Residential Utility Consumer OfficeLitchfield Park Service Company - 2008 Rate Case Filing
On March 9, 2009, Litchfield Park Service Company (“LPSCO” or “Company”) filed applications for the Company's utility operations in Maricopa County with the Arizona Corporation Commission ("ACC" or "Commission").
LPSCO is a Class A utility that provides water and wastewater service to approximately 15,600 water customers and 14,600 sewer customers of which 14,333 water customers, or 91.9 percent, and 14,129 sewer service connections, or 96.8 percent, are residential ratepayers. The Company’s service area is located in the southwestern portion of the Phoenix metropolitan area, and includes the Town of Litchfield Park, roughly one-half of Goodyear, a small section of Avondale and an unincorporated area of Maricopa County. LPSCO’s present rates were established in Decision No. 65436, dated December 9, 2002 (Decision No. 65436 adopted a black-box settlement agreement in which RUCO was an intervenor). The Company is a subsidiary of the Algonquin Power Income Fund, a Canadian mutual fund that is based in Toronto, which also owns other public service companies in Arizona including Bella Vista Water Company, Gold Canyon Sewer Company Rio Rico Utilities, Inc. and Black Mountain Sewer Corporation.
According to LPSCO’s applications, the Company had adjusted gross revenues of $6,475,002 from the water utility service and $6,356,372 from the wastewater utility service during the test year ended September 30, 2008 (“Test Year”). Operating expenses for the same period totaled $6,757,896 from the water utility service and $6,192,413 from the wastewater utility service thus resulting in an operating income (loss) of ($282,894) and $163,959 respectively. This produced a Test Year rate of return of negative 0.75 percent for the water utility service and a positive 0.58 percent for the wastewater utility service when applied to the Company-proposed fair value rate bases of $37,930,921 and $28,367,071 respectively.
LPSCO is requesting an increase of $7,509,328, or 115.97 percent for the water utility service and an increase of $5,004,346 or 78.73 percent for the wastewater utility service over Test Year adjusted operating revenues. The Company-proposed rates will provide LPSCO with operating incomes of $4,321,918 for the water utility service and of $3,236,683 for the wastewater utility service or an 11.41 percent rate of return on invested capital. Under the Company-proposed level of operating revenue, a typical water residential customer will experience an increase in rates from $10.80 per month to $20.21 per month (87.63 percent). Under the Company-proposed level of operating revenue, a typical wastewater residential customer will experience an increase in rates from $27.20 per month to $49.22 per month (80.96 percent). In addition to the requested rate increase described above, the Company is also requesting a new hook-up fee tariff and a new pretreatment tariff.
After resolving problems with the Company's original filings, ACC Staff notified LPSCO that its applications ("Water Application" and "Wastewater Application) were sufficient in a letter dated May 8, 2009.
On Thursday, May, 21, 2009, the Administrative Law Judge ("ALJ") assigned to the case issued a procedural order which consolidated the water and wastewater dockets and set the date for the evidentiary hearing in the matter for Monday, January 4, 2010.
On Thursday, May 28, 2009, RUCO filed a motion to intervene in the case on behalf of residential ratepayers.
On June 22, 2009, the ALJ assigned to the case granted RUCO's request.
Direct testimony from ACC Staff, RUCO and other intervenors was filed on Wednesday, November 4, 2009. The Company filed rebuttal testimony on Friday, December 4, 2009. Surrebuttal testimony from ACC Staff, RUCO and other intervenors was filed on Thursday, December 17, 2009. A final round of rejoinder testimony from the Company was filed on Monday, December 28, 2009.
The evidentiary hearing on LPSCO began as scheduled with public comment on Monday, January 4, 2010. The hearing was conducted over approximately seven days and concluded on Friday afternoon, January 15, 2010.
During the evidentiary hearing, attorneys for the parties to the case had the opportunity to cross examine expert witnesses and present their positions on various issues.
On Monday, January 25, 2010, approximately 488 concerned citizens attended an ACC public comment meeting on LPSCO's request for increased water and sewer rates. The meeting was held at 6:30 p.m. in the Sachem Room of the Wigwam Resort, 300 Wigwam Boulevard, Litchfield Park. All five Commissioners listened to the thirty-five customers of LPSCO who chose to express their opinions (for the record) on the Company's request. A representative from RUCO was also on hand to answer questions from concerned ratepayers.
Final accounting schedules from the parties to the case were filed on Monday, February 1, 2010. Initial closing briefs were filed on Wednesday, February 10, 2010. Reply briefs were filed on Wednesday, February 24, 2010.
On Friday, April 2, 2010, RUCO filed a request for reconsideration of procedural order, asking the ALJ to reconsider her decision to bifurcate the hook-up fee issue in the case to the extent that it limits the ALJ’s ability to considerer how proposed hook-up fee tariff's treatment of contributions-in-aid-of-construction will impact the Company's rate base.
The ALJ is now weighing all of the evidence presented during the proceeding (including public comments and correspondence from concerned ratepayers) and issue a Recommended Opinion and Order ("ROO") that will be voted on by the five sitting ACC Commissioners. The Commissioners can either accept, reject or amend the ROO during a noticed Open Meeting.
A final decision on LPSCO's request for an increase in rates is not expected until sometime during the second quarter of 2010.