Rio Rico Utilities, Inc. - 2012 Rate Case

Status
Prior
Docket Number
WS-02676A-12-0196
Assigned Staff
Dan Pozefsky
T. Coley

 

Case Information:

On Thursday, May 31, 2012, Rio Rico Utilities, Inc. (“RRUI” or “Company”), filed an application(link is external) for the Company's water and wastewater operations in Santa Cruz County ("Application") with the Arizona Corporation Commission ("ACC" or "Commission").

According to the Company's Application, RRUI is a public service corporation that provides water and wastewater service to approximately 8,958 customers (6,751 water only customers and 2,207 wastewater only customers) the majority of which are residential ratepayers.  The Company has chosen a test year ended February 29, 2012 (“Test Year”).  Rio Rico’s present rates were established in Decision No. 72059, Dated January 6, 2011(link is external).  The Company is a subsidiary of Liberty Utilities which also owns other public service corporations in Arizona including Litchfield Park Service Company, Bella Vista Water Company, Gold Canyon Sewer Company and Black Mountain Sewer Corporation.

According to RRUI’s Application, the Company's Water Division had adjusted gross revenues of $2,854,838 and operating income of $375,933 during the Test Year resulting in a rate of return of 4.93 percent on an adjusted fair value rate base of $7,629,607.  During the same period, the Company's Wastewater Division had adjusted gross revenues of $1,360,583 and an operating income of $213,826 resulting in a rate of return of 4.65 percent on an adjusted fair value rate base of $4,600,012.

RRUI is requesting a revenue increase of $604,079, or 21.16 percent for the Company's Water Division and an increase in revenue of $393,612, or 28.93 percent for the Company's Wastewater Division.

Under the Company-proposed increase in revenues, a typical water customer using a 5/8 x 3/4-inch meter, with an average consumption of 7,794 gallons, will see his or her monthly bill increase by $7.41, or 24.91 percent, from $29.75 to 37.16.  A typical wastewater customer, using a 5/8 x 3/4-inch water meter, will see his or her monthly bill increase by $14.13, or 30.80 percent, from $45.88 to $60.01.

On Thursday, June 28, 2012, RRUI filed amended pages(link is external) to the Company's Application. 

On Monday, July 2, 2012, ACC Staff issued a letter of sufficiency(link is external) informing RRUI that its Application meets the sufficiency requirements of A.A.C R14-2-103.

On Friday, July 6, 2012, RUCO filed an application(link is external) with the Arizona Corporation Commission to intervene in the case.

The Administrative Law Judge ("ALJ") assigned to the case issued a Procedural Orde(link is external)r on Friday, July 13, 2012, granting intervention status to RUCO and originally scheduling the evidentiary hearing on the matter.

A pre-hearing conference has been scheduled for 9:30 a.m. on Thursday, March 21, 2013 at 400 W. Congress Room 222 in Tucson.

On Thursday, August 9, 2012, RUCO staff members assigned to the case toured RRUI's plant and inspected additions that were placed into service since the Company's last rate case.  RUCO staff also toured the Nogales International Wastewater Treatment Plant where the majority of Rio Rico's wastewater flows are treated under an agreement with the City of Nogales.

On Monday, August 13, 2012, the attorney representing RRUI filed a request(link is external) to delay the start date of the evidentiary hearing by one day and begin on Wednesday, March 27, 2013.

On Friday, August 17, 2012 the ALJ assigned to hear the matter granted the Company's request to delay the start date of the evidentiary hearing by one day and begin at 10:00 a.m. on Wednesday, March 27, 2013 at 400 W. Congress, Room 222 in Tucson.  Public comment will be taken during the first day of the evidentiary hearing. The ACC Commissioners may conduct a public comment meeting in RRUI's service area if there is enough input from ratepayers who are served by the Company.

On Friday, December 7, 2012, Santa Cruz County filed an application to intervene in the matter.

On Friday, December 28, 2012, the ALJ assigned to the case issued a Notification of Intervention(link is external) granting intervenor status to Santa Cruz County.

On Monday, December 31, 2012, ACC Staff and RUCO filed their direct testimony on required revenue, cost of capital and other issues in the case.

On Monday, January 7, 2013, ACC Staff and RUCO filed their direct testimony on rate design.

On Friday, January 11, 2113, ACC Staff filed a notice(link is external) informing the Commission that the parties to the case may enter into settlement discussions on or after January 18, 2013 in the Utility Director’s Conference Room at the ACC Offices at 1200 W. Washington in Phoenix. The Notice served to comply with the Commission’s Settlement Policy by providing three working days’ notice prior to Staff entering into settlement negotiations.

