residential utility consumer office (ruco) pat quinn director 602 364-4838 email [email protected]
TRANSCRIPT
Water/Wastewater
What You Need to KnowSeptember 17, 2014
Agenda
1. EPCOR Agua Fria Wastewater Consolidation Docket No. SW-01303A-09-0343
2. EPCOR’s Pending Sun City Rate Case Docket No. WS-01303A-09-0343
3. Arizona Corporation Commission’s Docket on Changing the Way APS Files Rate Cases
AGUA FRIA WASTEWATER CONSOLIDATION
EPCOR CASE Cost of Service -Rate Base X Return + Expenses -Cost of service varies by community -Consolidation does not use cost of service by community but by total company costs
RUCO Position -Represents all residential customers -Any change in rates requires full cost of service rate case -Stale test years -Commission and Company want to open up the rate cases from 2008, 2010 and a just filed 2014
-Cost savings of consolidation -Current revenue requirement considering all factors and parties -Current rate design
EPCOR – CONSOLIDATED WASTEWATER RATE PROPOSAL
CURRENT RATES RECOMMENDEDSYSTEM TOTAL Note (3) RATE INC (DEC) PERCENT
Agua Fria Note (1) $ 121.91 $ 34.30 ($ 87.61) ( 71.86 %)
Anthem Note (2) $ 56.26 $ 34.30 ($ 21.95) ( 39.02 %)
Mohave WWater $ 82.79 $ 34.30 ($ 48.49) ( 58.57 %)
Sun City $ 18.11 $ 34.30 $ 16.19 89.40 %
Sun City West $ 30.96 $ 34.30 $ 3.34 10.79 %
Note: (1) Agua Fria and Anthem – Current rates reflect rates scheduled to go into effect on January 1, 2015.Note: (2) Mohave Wastewater -- Current rates reflect pending increase in rates as filed in Docket No. WS-01303A-14-0010Note: (3) All rates based on average usage of 7,000 gallons per month
AGUA FRIA CONSOLIDATED
What can you do? -Contact the Corporation Commissioners
-Let them know your position through emails, calls or voicemails, letters, petitions
Timeline -It appears the commission wants to hear this quickly, before end of the year
-Cost of service rate case would take minimum of a year
-It was on the open meeting for September 9th but was pulled
-It will probably show up in some form on the October open meeting
EPCOR 2014 RATE CASE FILING
Recent Commission decision in EPCOR's Chaparral rate case (Fountain Hills) -Majority of Commissioners sided with the company on rate of return and depreciation. -against recommendations of the ALJ, Staff and RUCO -two adjustments alone increased the rates over 26%
-Approved a System Improvement Benefit (SIB) ◦ -doubles rates over the next 5 years
-Approved several other increases tank maintenance and declining usage
-All this added up to a 43% increase for the residential customer, Order approved by Commission says a 20.3 %
-Fountain Hills reviewing options
BUT IT’S GOING TO GET WORSE
CURRENT INITIAL SIB INCREASE INCREASE ADJUSTED
YEAR RATE PER MONTH PERCENTAGE RATES 2014 $ 37.85 $ 7.68 -0-
$ 45.53 2015 $ 45.53 $ 1.76 3.87 %
$ 47.29 2016 $ 47.29 $ 1.69 3.72 %
$ 48.99 2017 $ 48.99 $ 1.73 3.79 %
$ 50.71 2018 $ 50.71 $ 1.73 3.80 % $ 52.45 2019 $ 52.45 $ 1.67 3.65 %
$ 54.11
The Order as approved by the Commission states that the rate increase on the average residential ratepayer is $7.68 per month or 20.3%. In reality, the rates increase each year and at the end of year five the rate has increased to $54.11, a percentage increase of 43.0%.
WE’RE NOT FINISHED YET
COMMISSIONERS APPROVAL vs. ALJ• Additional Depreciation Expense through the use of the Group Depreciation
Method as opposed to the modified Vintage method, and the continuation of over-depreciating Utility Plant Assets.
• Changing the Rate of Return on Rate Base from 8.06 percent to 8.95 percent.
ADDITIONAL APPROVALS Declining Usage $ 22,174 Tank Maintenance Expense (18years) $ 202,184 Additional Post Test Year Plant over what RUCO recommended $ 2,278,882 System Improvement Benefit $ 1,502,514
EPCOR 2014 SUN CITY RATE CASE
What is in the Sun City rate case -Filing includes all the issues that were approved in Chaparral case
◦ -Tank maintenance, declining usage, SIB, depreciation, post test year plant
-Adds new issues: Obama Care (insurance cost increases) -Actual rate increase over next 5 years is double because of SIB
◦ - $3.82 vs $7.64 22% vs 44%
-All numbers come from the EPCOR filing
REVENUE PROPOSED BY EPCOR
Current Revenues $
10,265,553
Total Revenues Requested (this filing) $ 11,912,007
Company Increase Requested $ 1,646,454
Percent Increase - Overall 16.04 %
Percent Increase – Residential (Note 1) 22.00 %
SIB Revenue Increases (over 5 years) $ 1,233,692
Percent Increase - Overall With SIB 28.05 %
Percent Increase - Residential With SIB 44.05 %(Note 1 – 5/8’ X ¾” and ¾” = 90% of residential ratepayers)
SIB RATE INCREASE TO RESIDENTIAL RATEPAYERS
INITIAL SIB
CURRENT INCREASE ADJUSTED YEAR RATE PER MONTH RATES
2014 $ 17.35 $ 3.82
$ 21.17
2015 $ 21.17 $ .79
$ 21.96
2016 $ 21.96 $ .76
$ 22.72
2017 $ 22.72 $ .84
$ 23.56
2018 $ 23.56 $ .70
$ 24.26
2019 $ 24.26 $ .72
$ 24.98
Overall increase from current rates 44.03%
EPCOR 2014 SUN CITY RATE CASE
Current Status -Original schedule
◦ -Filed case found sufficient 4/4/14, interveners' testimony due 10/3, hearing 12/2
-Schedule suspended 9/12 -Staff and RUCO been working with company since April -Company can't defend the accuracy of their beginning numbers -Numbers constantly changing -Not ready to file case -They will have to file new accurate data and schedules -Numbers we have shown you today will change but we don't know degree or direction -Schedule is now on a month to month process where the company, staff and RUCO meet with ALJ to discuss where we are and how to proceed
-Watch docket and we will try to keep you advised
APS REQUEST TO CHANGE RATE CASE PROCESS
Requested change -Normally in a rate case the revenue requirement and the rate design are looked at
simultaneously
-APS wants to bifurcate the rate design from the revenue requirement determination
-Based on discussion at the September 9th open meeting it appears that the majority of the Commissioners support this idea
-There was no written document describing this new process
-Everyone at the meeting besides the Commission, the Staff and APS spoke against the proposal
-The Commission didn't vote on the item but instead directed the Staff to draft a proposal
-All parties will get a chance to make comments on the proposal
-We will keep you informed to the schedule since this could move pretty fast