On Friday, April 26, 2013, Chaparral City Water Company ("Chaparral" or the "Company") filed an application for a permanent rate increase ("Application") with the Arizona Corporation Commission ("ACC" or "Commission"). According to the Company’s Application, Chaparral provides water service to a total of 13,614 customers, of which 12,700 or 93.3 percent are residential customers, in portions of eastern Maricopa County including the Town of Fountain Hills.
Chaparral’s current rates were approved in Decision No. 71424, dated December 8, 2009 and Decision No. 72258, dated April 7, 2011. The Company is a wholly owned subsidiary of EPCOR Water (USA), Inc. ("EWUS") which also provides service to water and wastewater customers in Sun City, Sun City West, Paradise Valley, Lake Havasu Bullhead City and Tubac.
Chaparral is requesting an increase in annual revenues of $3,141,028 or 34.8 percent over adjusted test year revenues of $9,014,985. The reasons cited by the Company for the requested increase in rates included higher operating expenses, the recovery of new plant additions and Chaparral's inability to earn its authorized rate of return on investment.
The Company is requesting that the basic monthly service charge for residential customers (using a 3/4-inch meter) be increased from $16.50 to $22.30. Chaparral is also proposing that the current 3-tiered metered commodity rate structure be retained for residential customers. Under the Company's proposal, the first tier commodity rate (for the first 3,000 gallons) would increase from $2.31 per 1,000 gallons to $3.1061 per 1,000 gallons. The second tier commodity rate (3,001 gallons to 9,000 gallons) would increase from $2.96 per 1,000 gallons to $3.9850 per 1,000 gallons. Finally, the third tier commodity rate (any consumption over 9,000 gallons) would increase from $3.61 per 1,000 gallons to $4.8640 per 1,000 gallons.
Under the Company-proposed level of operating revenue, a typical monthly bill for a residential customer served by a 3/4-inch meter, with an average monthly consumption of 7,870 gallons, would increase by $13.18, or 34.8 percent, from $37.85 to $51.02.
In addition to the requested increase in base rates described above, Chaparral is also requesting a System Improvement Benefits ("SIB") mechanism that will allow the Company to establish annual surcharges to recover the costs of specific routine plant items placed into service between general rate case proceedings. The Company is also seeking an accounting order that would allow the Company to recover up to twenty-four months of deferred costs associated with plant that has been in service since January 1, 2012. Chaparral is further seeking a surcharge to flow Central Arizona Project ("CAP") cost increases through to the Company's ratepayers.
On Friday, May 24, 2013, the Town of Fountain Hills filed a Motion to Intervene in the matter.
On Tuesday, May 28, 2013, ACC Staff issued a Letter of Sufficiency informing Chaparral that its Application meets the filing requirements of A.A.C. R-14-2-103. A procedural order is expected in the coming weeks that will establish the date for an evidentiary hearing on the matter.
On Monday, June 10, 2013, RUCO filed an Application to Intervene in the matter.
On Monday, June 17, 2013, the Administrative Law Judge ("ALJ") assigned to hear Chaparral's request for a permanent increase in rates issued a Procedural Order scheduling the evidentiary hearing on the matter and granting RUCO's request to intervene in the case. On Tuesday June 18, 2013, the ALJ issued a correction to the procedural order and rescheduled the evidentiary hearing on the matter for 10:00 a.m. on Tuesday, February 18, 2014, at 1200 W. Washington, Phoenix, Arizona in Hearing Room No. 1. A pre-hearing conference is scheduled for 2:00 p.m. on Thursday, February 13, 2014, at the same location.
On Friday, August 2, 2013, the Town of Fountain Hills filed a Motion to Intervene signed by an active member of the Arizona bar.
ACC Staff, RUCO and other intervenors to the case will file direct testimony on issues other than rate design by 4:00 p.m. on Monday, November 25, 2013. Direct Testimony on rate design will be filed by 4:00 p.m. on Thursday, December 5, 2013. Chaparral will file rebuttal testimony on Monday, December 30, 2013 by 4:00 p.m. This will be followed by surrebuttal testimony from ACC Staff, RUCO and other intervenors to the case by 4:00 p.m. on Tuesday, January 21, 2014. A final round of rejoinder testimony is due by noon on February 11, 2014.
After the evidentiary hearing, the five sitting ACC Commissioners will vote on Chaparral's request for a rate increase during a noticed open meeting. Chaparral's request will most likely be voted on sometime during the second quarter of 2014.