Regulators reject EPCOR consolidation plan

January 27, 2019

PHOENIX — Mayor Tom Brady called it a big win for Bullhead City residents.

The Arizona Corporation Commission on Friday rejected both a rate restructuring and consolidation proposal by EPCOR Water Arizona. Both measures failed to pass by 2-2 votes with Commissioner Sandra Kennedy abstaining.

“Ultimately, at the end of the day, our position prevailed,” said Bullhead City Manager Toby Cotter.

Bullhead City’s position had been — and continues to be — that EPCOR’s rate increase request contained unnecessary adjusters that added to the cost and that consolidation amounted to “socializing” EPCOR’s rate structure among its 11 Arizona districts despite economic inequities between those areas.

“We won,” Brady said. “We won the battle, but the war’s not over.”

EPCOR responded by filing an application for interim rates, meaning that Friday’s ruling is, at worst, a reprieve for ratepayers who could have faced a more than 30 percent increase in their monthly water bills.

“It’s another small reprieve,” Cotter said. “It’s not over. They might still propose these 35 percent increases. But there is definitely going to be more time (before those rates are considered prior to implementation).”

Cotter said the Corporation Commission voted “not to allow the rate increases to go into effect” and “not to allow consolidation to take place.”

“As the mayor said (in comments to the ACC earlier this month), we are not here to subsidize the water systems” in wealthier districts.

Cotter said he, Brady and other city officials are committed to “advocating for our residents” as the issue continues, in whatever form.

“We’re going to keep up the fight,” Cotter said.

While there was no timeline presented for EPCOR’s emergency request for interim rates, Cotter said that city officials and residents will have an opportunity to review that information as it becomes available.

“There is definitely going to be more time (before residents are faced with the prospect of higher water bills),” he said. “We are going to keep fighting for our citizens.”

Brady said that fight might well include moving forward with efforts to take over the city’s water utility operated by EPCOR.

“It would be such a simple matter if the city owned the water system,” he said. “Just sitting through that whole process was uncomfortable. It should be a city function.”

He said the city could run the water utility more efficiently without concern for profits generated by the system. EPCOR, owned by the City of Edmonton, Alberta, Canada, is a for-profit utility.

“We need to take destiny into our own hands,” Brady said.

Cotter said any attempt to move forward with plans to take over EPCOR’s local system would be “a conversation for city council” in the future.

Last year, the city proposed putting a measure on the November ballot, asking voters to authorize acquisition of the water system, either by open-market purchase or a condemnation process to force EPCOR to sell. The measure was withdrawn at the city’s request, partly to allow time and negotiations on EPCOR’s rate increase and consolidation plans to play out.

“That’s a policy decision that still exists,” Cotter said Friday.

EPCOR, at the ACC’s request, had put together a pair of rate proposals. One called for stand-alone districts for its 11 Arizona water systems with each seeing a significant rate increase. A second proposal called for consolidation of the 11 districts under one big umbrella with a five-year phase-in toward similar if not identical rates for all 11 of its districts. The stand-alone proposal called for rate increases from an average of about $28 per month to roughly $37 per month. In a consolidation proposal submitted to the ACC, most Bullhead City residents would have seen water bills jump from $28 to more than $41 by the end of the five-year phase-in. Some of EPCOR’s other districts would have seen an eventual rate decrease, leading Brady to label it the “socializing” of water rates.

“We reject socialized rates,” he said.

EPCOR’s 11 Arizona water districts include four in Mohave County: Mohave, with 16,000 residential and business connections in and around Bullhead City; North Mohave, 2,020 connections mostly north of the city; Willow Valley, about 1,500 connections in Mohave Valley; and Havasu, 1,765 connections north of Lake Havasu City.

Most of the company’s other Arizona water districts are in the Phoenix metropolitan area.

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