On April 1, 2008, Johnson Utilities, LLC (“Johnson” or the “Company”) filed a rate application (Application) with the Arizona Corporation Commission ("ACC" or "Commission") requesting a decrease of $2,233,480, or a negative 16.96 percent over Test Year adjusted operating revenues, for the Company's Water Division and an increase of $2,239,804 or 19.84 percent over Test Year adjusted operating revenues for Johnson's Wastewater Division.
During a Special Open Meeting held on Wednesday, August 11, 2010, the five sitting ACC Commissioners voted to adopt Decision No. 71854, which decreased Johnson's water and wastewater revenues by $3,398,960 and $1,667,019 respectively, thus resulting in lower rates for Johnson's water and wastewater customers.
On Wednesday, March 2, 2011 Johnson petitioned the ACC to amend Decision No. 71854.
On Friday, August 26, 2011, ACC Staff filed a memorandum related to possible changes to Decision No. 71854 for the purpose of aiding Commissioners in considering the changes agreed to by Johnson. Later that same day, ACC Staff filed a Sample Form of Order Amending Decision No. 71854.
During the Regular Open Meeting held on Tuesday, September 6, 2011, the five sitting Commissioners adopted Staff's Sample Form of Order order by a vote of 3 yes, 1 no and 1 abstention and and subsequently issued Decision No. 72579 on September 15, 2011 which established Johnson's increased current rates and charges.
On Friday, February 22, 2013, the Commission issued Decision No. 73739 adopting an Income Tax Policy Statement which allows for pass-through entities (i.e., limited liability companies, Subchapter S corporations, and partnerships), as well as sole proprietorships, to impute income tax expense in the cost of service which can be passed on to ratepayers in the form of higher rates.
On Friday, March 8, 2013, Johnson filed a petition to amend Decision No. 71854 in order to recover income tax expense through rates under the Commission's revised policy.
On Monday, March 27, 2013 Commissioner Gary Pierce filed a Letter to ACC Utilities Division Director Steve Olea, asking that Commission Staff review the petition and the attached calculations to ensure that they comply with the Commission's adopted policy. Commissioner Pierce also asked to hear Mr. Olea's recommendation on Johnson's proposal for a six year stay-out if the Commission approves the Company's petition.
On Monday, April 8, 2013 Director Olea filed a response to Commissioner Pierce's letter.
On Thursday, April 4, 2013, RUCO filed a response opposing Johnson's petition to amend Decision No. 71854.
On Monday, April 22, 2013, Swing First Golf LLC's filed a response to Johnson's petition to amend Decision No. 71854.
On Friday, April 26, 2013, ACC Staff filed its Staff Report and Proposed Order on Johnson's petition.
By a final vote of 4 to 1, ACC Commissioners approved Johnson's request and allow the Company to raise its rates to recover shareholder's personal income taxes. The Commission approved Johnson's request despite ratepayers complaints regarding service quality during the Regular Open Meeting held on Thursday, June 27, 2013.
Under the Proposed Order adopted by the Commission, Johnson is required to file a full rate case application for both its water and wastewater divisions by no later than June 30, 2015, using a 2014 calendar year test year.
On Tuesday, July, 16, 2013, the Commission issued Decision No. 73992 establishing Johnson's new rates and charges.
On Friday, July 26, 2013, Johnson filed a petition for rehearing Decision No 73992's requirement that the Company file rate case applications for its water and wastewater systems by June 30, 2015, using a test year ending December 31, 2014.
RUCO's APPLICATION FOR REHEARING OF DECISION NO. 73992
On Wednesday, July 31, 2013, RUCO filed an Application for Rehearing of Decision No. 73992 ("Application for Rehearing") with the ACC. In its Application for Rehearing, RUCO is requesting that the Commission reopen the Johnson rate case for the purpose of rehearing the income tax issue. RUCO argues that the imputation of an income tax expense that does not exist will result in a higher rate of return that what was authorized in the Commission's Decision. The Commissioners have twenty days to act on RUCO's request. If the Commissioners do not act on RUCO's Application for Rehearing within the twenty day period, the request is denied by operation of law. RUCO would then have thirty days to appeal Decision No. 73993 in the Arizona Court of Appeals.