Rate Hike To Get More Scrutiny

State consumers' office steps into water rate issue

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The state's Residential Utility Consumers Office (RUCO) has decided to look into a proposed water rate increase for Brooke Utilities' customers in the Rim country, a decision that was based in part on an overwhelming response from the public.

The state consumer advocate office will take a hard look at the company's request for as much as an 84 percent rate increase for some of its customers.

The study may also include four other requests submitted by the parent company, Brooke Utilities.

The long process of intervention also guarantees that some Brooke Utilities customers will see no increase on their water bills until sometime this fall. And the increase may be less than the company is requesting.

Marylee Diaz Cortez, audit manager with RUCO in Phoenix, said last week that she had just gotten the recommendation back from staff to intervene.

"About a month or so ago, I got notification that they had filed (for a rate increase)," she said.

According to a letter that went out in early March to customers who would be affected by the proposed rate hike, Brooke Utilities applied for the increase in both installation and rates to "preserve the integrity" of its water system.

The company is also seeking a 40 to 100 percent rate increase for high water users -- people who use more than 1,000 gallons a month.

The company is seeking to raise service line and meter installation fees in some areas by more than $200.

Long time, no hike
Brooke Utilities President Robert Hardcastle said Monday that the water systems received no improvements or re-investment until the systems came under Brooke's ownership in 1996.

"Many improvements have been made and the systems are reasonably stable and predictable," he said.

He said the previous owners had many problems and did not attempt a rate increase because such an attempt would likely have been unsuccessful.

"All public service utilities should probably examine their operations at least every one to two years and determine if an adjustment in rates is necessary," he said.

He said that despite "a substantial investment," a lot of work remains to done in the area of water supply, storage, infrastructure replacement, electrical, mechanical and automated systems. The costs for improvements vary by water system. Water systems serving more than a dozen small Rim country communities would be affected by the rate increase.

Capital improvements and expenditures will be one of the things RUCO will look at when state auditors examine Brooke Utilities' books this summer.

Of the five requests for rate hikes that Brooke Utilities submitted, only those for United Utilities -- a Brooke Utilities subsidiary -- has so far been considered for intervention.

Hardcastle said Monday that applications had been filed in United Utilities, Inc., Navajo Water Co., Inc., C&S Water Co. Inc., Williamson Waterworks Inc., and E&R Water Co. Inc. -- all owned by Brooke Utilities.

"Service areas of these water companies is Gila, Pinal and Navajo counties with approximately 4,800 customers," Hardcastle said.

"Eventually, the corporation commission may combine all five requests," Diaz Cortez said. "We will look at all of them if they get combined."

Customer reaction
Diaz Cortez said her office has gotten "quite a public response" from United Utilities' customers.

Hardcastle described the public response he's gotten as "mixed." He said he received a lot of positive response from customers and that many of them recognize how much the company has done to improve their water systems.

But others have taken their concerns to the state.

One Tonto Basin customer, Margaret Lantagne, owner of the Tonto Creek Trail RV Park, has applied to the Arizona Corporation Commission to be an intervener, a role she said she would not normally seek.

"People up in Strawberry and Pine should be doing this," Lantagne said Monday. "It's a way to be informed and be part of the process, to make a public comment."

Lantagne said she has also gotten 200 signatures from Tonto Basin residents who are concerned about the proposed rate hike. She was in the Valley Monday submitting the petitions to the corporation commission.

"I'm not one to do this kind of thing, normally," she said. "But they could put me out of business. If they do that, I'm going to go down fighting."

Lantagne said she is now paying $2.33 per 1,000 gallons for water for her business, and currently has 51 RVs at the park. If the proposed rate hike goes through, Lantagne said she is looking at paying $30 per 1,000 gallons, an increase she would have to pass along in charges to her customers at the RV park.

She said other RV parks in Tonto Basin have private wells and would not have to raise their rates. If Lantagne is forced to pass on the costs to her customers, she believes she will be forced out of business.

"It's going to affect businesses and growth in the Tonto Basin area," she said. "I'm really relieved to find out that RUCO is intervening."

United Utilities will now be audited by staff from the consumers' office, a process that requires four or five months of looking at the company's books. The state's auditors will then make recommendations and the consumer office will have a hearing.

Diaz Cortez said the hearing could be held in corporation commission offices in Phoenix or Tucson or at a public meeting in the Payson area.

"When there's a public outcry, they'll hold the hearing in the service area," she said.

The decision-making process, from the time of the hearing, could take up to two months, Diaz Cortez said.

After all the evidence is considered, the hearing officer will make a decision about what the rate hike should amount to, and will take her findings to the corporation commission. The three commissioners will vote on that decision.

But the decision could include a number of things, among them a decrease in rates, a possibility Diaz Cortez said is rare.

Brooke Utilities customers who have concerns, complaints or questions about the proposed rate increase can contact the Arizona Corporation Commission at 1200 W. Washington Ave., Phoenix, AZ 85007.

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