The Anthem Community Council Board of Directors voted last evening to approve a settlement agreement brought to the table by the Residential Utilities Consumer Office (RUCO) in last week’s evidentiary hearings which would, if implemented, result in a rate compromise for Anthem. Rates for wastewater service in Anthem would still go down in 2015, but less than the rates resulting from the 2012 decision to deconsolidate the Anthem and Agua Fria wastewater districts. View the full settlement agreement.
The next step is for the Administrative Law Judge to review the agreement. If he believes the agreement is fair, reasonable and in the public interest, he will include the agreement in his Recommended Order. The final step is for the five Commissioners to review the Recommended Order and either accept or reject that order.
History of the case
In 2012, the Arizona Corporation Commission ordered the deconsolidation of the Anthem and Agua Fria wastewater districts effective January 2013. Wastewater rate relief was to be implemented in three Steps in January of 2013, 2014 and 2015. The three Steps combined would in 2015 result in an increase of about $47/month for Agua Fria and a decrease of about $19/month for Anthem from the previously consolidated rate (per 7,000 gallons of water usage).
Early this year, with the third Step soon to be implemented, Agua Fria ratepayers petitioned the Arizona Corporation Commission for relief of their climbing rates. The Arizona Corporation Commission directed EPCOR to present a number of scenarios that would allow relief to Agua Fria, which include:
- Full consolidation of all five of EPCOR’s districts (Agua Fria, Anthem, Mohave, Sun City and Sun City West);
- Reconsolidation of Anthem and Agua Fria (which Anthem has objected to from the outset, thus resulting in a petition and letter writing campaign to the Corporation Commission); and
- Full deconsolidation of the three separate systems within the Agua Fria district.
Over the past three months, the parties to this case have submitted testimony regarding these alternatives. RUCO and Corporation Commission staff recommended that the Commission freeze the Anthem and Agua Fria rates at Step 2 (those currently in effect) until EPCOR filed a new case with updated financial data. The Anthem Community Council Board of Directors in August voted to support a rate freeze for 30 days (the month of January only) to allow the Commission more time to make a fully researched decision, one that in the long term would benefit all parties and not just Agua Fria.
During the first day of evidentiary hearings on November 12, RUCO Director Pat Quinn summoned Anthem and Agua Fria representatives to discuss the possibility of reaching a settlement agreement to provide rate relief to Agua Fria while attempting to come as close to the Step 3 (2015) rates for Anthem as possible. His initial proposal was predicated on Sun City and Sun City West accepting a very modest increase. After a number of iterations, all parties agreed that the best alternative was a compromise. Hearings were suspended on Monday to allow the parties time to discuss the settlement and reconvene today.
For Anthem, the residential rates (as reflected in the settlement agreement) are between the Step 2 (current rates) and Step 3 (rates after third adjustment in 2015), meaning that Anthem residential customers receive a portion of the reduction anticipated for next year. Commercial customers would remain at the current Step 2 rates.
In addition, as part of this settlement agreement, EPCOR must submit a new rate case no later than Sept. 30, 2015. Other conditions will be detailed in the final settlement agreement. Based on discussions with EPCOR and RUCO, those conditions will likely have no or minimal negative impact on Anthem.
Why is the settlement good for Anthem?
- The Anthem community has loudly opposed reconsolidating the Anthem and Agua Fria districts. The proposed settlement fulfills the request of the petition circulated in Anthem and signed by over 3,000 of our residents.
- While Anthem expected the Commission to honor its commitment to Anthem and fully implement the Step 3 rates on Jan. 1, the proposed settlement results in rates that are still lower than Step 2.
- The settlement requires EPCOR to submit a new case for full consolidation which would likely result in a FIXED rate.
ACC Community Executive Officer Jenna Kollings is attending the hearings at the Arizona Corporation Commission the remainder of this week to provide her testimony and present support on behalf of the Anthem Community for the settlement agreement.
Update Nov. 20, 2014:
The settlement agreement was the subject of a brief hearing this morning at the Corporation Commission offices. The Administrative Law Judge accepted the agreement and is now required to prepare his Recommended Opinion and Order (ROO) which will then be reviewed by all parties, final comments/objections to the ROO submitted and the final documents provided to the Commissioners for their December Open Meeting. At that time. the Commissioners will vote to accept, modify or reject the ROO.
As previously noted, rates for Anthem residential customers in the agreement will be slightly lower than current rates, but not quite as low as the Step 3 rates under the deconsolidation decision, which were to be implemented in 2015. Rates for commercial customers will remain at the Step 2 level.
Another key aspect of the settlement agreement was that EPCOR agreed to submit a new rate case that considers both full consolidation and full deconsolidation of the five wastewater districts by no later than September 30, 2015. This would set the policy for EPCOR’s wastewater districts for the foreseeable future, likely 2017 and beyond.