Far West seeking 188% rate increase
Far West Water & Sewer is back in front of the state with an appeal to nearly triple its customers' sewer bills.
The fiscal reality at the Foothills utility is grim. That's their word. Representatives of Far West took little time getting right to that point when they filed a request with the Arizona Corporation Commission this summer asking for permission to increase residential sewer bills from $21.75 per month to $62.65.
Utility officials say more than $20 million in improvements to a badly stressed wastewater treatment system gave its customers “A+” quality reclaimed water, but unless that expense is recouped by a significant rate increase, the company will find itself in a hole it can't climb out of. Also, costs of doing business have increased since the current wastewater rate was set in 2007, they add.
“Far West's current financial condition is grim,” wrote attorney Craig Marks in a July application to the ACC. “Far West does not have sufficient resources to pay all of its bills as they become due and obligations to multiple parties are severely overdue.”
Without the infusion of cash from increased rates, officials forecast an inability to attract future capital – and thus be unable to expand further, maintain adequate staffing and provide service at all as the company tumbles from what insolvency it's already in to total bankruptcy.
“Far West realizes the magnitude of the increase requested in this case is very large and may be a hardship for its customers,” consultant Ray Jones told the ACC. “However, not addressing Far West's financial condition would be even more harmful to Far West's customers.”
Customers, however, are skeptical. About 70 ratepayers have weighed in so far on the proposed hike. Some said they are willing to support a small increase, but none is agreeable to an increase of 188 percent. Some took obvious care to be diplomatic but were clear in their disapproval.
Some were downright angry. One-word descriptions from comments filed with the ACC for the record: “Drastic.” “Exorbitant.” “Outrageous.” “Absurd.” “Appalling.” “Obscene.” “Ludicrous.” “Criminal.” Several called out Far West for “greed” and criticized management and quality of service. Many customers point out that winter visitors, who make up a significant proportion of Far West's base, must pay a full monthly flat fee even when they aren't living in Yuma, and suggested that the utility suspend billing when a home isn't occupied.
The ball has formally been rolling since July, but it's still relatively early in the process. Hearings on the increase aren't scheduled until April at the ACC headquarters in Phoenix. Customers can contact the Corporation Commission to contribute a comment or file as interveners, a more actively involved kind of opponent.
Far West's last attempt at a sewer rate increase was in 2009. Corporation Commission and agency staff issued a stinging denial to that request. That request sought an interim increase to $45.54 for residential customers and was filed four months after an application for a permanent, phased-in increase to $74.32.
According to the 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.
Follow the case and get involved by visiting http://edocket.azcc.gov and searching for docket WS-03478A-12-0307.
Hillary Davis can be reached at email@example.com or 539-6857.