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ACC nixes request for interim Far West management
Appointing interim management at a utility company is an extraordinary measure that the Arizona Corporation Commission continues to say is not warranted right now for Far West Water & Sewer.
Steven Olea, director of the ACC's Utilities Division, responded this week to a query from commissioner Susan Bitter-Smith asking about Far West's management and the advisability of appointing interim leadership at the Foothills utility, which is trying to raise sewer rates amidst staunch opposition by customers.
Among those customers is a group that filed a motion with a corporation commission judge asking for the ACC to install interim management, along with ordering financial and operational audits, and to suspend the rate case until the audits are complete and a new manager has issued findings.
“The appointment of an interim manager is considered extraordinary relief by the Commission, ordered when no other options exist,” Olea wrote in a memo where he reiterated an earlier staff conclusion that interim management is not recommended at this time. “The appointment of an interim manager is intended to be a temporary measure used to ensure safe and reasonable service.”
Olea's explanation said commission staff will typically initiate a petition for interim relief, supported by affidavits, when they've determined there is a serious potential for harm to the public. The commissioners would then make a decision.
“These affidavits usually state there is a clear and present danger to the public health and safety requiring the appointment of an interim manager to ensure that the public is protected,” he wrote, giving the example of a Pinal County water company that several years ago violated commission orders, failed to haul in emergency water for its customers during a severe shortage and threatened to discontinue service.
Olea's memo did not address the calls for audits.
Bitter-Smith's questions came after the group of Far West customers submitted their request in March, saying they and their fellow ratepayers had no confidence in Far West's management.
Olea acknowledged that ACC staff has its concerns about Far West, such as the company not being current on its property taxes and monies due under main extension agreements, its practice of not collecting all amounts due from related parties, and the need to reach a new consent agreement with the Arizona Department of Environmental Quality, which issued a judgment in 2010 for numerous air and water quality violations.
He did say, though, that Far West has bettered its operations with its expansions at the Section 14 and Del Oro sewage treatment plants, allowing them to produce A+ reclaimed water, and its upgrades to the Palm Shadows plant to deliver raw sewage to Section 14. He also noted that while the ADEQ said last fall that Far West is still not in full compliance, the agency is encouraged with the company's progress and it is currently amending the consent judgment.
“... Far West has made significant improvements in its operations that have a direct impact on the health and safety of its ratepayers along with significant reductions to the odor problems, and these improvements are a contributing factor to Staff's recommendation not to appoint an interim manager at this time,” Olea said.
He did say that the opportunity would be reserved for future consideration.
Far West is seeking ACC approval to raise its monthly residential sewer rates from $21.75 to $57.77. The company has said its financial health is poor, and it needs to recover roughly $19 million spent on improved plants. The current rates were set in 2007.
The commission will hold hearings on the matter later this month.
Hillary Davis can be reached at email@example.com or 539-6857. Find her on Facebook at Facebook.com/YSHillaryDavis or on Twitter at @YSHillaryDavis.