Arizona-American Water Company, Inc. - Anthem/Agua Fria Wastewater District Deconsolidation

Docket Number
Assigned Staff
Dan Pozefsky
W. Rigsby


Case Information:


On Thursday, July 2, 2009, Arizona-American Water Company, ("AAWC" or "Company"), a wholly owned subsidiary of American Water Works Company (NYSE: AWK), filed an application for a permanent rate increase with the Arizona Corporation Commission ("ACC" or "Commission") requesting rate increases for AAWC's Anthem and Sun City Water Districts, and  the Company's Anthem/Aqua Fria, Sun City, and Sun City West Wastewater Districts.

On Wednesday, December 15, 2010, the five sitting ACC Commissioners passed Decision No. 72047(link is external), that adopted RUCO's recommended lower 9.50 percent cost of common equity (resulting in a 6.70 percent overall rate of return), and accepted an agreement between AAWC, Anthem Community Council, ACC Staff, and RUCO for phased-in water rates to mitigate the impact of $23.3 million in AAWC repayments to Pulte Homes for Anthem water and wastewater infrastructure.  The agreement also sought to keep the existing docket open for the purpose of deconsolidating the Anthem/Agua Fria Wastewater District.

On Friday, April 1, 2011, pursuant to Decision No. 72047, AAWC filed an application supporting consideration of stand-alone (i.e. deconsolidated) revenue requirements and rate designs for the Anthem/Agua Fria Wastewater District ("Application(link is external)").  According to the Company's Application, a typical Anthem ratepayer, with average monthly water consumption of 5,814 gallons, will see their monthly bill fall from $68.88 to $55.42 or a decrease of $13.46.  On the other hand, Agua Fria customers, with average monthly water consumption of 5,297 gallons, will see their monthly bill climb from $66.30 to $108.34 or an increase of $42.04.

On Monday, April 4, 2011, the Administrative Law Judge ("ALJ") assigned to hear AAWC's proposed deconsolidation, issued a Procedural Order(link is external) scheduling a procedural conference for 2:00 p.m. on Tuesday, April 19, 2011 in Hearing Room #1 at 1200 W. Washington in Phoenix. 

During the procedural conference held on April 19, 2011, parties to the case had the opportunity to discuss a procedural schedule on AAWC's deconsolidation proposal. 

On Wednesday, April 27, 2011, the ALJ assigned to the case issued a Procedural Order(link is external) scheduling the evidentiary hearing and a pre-hearing conference on the matter.

On Friday, July 15, 2011, the ALJ assigned to the case issued a Procedural Order(link is external) granting intervenor Corte Bella Country Club's request for an extension of the filing deadline for written direct testimony, and AAWC's request to extend the filing dates for all other written testimony and the scheduled evidentiary hearing.

The evidentiary hearing on the matter is now scheduled for 10:00 a.m. on Monday, November 14, 2011 at 1200 W. Washington in Phoenix.  A pre-hearing conference will be held at 2:00 p.m. on Monday, November 7, 2011.

On Tuesday, August 16, 2011, ACC Staff, RUCO and other intervenors to the case filed direct testimony.

Rebuttal testimony was filed by AAWC on Tuesday, September 13, 2011.

On Tuesday, October 11, 2011, the parties to the case, including RUCO, filed surrebuttal testimony as scheduled. 

A final round of rejoinder testimony was filed by AAWC on Tuesday, November 1, 2011.

On Monday, October 17, 2011, three of the five sitting Commissioners heard public comment from Anthem and Agua Fria customers who voiced their concerns on the Company's deconsolidation proposal.  Ratepayers filled two hearing rooms at 1200 W. Washington in Phoenix.

On Monday, November 7, 2011, a pre-hearing conference was held at the Commission's Phoenix Office for the purpose of scheduling expert witness appearances during the evidentiary hearing.

On Monday, November 14, 2011, RUCO filed a Notice of Errata(link is external) which corrected typographical errors in its direct rate design testimony and summary of testimony.

The evidentiary hearing on the matter began as scheduled on Monday, November 14, 2011.  The hearing was recessed earlier than expected on its third day and concluded on Thursday, November 17, 2011.

Opening legal briefs were filed by the attorneys representing the parties to the case on Tuesday, January 17, 2012. 

Reply briefs were filed on Tuesday, February 7, 2012.  RUCO elected not to file a reply brief and stands by its opening brief.  

After weighing all of the evidence presented during the proceeding, including comments from concerned ratepayers, the ALJ assigned to the case issued her Recommended Opinion & Order (link is external)("ROO") on Tuesday, April 10, 2012.  The ROO takes the position that deconsolidation is "not in the public interest at this time." The ALJ is also recommending that EPCOR Water (USA), the new owner of AAWC, file a future rate application that includes all of its water and wastewater systems and provides two separate scenarios, one that includes Sun City and one which does not,  for a phase-in that will lead to a gradual transition toward consolidated rates as ordered by Decision No. 72047.

On Monday April 16, 2012, the City of Phoenix filed a request for an extension(link is external) to file exceptions which was approved by the ALJ in a Procedural Order(link is external) issued on the same date.

On Wednesday, April 18, 2012, the ALJ assigned to hear the matter issued a Procedural Order(link is external) that extended the date for all parties who wish to file exceptions to the ROO. 

Exceptions to the ROO are now due on Friday, April 27, 2012.

On Wednesday, April 18, 2012, ACC Commissioners pulled the item from its April 24 and 25 Regular Open Meeting agenda. 

By a vote of 3 to 2, the five sitting ACC Commissioners rejected the recommendations of the ALJ and passed a final decision that orders the deconsolidation of the Anthem/Agua Fria Wastewater district during the Regular Open Meeting held on Tuesday, May 22, 2012, at 1200 W. Washington in Phoenix.