EPCOR Water is preparing an application for a new rate case with representatives going before the Town Council Oct. 6 to make a presentation for the town.
EPCOR Government Relations Director Chad Guzman reminded the council that the company is currently using interim water rates for the Chaparral Water District that includes Rio Verde. In early 2019 the Arizona Corporation Commission considered a new rate structure based on total consolidation of all EPCOR districts. In March 2019, the ACC rejected the consolidation plan on a 2-2 deadlock vote with one commissioner recusing herself. The commission provided EPCOR with opportunity to apply for interim rates and ordered a new application be filed with 2019 being used as the test year.
The formal rate application process takes 24 to 30 months, with the company presenting its expenses to be reviewed and approved by the ACC. Investment in the utility is examined for prudency and use/usefulness.
Customers are notified and the hearing procedure is scheduled by an administrative law judge.
Guzman outlined for the council how EPCOR uses every dollar it receives from its customers. He presented it as follows:
*32 cents are for capital investment in the infrastructure.
*31 cents are for operating costs.
*17 cents covers taxes and insurance.
*09 cents are for administration, legal and regulatory.
*08 cents are for debt service.
This breakdown leaves 03 cents as return on investment.
EPCOR has changed its approach regarding consolidation or unification of the districts and, according to Guzman, it is the biggest issue related to the rate case. In the previous case EPCOR presented the consolidation of all its Arizona operations. There are 11 total.
With the new application they are presenting five different unification scenarios for consideration by the ACC. One is full consolidation presented previously and one is status quo, where all districts remain stand-alone entities.
The other three combine the various district into groups. Fountain Hills/Chaparral is proposed as follows:
Scenario 1: Agua Fria, Anthem, Chaparral/ Havasu/Tubac and Willow Valley.
Scenario 2: Agua Fria, Anthem, Chaparral and Tubac.
Scenario 3: Chaparral, Sun City West, Sun City, Paradise Valley, Havasu, and Willow Valley all remain stand-alone districts (no consolidation).
Actual costs depend on the ACC’s disposition of the application, but according to Guzman, EPCOR has laid out potential new rates for the districts. Scenario 4 (full consolidation) provides Fountain Hills/Chaparral with the greatest advantage by actually reducing current rates by $6.38.
Scenario 2, described above, would result in a $2.15 increase; Scenario 1, $2.82; Scenario 3 and Scenario 5 both have a $5.81 rate hike.
Guzman said EPCOR wants residents to know that the company will continue with its customer assistance programs that include low income ($10 credit), deployed service member (bill waived it qualified and disabled veterans assistance ($10 credit).
EPCOR will be announcing and presenting virtual information sessions for the public in the coming months and will continue with ongoing communications.
Currently the public hearing before the ACC is scheduled for Monday, March 22, 2021.
Frank Metzler, EPCOR Director of Operations for the East Division, responded to a question from Mayor Ginny Dickey concerning operational impacts due to unification. Metzler said there would be no impact whatsoever to the operations for the Fountain Hills district.
With another recent water main failure along Palisades Boulevard, Metzler outlined what is in the planning for the future. He said there is approximately 8,500 feet of water main under Sunridge Drive in need of replacement. He said the existing installation uses a lesser quality of pipe and is poorly bedded, which results in the failures.
Metzler said the replacement is a $3 million to $3.5 million project. The company will be planning to implement the repair in a manner that spreads the cost over budgets and has the least impact on customers. In the meantime, EPCOR is using new technology to provide faster response to line failures and mitigate the damage and cost of repair. That technology includes “smart fire hydrants” that can detect fluctuations in water pressure and call it in immediately.
Metzler also said EPCOR will be replacing its water storage tank off Blackbird Drive. This facility was built in 1972, and replacement is expected to be a $1.5 million project.