hearings in Docket No.W-01445A-11-0310 (“Eastern Group or Eastern Group Docket”) into the current Northern Group docket.

The evidentiary hearing on the Settlement Agreement  began as scheduled on Monday, May 13, 2013, and concluded on Tuesday, May 14, 2013, at the Arizona Corporation Commission's offices at 1200 W. Washington in Phoenix.

As requested by the ALJ assigned to the case, RUCO filed language related to its position on the SIB surcharge mechanism on Thursday, May 23, 2013.

RUCO filed its opening legal brief on Tuesday, June 18, 2013.

After the evidentiary hearing and the filing of legal briefs, the ALJ will weigh all of the evidence presented in the case and write a Recommended Opinion and Order ("ROO").  The ROO will then be voted on by the five sitting ACC Commissioners during a noticed Open Meeting. The Commissioners can either accept, reject or amend the ROO.

A final decision by the Commission on AWC's requested increase is not expected until sometime during  late August or early September, 2013.