On Wednesday, January 23, 2013, the  Santa Cruz Valley Unified School District #35 filed an application to intervene with the ACC.

On Thursday, January 24, 2013, the parties to the case met to discuss a possible settlement agreement but were unable to come to terms.  Latter that day, the Company notified the Director of the ACC's Utilities Division that it did not wish to continue negotiations.

Company Rebuttal testimony was filed on Monday, January 28, 2013.

On Thursday, February 7, 2013, the ALJ assigned to the case issued a Notification of Intervention(link is external) granting intervenor status to Santa Cruz Valley Unified School District #35 to represent the school district's interests.

Surrebuttal testimony from ACC Staff, RUCO and other intervenors was filed on Tuesday, February 19, 2013.

On Thursday, February 21, 2013, RUCO filed a notice of errata(link is external) that made minor corrections to RUCO's surrebuttal testimony.

On Tuesday, February 26, 2013, RRUI, filed a request seeking a three day extension for the filing of Company rejoinder testimony.

On Thursday, February 28, 2013, the ALJ assigned to hear the case issued a Procedural Order(link is external) granting RRUI's request for a three day extension for the filing of Company rejoinder testimony.

On Friday, March 1, 2013, RRUI filed a motion(link is external) to bifurcate the evidentiary hearing and treat the Company's request for a Distribution System Improvement Charge ("DSIC") as a stand-alone issue.  Under RRUI's proposal, the DSIC issue would be the subject of a second phase of the evidentiary hearing on RRUI's rate increase request.

On Thursday, March 7, 2013, RUCO filed a response(link is external) to RRUI's motion to bifurcate.

RRUI filed its rejoinder testimony on Friday, March 8, 2013.

On Friday, March 8, 2013, the Santa Cruz Valley Unified School District #35 and Santa Cruz County  filed a joint response(link is external) to RRUI's motion to bifurcate.

On Monday, March 11, 2013, RRUI filed a response(link is external) to RUCO's response to RRUI's motion to bifurcate and a response(link is external) to Santa Cruz Valley Unified School District #35 and Santa Cruz County's joint response to RRUI's motion to bifurcate.

On Tuesday, March 12, 2013, ACC Staff filed a response(link is external) in support of the Company's motion to bifurcate.

On Wednesday, March 20, 2013, the ALJ assigned to the case issued a Procedural Order(link is external)which presented three options for handling the Company's request for bifurcation.

During the pre-hearing conference conducted on Thursday, March, 21, 2013, RRUI offered to withdraw its request for a DSIC. the Company's offer was accepted by the ALJ. 

The evidentiary hearing began on Wednesday, March 27, 2013.  Over the course of the hearing, RRUI, ACC Staff and RUCO reached agreement on a number of disputed issues.  The hearing concluded on Friday, March 29, 2013.

On Friday, April 19, 2013, the Company filed a stipulation(link is external) to extend the filing dates for post hearing legal briefs.  All of the parties to the case were in agreement on the revised filing dates.

Final accounting schedules were filed on Tuesday, April 23, 2013.

Initial closing legal briefs were filed on Friday, May 3, 2013.

A final round of reply briefs were filed on Wednesday, May 15, 2013.

After weighing all of the evidence presented in the matter, the ALJ assigned to the case issued a Recommended Opinion and Order(link is external) ("ROO") on Tuesday, July 2, 2013.

Under the rates recommended by the ALJ, a typical residential water customer using a 5/8 x 3/4-inch meter, with a monthly consumption of 9,061 gallons, will see his or her monthly bill increase by $4.53, or 13.52 percent, from $33.49 to 38.02. A typical residential wastewater customer, will see his or her monthly bill increase by $3.12, or 6.80 percent, from $45.88 to $49.00.

On Thursday, July 11, 2013,  RUCO filed a notice(link is external) stating that it had no objections to the ROO.  Latter that day, RRUI filed a request for clarification(link is external) asking that certain corrections be made regarding the ALJ's recommended rate design and expressing the Company's support for the ROO.

By a final vote of 5 to 0, the five sitting ACC Commissioners adopted an amended ROO that included RRUI's corrections during the Regular Open Meeting conducted on Wednesday, July 17, 2013.

On Tuesday, July 30, 2013, the Commission issued Decision No. 73996(link is external) which established RRUI's new rates and charges.