On Monday, August 29, 2011, Pima Utility Company ("Pima" or "Company") filed applications requesting permanent rate increases for its Water and Wastewater Divisions with the Arizona Corporation Commission ("ACC" or "Commission"). The Company provides service to customers living in the community of Sun Lakes.
According to the Company's applications, Pima is seeking revenue increases of $1,023,565, or 51.76, percent for the Company's Water Division and $691,210, or 22.32 percent, for the Company's Wastewater Division.
Under Pima's proposed rates, a residential water customer, using a 5/8 x 3/4-inch meter with an average consumption of 6,359 gallons, would see his or her bill increase $3.83, or 35.91 percent, from $10.66 to $14.49. A typical wastewater customer, using a 5/8 x 3/4-inch meter, would see a billing increase of $5.06, or 22.25 percent, from $22.73 to $27.79.
During the test year ended December 31, 2010, Pima served approximately 10,175 water connections and 10,051 wastewater connections. The Company stated that Pima’s customer base is comprised of approximately 96.00 percent residential customers, with only 196 commercial customers and 4 irrigation customers. Nearly all of the residential customers are served by 5/8 x 3/4-inch meters. Commercial customers are served by meters ranging from 5/8 x 3/4-inch to 2-inch in size.
In addition to the proposed rate increase, Pima is requesting that the Commission allow it to collect income tax expense despite the fact that the Company has chosen to be organized as a subchapter S corporation that, as a corporate entity, does not pay income taxes (taxes are passed through to shareholders who pay their proportionate share of taxes based on their individual tax situation).
On Monday, September 19, 2011, Pima filed a request(link is external) to consolidate both applications.
On Thursday, September 29, 2011, ACC Staff issued letters of sufficiency informing Pima that the Company's applications met the requirements of Arizona Administrative Code R14-2-103.
On Friday, September 30, 2011, the Administrative Law Judge ("ALJ") assigned to the case issued a Procedural Order(link is external) that grated the Company's request to consolidate the two applications and scheduled the evidentiary hearing on the matter for 10:00 a.m. on Tuesday, May 29, 2012. A pre-hearing conference will be held at 2:00 p.m. on Thursday, May 24, 2012.
On Tuesday, December 20, 2011 RUCO filed a request to intervene(link is external) in the case.
On Monday, January 9, 2012, the ALJ assigned to the case issued a Procedural Order(link is external) granting RUCO's request for intervention.
Pursuant to the Procedural Order issued on September 30, 2011, RUCO filed its direct testimony on Tuesday, March 27, 2012. Also on Tuesday, March 27, 2012, ACC Staff filed a motion(link is external) that requested an extension to file its direct testimony. ACC Staff's motion also proposed a revised schedule for filing remaining written testimony.
RUCO is recommending a 28.62 percent increase in revenue for Pima's Water Division, which is just over fifty-five percent of what the Company requested in its application with the ACC. For Pima's Wastewater Division, RUCO is recommending a 7.50 percent increase in revenue or approximately thirty-four percent of the amount of increase requested by the Company.
Under RUCO's recommended water rates, a typical Pima ratepayer with a 5/8 x 3/4-inch meter, and an average monthly consumption of 6,395 gallons, would see a bill increase of $2.11, or 19.79 percent, from $10.66 to $12.77. A typical 5/8 x 3/4-inch meter wastewater customer would see his or her monthly bill increase by $1.03, or 4.53 percent, from $22.73 to $23.76. RUCO is also recommending a 9.57 percent increase in Pima's irrigation rate as opposed to the Company-proposed 29.17 percent increase.
On Wednesday, March 28, 2012, the ALJ assigned to the case issued a Procedural Order(link is external)that granted ACC Staffs' request for an extension to file its direct testimony. The ALJ also revised the filing schedule for all remaining written testimony.
On Thursday, March 29, 2012, RUCO filed a notice of errata(link is external) correcting information contained in the direct testimony of RUCO witnesses William A. Rigsby and Timothy J. Coley.
On Tuesday, April 3, 2012, RUCO filed a notice of errata(link is external) correcting information contained in the direct testimony of RUCO witness Robert B. Mease.
On Tuesday, April 3, 2012, ACC Staff filed its direct testimony.
Pursuant to the revised filing schedule, Company rebuttal testimony was filed on Friday, April 27, 2012.
On Thursday, May 17, 2012, the ALJ assigned to the case issued a Procedural Order(link is external) that extended the filing deadline for rejoinder testimony from noon on Thursday, May 24, 2012, to 2:00 p.m. on Friday, May 25, 2012. The first day of the hearing scheduled for 10:00 a.m. on Tuesday, May, 29, 2012 at 1200 W. Washington in Phoenix, would be conducted solely for the purpose of taking public comment. The evidentiary portion of the hearing would begin at 9:30 a.m. on Wednesday, May 30, 2012.
Surrebuttal testimony from ACC Staff, RUCO and other intervenors was filed on Friday, May 18, 2012.
A final round of rejoinder testimony from the Company was filed on Friday, May 25, 2012.
The public comment portion of the hearing began as scheduled at 10:00 on Tuesday, May 29, 2012.
The evidentiary portion of the hearing began at 9:30 a.m. on Wednesday, May 30, 2012 and concluded on Friday, June 1, 2012.
During the evidentiary hearing, the Commission announced that it will hold a public comment meeting for Pima's customers at 10:00 a.m. on Tuesday, July 10, 2012 at the Sun Lakes Country Club, Navajo Room, 25601 N. Sun Lakes Blvd., Chandler, AZ 85248.
Pima, ACC Staff and RUCO filed final accounting schedules on Tuesday, June 26, 2012.
RUCO filed revisions to its final schedules on Thursday, June 28, 2012.
Initial closing legal briefs were filed on Tuesday, July 3, 2012.
A final round of reply legal briefs were filed on Friday, July 27, 2012.
After weighing all of the evidence presented in the case, the ALJ issued a Recommended Opinion and Order(link is external) ("ROO") on Friday, September 28, 2012. The ALJ recommded that Pima not be permitted to collect income taxes in rates and that the Company be permitted to establish a surcharge mechanism to collect the Commission-approved level of rate case expense.
On Friday, October 5, 2012, Pima filed a request(link is external) for an extension of deadline for filing exceptions to the ROO from Tuesday, October 9, 2012, to Wednesday, October 24, 2012.
On Tuesday, October 9, 2012, the ALJ assigned to the case issued a procedural order(link is external)granting Pima's request for an extension of the filing deadline for exceptions to the ROO.
On Wednesday, October 24, 2012, Pima's attorney filed exceptions(link is external) to the ROO.,
During the ACC's Regular Open Meeting held on Thursday, November 8, 2012, four of the five sitting Commissioners adopted an amended ROO, by a vote of 3 to 1, that denies the collection of income taxes in rates and rejects the establishment of a surcharge to recover Pima's rate case expense. On Wednesday, November 21, 2013 the Commission issuedDecision No. 73573(link is external) establishing new rates and charges for the Company.