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Far West rate hike unlikely to get support from customers
A proposed rate hike by Far West Water and Sewer has been a contentious issue for residents of the Foothills.
The move, if approved by the Arizona Corporation Commission, would increase monthly sewer rates by 188 percent, from $21.75 to $62.65, which would bring in $3.9 million overall to the beleaguered utility.
More than 1,000 residents turned out for a public comment meeting with the ACC, and the message was overwhelming against the hike.
The ACC staff has recommended an increase to $55.70, which is a 156 percent hike, but it comes with some strings: the utility must pay off several debts.
The debts include about $190,000 owed to vendors, $106,000 in refunds in aid of construction to a housing developer and $371,000 in back property taxes, and it needs to collect money it owes itself: about $402,000 for effluent sold to company-affiliated golf courses. And, Far West needs to come into full compliance with a consent judgment issued by the Arizona Department of Environmental Quality in 2010.
That judgment included a fine of $500,000 from the state after a series of water and air quality violations that Arizona Attorney General Terry Goddard called “a serious lack of oversight.”
In the wake of the fine, Far West noted that there were prior management compliance difficulties that led to the violations, but noted that a $20 million capital improvement project would rectify the situation.
Now, Far West officials have said they need to recoup more than $20 million in improvements to its wastewater treatment system. And, the cost of doing business has increased since the rate was set in 2007 — hence the need for the rate hike.
Officials noted that without the increased rates, they will not be able to attract future capital, which in turn would mean a decline in service for customers. The situation is grim, and the hike is needed to stave off bankruptcy, officials said in the rate hike application.
The company's last rate increase attempt was in 2009, which was denied by the ACC. That proposal would have more than doubled costs for residential customers, to $45.54.
At the time, the ACC noted that Far West “placed its own needs above those of the ratepayers” and was in financial distress at that time due to “the direct result of mismanagement of the IDA bond funds,” which were taken out to improve the wastewater facilities.
The problem is, based on the company's outstanding debt problems, it would seem that management issues have continued at Far West.
And, Far West's customers have made it clear that they are unhappy with the level of service provided by the company, citing a variety of issues, from a water outage after a storm in 2012 to an ongoing complaint of smells emanating from the sewer treatment facility.
Many customers have said they would support a smaller increase, but many of Far West's customers are on a fixed income, and an increase — be it 156 or 188 percent — is a major blow to those fixed incomes.
However, residents are still very unhappy with the company, as evidenced by the comments at last week's ACC meeting.
At this point, it is unlikely that Far West will get support it says it needs for the rate hike from customers. The company needs to take steps to address complaints from their customers, who then might be more favorable to a more modest increase.