RUCO 091714 Presentation

Report
RESIDENTIAL UTILITY CONSUMER OFFICE
(RUCO)
PAT QUINN DIRECTOR
602 364-4838
Email [email protected]
Water/Wastewater
What You Need to Know
September 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 RECOMMENDED
TOTAL Note (3)
RATE
INC (DEC)
SYSTEM
Agua Fria
PERCENT
$ 121.91
$ 34.30
($ 87.61)
( 71.86 %)
$ 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 %
Anthem
Note (1)
Note (2)
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-14-0010
Note: (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
YEAR
2014
2015
2016
2017
2018
2019
CURRENT
INCREASE
RATE
$ 37.85
$ 45.53
$ 47.29
$ 48.99
$ 50.71
$ 52.45
INITIAL
INCREASE
PER MONTH
$ 7.68
$ 1.76
$ 1.69
$ 1.73
$ 1.73
$ 1.67
SIB
ADJUSTED
PERCENTAGE
-03.87 %
3.72 %
3.79 %
3.80 %
3.65 %
RATES
$ 45.53
$ 47.29
$ 48.99
$ 50.71
$ 52.45
$ 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 overdepreciating Utility Plant Assets.
• Changing the Rate of Return on Rate Base from 8.06 percent to 8.95 percent.
ADDITIONAL APPROVALS
Declining Usage
Tank Maintenance Expense (18years)
Additional Post Test Year Plant over what
RUCO recommended
System Improvement Benefit
$ 22,174
$ 202,184
$ 2,278,882
$ 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
YEAR
CURRENT
RATE
INITIAL
INCREASE
PER MONTH
SIB
ADJUSTED
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

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