On February 7, 2014, RUCO filed surrebuttal testimony on Chaparral City Water Company's ("CCWC") request for rate increases in its water system. CCWC provides water service to the Town of Fountain Hills and is a subsidiary of EPCOR Water Arizona, Inc. Chaparral filed its original application for a permanent rate increase with the ACC on Friday, April 26, 2013. The Company has since filed rebuttal and rejoinder testimony and is seeking a revenue increase of $3,089,039 or 34.3% over its test year adjusted operating revenue of $9,014,985. RUCO is proposing a revenue increase of $1,068,501 or 11.77% on test year adjusted operating income.
Additional testimony was filed on February 12, 2014, and hearings began on February 18, 2014. Hearings concluded on February 28, 2014.
Decision No. 74568 was issued on Friday, June 20, 2014, which calls for $2.1 million increase in rates. However, the majority of the Commission voted against the Hearing Division, Staff and RUCO to give the Company a higher rate of return and higher depreciation expense. This resulted in more money for the Company and higher prices for the residential ratepayer. Additionally, the Commission approved several Company proposed pro-forma/adjustor mechanisms listed below:
1. Declining Usage
2. Central Arizona Project adjustor mechanism
3. Projected tank maintenance expense
4. System Improvement Benefit charge
Under the Recommended Opinion and Order ("ROO") from the Corporation Commission hearing division (dated May 28, 2014) a typical 3/4 inch residential customer with an average usage of 7,870 gallons per month would experience a $6.16 or 16.28 percent increase in rates from $37.85 to $44.01.
Under two amendments offered by Commissioner Susan Bitter Smith, the first of which increased the Rate of Return on Rate Base from 8.06 percent in the ROO to 8.95 percent, and the second amendment which allows the Company to continue to depreciate its fully depreciated plant assets, both of which were adopted; have the effect of increasing the typical 3/4 inch residential customer bill with an average usage of 7,870 gallons per month by $7.68 or 20.29 percent from $37.85 to $45.53.
On September 7 and September 10, 2014, RUCO and the Town of Fountain Hills filed a Motion for Rehearing which was denied by the Commission's failure to grant it within the necessary time frame. RUCO appealed the Commission's Decision as far as it related to the SIB.
On October 3, 2014, the Town of Fountain Hills filed a Formal Complaint at the Commission against Chaparral Water Company. RUCO has sought to intervene and both the Town and Staff have answered. The matter is currently pending before the Commission.
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