Rio Rico Utilities, Inc. - 2009 Rate Case

Docket Number
Assigned Staff
W. Rigsby
T. Coley
D. Pozefsky


On May 21, 2009, Rio Rico Utilities, Inc. (“Rio Rico” or “Company”) filed an application for the Company's utility operations in Santa Cruz County ("Application") with the Arizona Corporation Commission ("ACC" or "Commission").

Rio Rico is a Class A utility that provides water and wastewater service to approximately 6,000 customers (4,000 water only customers and 2,000 wastewater only customers) the majority of which are residential ratepayers. The Company has chosen a test year ended December 31, 2008 (“Test Year”). Rio Rico’s present rates were established in Decision No. 67279, dated October 5, 2004. The Company is a subsidiary of the Algonquin Power Income Fund, a Canadian mutual fund that is based in Toronto, which also owns other public service companies in Arizona including Litchfield Park Service Company, Bella Vista Water Company, Gold Canyon Sewer Company and Black Mountain Sewer Corporation.

According to Rio Rico’s Application, the Company's Water Division had adjusted gross revenues of $1,847,256 and an operating loss of $214,606 during the Test Year resulting in negative rate of return of 2.54 percent on an adjusted fair value rate base of $8,455,517. During the same period, the Company's Wastewater Division had adjusted gross revenues of $1,829,976 and an operating income of 490,676 resulting in a positive rate of return of 13.96 percent on an adjusted fair value rate base of $3,516,078.

Rio Rico is requesting a revenue increase of $2,057,112, or 111.36 percent for the Water Division and a decrease in revenue of $89,058, or -4.87 percent for the Wastewater Division.

After resolving problems with the Company's original filing, ACC Staff notified Rio Rico that its Application was sufficient in a letter(link is external) dated June 30, 2009.

On Tuesday, July 14, 2009, RUCO filed a motion to intervene(link is external) in the case on behalf of residential ratepayers.

On Friday, July, 10, 2009, the Administrative Law Judge ("ALJ") assigned to the case issued a procedural order(link is external) which scheduled the evidentiary hearing in the matter for 10:00 a.m. on Wednesday, March 10, 2010 at the Commission's offices at 400 W. Congress Street in Tucson. Public comment will be taken at the start of the hearing.

Written direct testimony from ACC Staff, RUCO and any other intervenors to the case on cost of capital was filed on December 15, 2009. Written direct testimony from ACC Staff, RUCO and any other intervenors to the case on required revenue was filed on December 23, 2009. Direct testimony on rate design and cost of service was filed on Monday, January 4, 2010. This was followed by a round of Company rebuttal testimony on February 1, 2010.

On Friday, February 19, 2010, ACC Staff filed a motion for an extension(link is external) to file surrebuttal testimony on RRUI's request for increased rates. Neither RUCO or RRUI opposed ACC Staff's motion for the filing extension.

On Friday, February 19, 2010 the ALJ assigned to the case issued a procedural order(link is external)granting ACC Staff's motion. RUCO filed surrebuttal testimony on Wednesday, February 24, 2010. On Thursday, February 25, 2010, ACC Staff filed a second motion for extension(link is external)to file surrebuttal testimony on Monday, March 1, 2010. The motion also sought to extend the filing date for Company rejoinder testimony to Tuesday, March 9, 2010.

The ACC's evidentiary hearing on RRUI began as scheduled on Wednesday, March 10, 2010 at 400 W. Congress in Tucson. Public comment was taken at the start of the hearing and a number of concerned citizens expressed their views on the proposed 98 percent increase in water rates. RUCO's Chief Legal Counsel cross examined RRUI witnesses during the first four days of the hearing. The evidentiary hearing was concluded at approximately 7:00 p.m. on Tuesday, March 30, 2010 at 1200 West Washington in Phoenix. Both of RUCO's witnesses testified on the final day of the hearing.

Final accounting schedules were filed on Friday, April 9, 2010. RUCO's Initial closing legal briefs were filed on Monday, April 19, 2010. Reply legal briefs were filed on Monday, May 10, 2010.

On Wednesday, May 19, 2010, a procedural order(link is external) was issued scheduling a public comment meeting for 6:00 p.m. on Wednesday, June 2, 2010 at the Santa Cruz County Board of Supervisors Conference Room, 2150 N, Congress Drive, Nogales AZ 85621.

During the scheduled public comment meeting, ratepayers served by RRUI had the opportunity to express their views with three of the five sitting ACC Commissioners.

On Tuesday, November 30, 2010, the ALJ assigned to the case issued her Recommended Opinion and Order(link is external) ("ROO") which recommends that the Commission increase RRUI's water rates by 74.41 percent and decrease the company's wastewater rates by 15.99 percent.

On Thursday, December 9, 2010, RUCO filed exceptions to the ROO.

During the Regular Open Meeting held on Wednesday, December 15, 2010, the five sitting ACC Commissioners passed an amended ROO which adopted a lower 8.74 percent rate of return that was agreed on by Liberty Water and RUCO.