On March 9, 2009, Litchfield Park Service Company (“LPSCO” or “Company”) filed applications with the Arizona Corporation Commission ("ACC" or "Commission") seeking permanent rate increases for the Company's water and wastewater utility operations in Maricopa County.
The evidentiary hearing on LPSCO's rate request began as scheduled with public comment on Monday, January 4, 2010. The hearing was conducted over approximately seven days and concluded on Friday, January 15, 2010.
During a Regular Open Meeting held on Monday, November 22, 2010, the five sitting ACC Commissioners passed an amended Recommended Opinion and Order that adopted an 8.01 percent cost of common equity that RUCO recommended in its direct testimony. Commission Decision No. 72026, dated December 10, 2010(link is external), also adopted a revised rate design and phased-in rates.
On Wednesday, December 29, 2010, LPSCO filed an Application for Rehearing(link is external) seeking to overturn the Arizona Corporation Commission's Final Decision to adopt an 8.01 percent return on common equity which resulted in lower rates for the Company's ratepayers.
On Friday January 14, 2011, RUCO's filed a request for reconsideration(link is external) under A.R.S. § 40-252 seeking a rehearing of whether the $7 million in upgrades to the Company's Palm Valley Reclamation Facility which RUCO opposed during the original rate case proceeding.
By a vote of 4 to 1, the five sitting ACC Commissioners voted to grant LPSCO's request for a rehearing and RUCO’s Request for Reconsideration during an ACC Staff Meeting held on Tuesday, January 18, 2011.
On Wednesday, January 26, 2011, attorneys for LPSCO, Arizona Corporation Commission Staff, The City of Litchfield Park and RUCO appeared before an Administrative Law Judge ("ALJ") during a scheduled procedural conference to discuss a number of issues associated with the rehearing of LPSCO's request for a permanent rate increase. The procedural conference, held at the ACC's Phoenix offices at 1200 W. Washington, was called to order at 11:00 a.m. and lasted approximately one hour. ACC Commissioner Sandra Kennedy, who voted against the rehearing, was present during the conference and expressed her desire to hold a future public comment meeting in LPSCO's service area.
On Friday, January 28, 2011, LPSCO filed a request for clarification(link is external) seeking to limit the rehearing to the return on common equity issue and to prevent RUCO and the The City of Litchfield Park from presenting new witnesses in the matter.
On Wednesday, February 16, 2011, ACC Commissioner Paul Newman filed a letter(link is external) requesting that the Commission reconsider its recent decision to rehear the LPSCO rate case. In his letter, Commissioner Newman expressed concerns regarding the incurrence of additional rate case expense, which could ultimately be borne by ratepayers, and the drain on the parties’ resources, as well as limited Staff and Commission resources. Commissioner Newman also cited the extensive public comments received in the case before and after the issuance of Decision No. 72026, and following the vote to revisit the issues on rehearing. Commissioner Newman asked that the Commission’s decision, during the January 18, 2011 Staff Open Meeting, to grant rehearing/reopening of Decision No. 72026 be placed on the next available Open Meeting agenda, with notice and an opportunity to be heard for the parties.
On Thursday, February 24, 2011, RUCO filed a response(link is external) to Commissioner Newman's February 16, 2011 correspondence. RUCO's filing also responded to LPSCO's request for clarification filed on Friday, January 28, 2011.
During the Regular Open Meeting held on Tuesday, March 2, 2011, LPSCO's attorney offered two amendments to Commission Decision No. 72026: the first of which would increase LPSCO's return on common equity from 8.01 percent to 9.00 percent and the second of which would forgo carrying charges on uncollected revenues during the phase-in period for the Rates approved by the ACC in December 2010. The Commissioners agreed to delay their vote, on whether or not to go forward with the rehearing, for several hours, in order to give LPSCO, The City of Litchfield Park, ACC Staff and RUCO the opportunity to reach a possible settlement agreement on the Company's proposed amendments.
Discussion on a possible settlement continued through Wednesday morning just prior to the beginning of the Regular Open Meeting held at 10:00 a.m. on March 2, 2011 at 1200 W. Washington in Phoenix. However, the parties to the case were unable to forge a satisfactory agreement.
After being informed that the parties were unable to reach a settlement agreement, four of the five ACC Commissioners, who were present during the Regular Open Meeting, voted 4-0 to reverse their January 18, 2011 decision to rehear the LPSCO rate case.
On March 9, 2011, the Commission issued Decision No. 72217 (link is external)which brings closure to the rehearing matter.
LPSCO now has the option of appealing Decision No. 72026 if it wants to.