On Monday, August 31, 2009, Bella Vista Water Company, Inc. (“BVWC”), Northern Sunrise Water Company, Inc. (“NSWC”) and Southern Sunrise Water Company, Inc. (“SSWC”) submitted a consolidated application ("Application") collectively as Bella Vista Water Company, Inc. (“BVWC” or “Company”) with the Arizona Corporation Commission ("ACC" or "Commission"). BVWC is a Class A utility that provides water service to approximately 9,610 customers of which 8,554, or 89.1 percent, are residential ratepayers.
BVWC’s service territory is located in a small region of southeastern Arizona, centered in Sierra Vista in Cochise County. BVWC’s present rates were established in Decision No. 65350, dated November 2, 2001. NSWC’s and SSWC’s present rates were established when they received their respective Certificate of Convenience and Necessity (“CC&N”) in Decision No. 68826, dated June 29, 2006 (RUCO was an intervenor in both proceedings). The Company is part of Liberty Water, a subsidiary of Algonquin Power & Utilities Corp., a large publicly traded Canadian corporation that is based in Toronto. Algonquin Power & Utilities Corp. also owns other public service companies in Arizona including Liberty Water's Black Mountain Sewer Company, Gold Canyon Sewer Company, Rio Rico Utilities and Litchfield Park Service Company.
According to BVWC’s Application, the Company had adjusted gross revenues of $4,162,136 during the test year ended March 31, 2009 (“Test Year”). Operating expenses for the same period totaled $4,123,965 thus resulting in an operating income of $38,170. This produced a Test Year rate of return of 0.44 percent when applied to the Company-proposed fair value rate base of $8,628,612. BVWC is requesting an increase of $1,510,349, or 36.29 percent over Test Year adjusted operating revenues. The Company-proposed rates will provide BVWC with operating income of $965,542 or a 12.5 percent rate of return on invested capital.
Under the Company-proposed level of operating revenue, a typical residential customer will experience the following change in rates:
BVWC customer - from $22.90 per month to $33.59 per month (+46.72 percent)
NSWC customer - from $43.08 per month to $31.05 per month (-12.03 percent)
SSWC customer - from $42.60 per month to $30.53 per month (-12.07 percent)
In addition to the requested rate increase described above, the Company is also requesting a new hook-up fee tariff and a low-income tariff.
On Wednesday, September 30, 2009, ACC Staff notified BVWC that its Application was sufficient.
On Tuesday, October 27, 2009, RUCO filed a motion to intervene in the case on behalf of residential ratepayers.
On Monday, November 9, 2009, the Administrative Law Judge ("ALJ") assigned to the case issued a procedural order setting the evidentiary hearing in the matter for Monday, June 28, 2010 at 10:00 a.m., at the Commission’s offices, 400 West Congress, Room 222 in Tucson, Arizona.
On Monday, May 3, 2010 the ALJ issued another procedural order that rescheduled the evidentiary hearing in the matter for 10:00 a.m. on Wednesday, July 21, 2010 at 400 West Congress in Tucson. Public comment will be taken at the start of the hearing and will also be heard at 10:00 a.m. on Monday, June 28, 2010 at the same location (the original time and place for the evidentiary hearing).
During the discovery phase of the proceeding, RUCO's in-house staff analyzed BVWC's application and performed a full cost of capital study.
RUCO's direct testimony on required revenue was filed on Monday, April 12, 2010. RUCO's direct testimony on rate design and supplemental direct testimony was filed on Friday, April 23, 2010. Company rebuttal testimony was filed on Tuesday, May 25, 2010. RUCO's surrebuttal testimony was filed on Friday, June 18, 2010. A final round of Company rejoinder testimony was filed on Wednesday, July 7, 2010. A pre-hearing conference was held on Thursday, July 15, 2010.
The first two days of the rescheduled hearing were held on Wednesday and Thursday, July 21 and 22, 2010 at 400 West Congress in Tucson. The hearing resumed on Monday, August 16, 2010 at 1200 W. Washington in Phoenix and concluded on Thursday, August 19, 2010.
During the evidentiary hearing RUCO's Director and staff testified as expert witnesses on the results of their analysis on the Company's Application and faced cross examination by attorneys representing the Company and ACC Staff. RUCO's attorney cross examined witnesses for the Company and ACC Staff.
RUCO filed its final accounting schedules on Friday, September 10, 2010, six days ahead of the Thursday, September 16, 2010 deadline. Initial closing legal briefs were filed on Tuesday, October 5, 2010. Reply briefs are now due on Friday, October 29, 2010.
On Tuesday, March 15, 2011, after weighing the evidence presented in the case, the ALJ, assigned to the case issued her Recommended Opinion and Order (ROO). Exceptions from the parties to the case are due on Thursday, March 24, 2011.
During the Regular Open Meeting held on Tuesday, March 29, 2011, ACC Commissioners adopted an amended ROO that provides Liberty Water's systems with an 18.26 percent increase in revenues a by a vote of 4-1.