City sees intervenor status in EPCOR rate case as a win

May 16, 2018

BULLHEAD CITY — On Thursday, the Arizona Corporation Commission granted the city’s application to intervene in rate case proceedings for EPCOR Water Arizona.

“The city had a big win (last) week by being granted intervenor status and getting the hearing delayed until July 17, despite EPCOR’s objections to the extension of time,” said Bullhead City Manager Toby Cotter. “We will attend the hearing starting on July 17.”

The ACC, which regulates utilities, provides intervention as a part of its process to make a determination in a rate case hearing.

“Intervenor status means that Bullhead City is now a party to the proceeding,” said Nick Debus, ACC public information officer. “As a party, Bullhead City is entitled to offer evidence on its own behalf and cross-examine witnesses of the other parties (and is) able to participate in any briefing of legal issues.”

Intervention gives the city an official seat at the table, Cotter said.

“We have the right to ask questions and offer an alternate to the proposed consolidation and dramatic rate increase,” Cotter said.

It is fairly common for a city to intervene in a matter that affects a large number of its residents or which affects the city’s own utility service, Debus said.

“The commission always grants intervention to a party that can demonstrate a direct and substantial interest in the issues to be discussed,” Debus said.

One of the things the city wants through the intervention process, Cotter said, is data.

“We want to see the $8 million in operational costs we are being told it takes to run the company here in Bullhead City,” Cotter said. “We want to further examine the proposed

$29 million in (EPCOR) capital expenditures planned for the next five years.”

The ACC previously ordered EPCOR to file a rate case this year and to include in its application options for both stand-alone rates and a rate consolidation — a single rate — across its 11 Arizona service areas. EPCOR also is asking to recoup $12 million in capital investment the company said it has made in Bullhead City since the last rate increase.

If approved as submitted, water rates in the two EPCOR Bullhead-area districts would increase to more than $40 per 7,000 gallons of water used.

EPCOR officials provided a letter to the ACC stating the company “fully supports Bullhead City’s intervention in this case.”

“The utility company asked the city to intervene and supported the intervention request in hopes of settling this case without city condemnation,” Cotter said.

Condemnation is a type of government acquisition through the power of eminent domain to the take private property for public use provided the owner is paid just compensation. The city is conducting a study on the feasibility of acquiring EPCOR Water Arizona’s Bullhead City assets and service, which the utility estimated is worth $130 million, not including infrastructure improvements already underway.

One local group said the ultimate cost of consolidation could be 31/2 times that much and is gathering petition signatures to direct the city to issue bonds as required to acquire all of EPCOR Water Arizona’s Bullhead City assets.

“We didn’t just decide this willy-nilly,” said Al Scigliano, H2O Committee chairman and a former city council member. “We’ve been researching the company and the impact of EPCOR’s proposal for stand-alone and consolidation and what the rates will look like in five to 10 years. We anticipate, and the company has stated, they will be back in five years for another rate increase to recoup the cost of their proposed improvements.”

EPCOR is proposing $59 million in capital improvements in the Bullhead City water system and a total of $400 million in improvements across the state over the next 10 years, Scigliano said.

“The public needs to understand EPCOR is a profit-making organization,” he said. “One thing EPCOR doesn’t say is that they can provide water at a more reasonable rate than the metropolitan area can.”

The city has no influence over the group of citizens circulating the initiative, Cotter said.

“We understand the concerns of the city residents who oppose consolidation with Greater Maricopa County water districts and are upset about rates increasing from $24 in the McCormick area and $28 throughout the city to $45 for an average water user,” Cotter said. “Businesses are also upset about the huge increases to their accounts.”

In its decision to grant intervenor status to Bullhead City, the ACC reserved Monday for public comment and rescheduled hearings on the case to begin July 17.

All public comments become part of the official docketed record of the case, but are not admitted as evidence because those submitting public comments are not under oath.

“If Bullhead City had not intervened, it would be entitled to offer public comment on the issues of the case, but public comment, while informative, is not testimony under oath,” Debus said. “While public comment may influence a decision, it cannot be relied upon solely to support a finding of fact or conclusion of law.