Far West Water & Sewer, Inc. - 2012 Rate Case

Status
Prior
Docket Number
WS-03478A-12-0307
Assigned Staff
Dan Pozefsky
T. Coley
Thomas H. Fish Ph.D. (Outside Consultant)
Royce A. Duffett P.E. (Ariadair Economics Group)

 

Case Information:

On Friday, July 6, 2012, Far West Water & Sewer, Inc. (“Far West” or the “Company”) filed an application for a permanent rate increase(link is external)  ("Application") with the Arizona Corporation Commission ("ACC" or "Commission") for the Company's wastewater operations.  Far West’s Sewer Division is a Class A utility that provides wastewater service to approximately 7,824 customers of which 7,067, or 90.3 percent, are residential ratepayers.  The Company's service territory is located along Interstate 8, just east of the City of Yuma, in an unincorporated portion of Yuma County known as the foothills area.

According to Far West’s Application, the Company is seeking a $3,866,046, or 173.52 percent, increase in operating revenue to allow it to earn a 7.409 percent rate of return on its original cost rate base. Under Far West's proposed rates, a residential customer’s monthly bill will increase by $40.90 to $62.65 per month, an increase of 188.05 percent.

On Tuesday, July 24, 2012, Spartan Homes & Construction, Inc. ("Spartan") filed an application to intervene in the rate case.

On Thursday, August 2, 2012, ACC Staff issued a Letter of Sufficiency(link is external) informing Far West that its Application had met the sufficiency requirements of R14-2-103.B.7 of the Arizona Administrative Code. 

On Friday, August 3, 2012, RUCO filed an application to intervene(link is external) in the case.  Also on Friday, August 3, 2012, Far West filed a response in opposition (link is external)to Spartan's request for intervenor status.

On Monday, August 27, 2012, the Administrative Law Judge ("ALJ") assigned to hear Far West's request issued a Procedural Order(link is external) that granted RUCO's request for intervention but denied Spartan's request for intervention.

On Thursday, August 30, 2012, the ALJ assigned to the case issued a Procedural Order(link is external)that  scheduled the evidentiary hearing on the matter for 10:00 a.m. on Monday, April 22, 2013 at 1200 W. Washington in Phoenix.  A pre-hearing conference will be conducted at the same location at 1:30 p.m. on Wednesday, April 17, 2013.

Public comment is generally taken during the first day of the evidentiary hearing on the matter. ACC Commissioners will more than likely conduct a public comment meeting in the Company's service area if there is a large amount of customer interest on the proposed rate increase.

On Thursday, August 30, 2012, Spartan filed a request for reconsideration(link is external) of the ALJ's decision to deny intervenor status.  Also on August 30, 2012, RUCO filed a response(link is external) in support of Spartan's request for reconsideration.

On Tuesday, September 4, 2012, Robert and Barbara Gilkey filed a request to intervene(link is external)in the matter.  Also on September 4, 2012, the ALJ assigned to the case issued aProcedural Order(link is external) granting intervenor status to Spartan.

On Tuesday, September 18, 2012, the ALJ assigned to the case issued a Procedural Order(link is external) granting intervenor status to Robert and Barbara Gilkey.

On Tuesday, September 25, 2012, Robert Rist filed a request to intervene(link is external) in the matter.

On Tuesday, October 9, 2012, Rodney & Kim Taylor filed a request to intervene(link is external) in the matter.

On Wednesday, October 10, 2012, the ALJ assigned to the case issued a Procedural Order(link is external) granting intervenor status to Robert Rist.

On Monday, October 22, 2012, the ALJ assigned to the case issued a Procedural Order(link is external) granting intervenor status to Rodney & Kim Taylor.

On Monday, October 29, 2012, Jerry S. Durden filed a request to intervene(link is external) in the matter and Seth & Barbara Davis filed a  request to intervene(link is external).

On Thursday, November 15, 2012, the ALJ assigned to the case issued a Procedural Order(link is external) granting intervenor status to Jerry S. Durden and to Seth & Barbara Davis.

On Monday, December 24, 2012, RUCO filed a response(link is external) in support of motions from intervenors Durden, Gilky, Rist and Taylor requesting that the Commission hold a public comment meeting in February 2013.

On Friday, January 4, 2013, ACC Staff filed a request(link is external) for a change in the procedural schedule on the filing of written testimony.

On Tuesday, January 8, 2013, RUCO filed a response(link is external) in support of ACC Staff's request for a change in the procedural schedule on the filing of written testimony.

On Wednesday, January 16, the ALJ issued a Procedural Order Modifying Filing Deadlines(link is external) in response to ACC Staff's request.

During the Arizona Corporation Commission Staff Meeting held on Tuesday, January 22, 2013, the five ACC Commissioners agreed to hold a public comment meeting in Yuma on Far West's rate request. 

On Friday, January 25, 2013, the ALJ assigned to the case issued a Procedural Order(link is external)scheduling the public comment meeting on Far West's request for an increase in wastewater rates for Wednesday, February 20, 2013, at 6:00 p.m. in the Gila Ridge High School Auditorium, 7150 E. 24th Street, Yuma, AZ 85365.

On Wednesday, February 6, 2013, the direct testimony of Robert Rist was filed.

RUCO filed its direct testimony on Friday, February, 8, 2013.

On Friday, February 8, 2013, the ALJ assigned to the case issued a Procedural Order(link is external) granting Robert and Barbara Gilkey an extension to file direct testimony.  The ALJ extended the filing deadline for the Gilkeys and all other parties to the extent that they have not previously filed their direct testimony.

