ACC staff proposes musts for Far West
Arizona Corporation Commission staff has recommended an increase to Far West sewer rates from $21.75 per month to $55.70, but with some pricey caveats.
The suggested 156-percent hike isn't far from the $62.65 being sought by Far West Water & Sewer, but the state's recommendation — which has not been decided upon by the commissioners, who won't hold hearings on the rate issue until April — comes on the condition that the Foothills utility first pay off several debts.
Those include the roughly $190,000 it owes to various vendors, about $106,000 in refunds of advances in aid of construction to a housing developer and $371,000 in back property taxes. Far West must also come into full compliance with the consent judgment issued by the Arizona Department of Environmental Quality in 2010 for numerous water and air quality violations.
In addition, it must collect the money it essentially owes itself: approximately $402,000, mostly for effluent sold to company-affiliated golf courses.
“First, staff is concerned that providing uncompensated service is inequitable to the other ratepayers who are required to pay for service and who may indirectly bear the cost of the uncompensated service,” ACC executive consultant Gerald Becker stated in testimony filed with the commission. “Second, staff is aware that the company has unpaid payables such as its property taxes, the payment of which would be a good use of the funds collected for past due bills from affiliated parties.”
Becker, who is from the commission's utilities division, recommended the rate structure and that if approved it be phased in in halves: the first half on the first day of the month after Far West meets all conditions, and the second half six months later.
According to additional testimony, Becker adjusted the company's rate base at a net decrease of about $3.8 million, which included removing late fees and legal costs incurred during delayed sewer system improvements that ultimately were not completed until mid to late 2011. Becker said Far West could have had its plant in service by mid-2009 but did not because of “the company's poor management decisions.”
Far West approached the ACC in July with its application to increase its sewer rates. The utility says its financial condition is “grim” after more than $20 million in improvements to its wastewater treatment system and the higher cost of doing business.
Customers, however, have been unsympathetic. When commissioners visited Yuma earlier this month to take public comments, a response to popular demand as they typically hold meetings in Phoenix or Tucson, about 1,000 to 1,200 customers filled the auditorium at Gila Ridge High School.
Of the roughly 40 consumers who spoke, none gave support for the large increase. Many vented about sewer smells, the extended absence of water availability during a severe monsoon storm last year and Far West's management and service.
The current rates were set in 2007. Far West last sought a sewer rate increase in 2009 but was denied. According to that decision, Far West “placed its own needs above those of the ratepayers” and was in financial distress at that time as “the direct result of mismanagement of the IDA bond funds,” or the bonds taken out to improve the wastewater facilities.
Hillary Davis can be reached at firstname.lastname@example.org or 539-6857. Find her on Facebook at Facebook.com/YSHillaryDavis or on Twitter at @YSHillaryDavis.