Pine Water Rate Raise Settled

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A settlement agreement among all but one of the concerned parties in the Pine Water Company rate increase application has been filed with the Arizona Corporation Commission.

"There has been an interesting development," ACC spokesperson Heather Murphy said. "There is a settlement."

Under terms of the settlement, Pine Water Company will receive an annual increase in revenue equal to $77,243. This will amount to an annual revenue increase of 11.81 percent and a total annual revenue of $731,291.

Pine Water Company filed the rate increase request on May 1, 2003, asking the ACC for a rate increase that would generate an additional $268,993 in revenues plus a $10 per month meter surcharge. Robert Hardcastle, president of Pine Water Company parent Brooke Utilities, argued that the current rates -- in effect since April 1, 2000 -- were no longer adequate to provide the company a fair rate of return and had, in fact, led to operating losses the last three years.

In announcing the settlement, Murphy said the participating parties included Pine Water Company, intervenors John Breninger and the Pine-Strawberry Water Improvement District (PSWID), and the ACC staff. Only intervenor Robert Cassaro declined to sign on.

Cassaro said he did not object to the financial terms of the settlement, only to the fact that the company's toll-free service number is non-functional much of the time and/or the company does not respond to leaks and other emergencies in a timely manner.

"I don't disagree with the agreement as it was written," Cassaro said. "I just wanted them to agree to deal with the lack of response time when people called the California 800 number reporting a leak." And if a leak does get reported the company's on-scene performance leaves a lot to be desired, according to Cassaro.

Breninger said his motive in agreeing to the settlement was a desire to see the company pursue new sources of water.

"What I wanted was for the commission to change its methodology and open up the door to more capital investment and the resulting higher rates to develop the real source of our water up here," Breninger said.

The actual increase customers can expect has not been determined, and the settlement agreement itself will not be final until it is approved by the ACC.

"It's not necessarily what this will be," Murphy said, "but it's what was submitted to the judge as what the parties agreed to, realizing that the parties were fighting with each other, as an equitable resolution of the rate case -- results they could live with except for Mr. Cassaro."

According to Breninger, ACC approval is far from a foregone conclusion.

Hardcastle agreed, and expressed his displeasure with a summary of the settlement recently sent to Pine Water customers by PSWID.

"Contrary to PSWID's recently circulated community flier, the judge has not yet issued his recommendation and the matter has not yet come before the commissioners," he said. "Both parties could materially change the settlement agreement to the extent that none of the parties can accept it."

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