On Monday, February 11, the direct testimony of Robert and Barbara Gilkey was filed.

On Wednesday, February 13, the direct testimony of ACC Staff and Brian Householder, on behalf of Spartan, was filed.

Based on an analysis conducted by RUCO's engineering consultant, RUCO is recommending an excess capacity adjustment that removes approximately 30 percent of the costs associated with the company's wastewater plant.  RUCO's adjustments to rate base and operating expenses results in a 119.34 percent  increase in required revenue as opposed to the Company-proposed 173.52 percent increase.  A comparison of the required revenue increase recommendations of Far West, ACC Staff and RUCO can be seen below.

 

                                                 FAR WEST                 ACC STAFF                   RUCO

LINE                                         OCRB/FVRB              OCRB/FVRB                  OCRB/FVRB

NO.    DESCRIPTION              COST                          COST                             COST 

     

1    Adjusted Original Cost/        $22,800,578               $18,998,380                    $16,399,350            Fair Value Rate Base

2    Adjusted Operating              $(1,187,812)               $(611,582)                         $(404,164)            Income (Loss)

3   Current Rate of Return                 -5.21%                       -3.22%                            -2.46%             (L2 / L1)

4   Required Operating                $1,689,295                  $1,405,880                     $1,197,153           Income (L5 X L1)

5   Required Rate of Return              7.409%                      7.400%                            7.300%             on Fair Value Rate Base

6   Operating Income                    $2,877,107                $   2,017,462                   $1,601,317           Deficiency (L4 - L2)

7   Gross Revenue                             1.3437                           1.6612                          1.6605           Conversion Factor                                                                                                                           (TJC-1, Page 2)

8   Required Increase                   $3,866,046                   $3,351,423                     $2,658,963         in Gross Revenue                                                                                                                          Requirement (L7 X L6)

9    Adjusted Test Year                   $2,227,982                  $2,227,982                    $2,227,982            Revenue

10  Proposed Annual                      $6,094,028                $5,579,404                     $4,886,944            Revenue (L8 + L9) 

11  Required Percentage                  173.52%                       150.42%                        119.34%          Increase in Revenue                                                                                                                      (L8 / L9)

12  Rate of Return on                          10.00%                        10.00%                           9.25%            Common Equity

 

On Tuesday, February 19, 2013, the ALJ assigned to the case issued a Procedural Order(link is external) granting ACC Staff's request(link is external) for a filing extension on direct testimony on rate design.  Direct testimony on rate design will now be filed on Thursday, February 21, 2013.

The public comment meeting on Far West's rate request, scheduled for February, 20, 2013, was conducted on schedule near the Company's service area.  Approximately 1,200 concerned individuals attended the meeting to express their opinions on the matter with four of the five sitting ACC Commissioners.

On Thursday, February 21, 2013 RUCO filed its direct testimony on rate design.

On Monday February 25, 2013, The ALJ assigned to the case issued a Procedural Order(link is external) that denied a request to intervene from William B. and Margaret Marie Ott that was filed after the deadline for intervention.

On Tuesday, February 26, 2013, RUCO filed revised rate design schedules(link is external).

RUCO is currently evaluating information provided by Far West just prior to the deadline for filing rate design testimony on Thursday, February 21, 2013, and may offer a revised rate design prior to filing surrebuttal testimony.

Rebuttal testimony from Far West was filed on Monday, March 11, 2013, after the parties to the case agreed to a two-day filing extension.

Pursuant to a Procedural Order(link is external) that granted a two day extension, Far West filed rebuttal testimony on rate design on Wednesday, March 13, 2013.

On Thursday, March 21, 2013, RUCO filed a motion(link is external) seeking an extension to file surrebuttal testimony on rate design.

On Tuesday, March 26, 2013, the ALJ assigned to the case issued a Procedural Order(link is external) granting RUCO's request to file surrebuttal testimony on rate design. 

On Thursday, March 28, 2013, Commissioner Susan Bitter Smith filed a letter(link is external) in the docket asking the parties to the case for additional details and analyses of facts relating to the conduct of the management of Far West, and the processes for the appointment of an interim manager, together with recommendations regarding the advisability or inadvisability of the appointment of an interim manager for the Company at this time.

On Friday, March 29, 2013, ACC Staff RUCO and other intervenors to the case filed surrebuttal testimony on issues other than rate design.

Surrebuttal testimony on rate design from RUCO, ACC Staff and all other parties was filed on Wednesday, April 3, 2013.

On Friday April 5, 2013, intervenors Gilkey and Rist filed a response(link is external) to Commissioner Bitter Smith's March 28, 2013 letter.

On Thursday, April 11, RUCO filed a motion(link is external) asking that one of its out of state witnesses be able to testify telephonically during the evidentiary hearing.

On Monday April 15, 2013, ACC Staff filed a response(link is external) to Commissioner Bitter Smith's March 28, 2013 letter.

A final round of rejoinder testimony from Far West was filed on Tuesday, April 16, 2013.

The evidentiary hearing on Far West's request began as scheduled at 10:00 a.m. on Monday, April 22, 2013 and concluded on Friday, April 26, 2013 at the Arizona Corporation Commission's offices at 1200 W. Washington in Phoenix.

RUCO filed its final accounting schedules on Friday, May 3, 2013 in advance of the Wednesday, May 15, 2013 filing deadline.

On Tuesday, June 11, 2013, RUCO filed its Initial opening legal brief.

Reply briefs were filed on Tuesday, July 2, 2013.  ACC Staff elected not to file a reply brief.

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

A final decision on Far West's rate increase request is not expected until sometime during October 2013.