Global Water rate hike could gain mid-2021 approval

The proposed rate hike requested by Maricopa’s primary water utility, Global Water Resources, is moving through the vetting and approval process and could be approved in mid-2021.

Global Water vice president and general manager Jon Corwin called the proposed hike minimal, noting any rate increase would be phased in over three years.

RELATED: How rate increase might impact your Global Water bill

He said bills for combined water and sewer service would increase by $4.93 per month in the first year for typical users. Increases of $4.39 per month and $4.57 would follow in the second and third year, respectively, he said.

For the entire rate application across all Global Water users, Corwin said the request is for a 12.6% increase over the three-year period. Those percentages may be smaller or larger for some users based on meter size and consumption, he said, and takes into account all customers including residential, commercial, sewer, recycled water and irrigation. The company uses the U.S. Consumer Price Index (CPI) as a gauge for determining the amount of a rate increase request. Corwin said the current application rate is lower than the CPI.

GWR doesn’t categorize increases by residential or commercial users, but rather by meter size.

According to Nick Debus, a legislative liaison for the Arizona Corporation Commission, the ACC and the Residential Utilities Consumer Office (RUCO) are evaluating the GWR requests and developing their relative positions. Their direct testimony to the legislature is due March 17, with rate design due a week later.

“The schedule (for these proceedings) has been set by the Administrative Law Judge,” Debus said.

Global Water will file its rebuttal testimony on April 19, 2021, with (ACC) staff and RUCO filing surrebuttal testimony (a procedure for opposing parties to answer evidence introduced in rebuttal by the applicant) on May 10. Then, Global Water will file rejoinder testimony on May 20, with the hearing scheduled to commence on May 24 barring any modifications to the calendar. Any increase that is approved would not take effect until January 2022, according to Debus.

It is unlikely that the public hearing will be held in Maricopa since Global Water has systems throughout the state, and hearings are almost always conducted in either the Phoenix or Tucson offices of the Corporation Commission, he said.

“If the pandemic is under better control in time, then it is likely that the Commission will hold public comment sessions in the specific areas served by Global,” Debus said. “If it isn’t, then those public comment sessions will be telephonic.”

FIRST IN EIGHT YEARS

The rate increase application filed by Global Water is the first in eight years, and according to Corwin, it came at the behest of the ACC. He noted the application is unrelated to the company’s recent acquisition of Red Rock Utilities, a water and wastewater operator serving Pinal and Pima counties, which was completed in October 2018.

“All our utilities including Red Rock are subject to rate review,” he said. “If it makes sense to file for rate increases individually, we can do that, or apply for increases for all our companies at once, which we have done in this case.”

Corwin stated that Global Water was not looking to file for a rate increase but was requested to do so by the ACC.

“We filed our rate case in August 2020 based on order from the Arizona Corporation Commission,” he said. “Primarily they asked us to do it because it had been eight years since our last rate case, and they like us to come in periodically and see where we are rate-wise.”

Most other large class A water utilities in the state have similar requests. Other utilities have also been in recently for their rate reviews.

According to Mayor Christian Price, the City has no direct role in the rate increase proceedings but will provide input during the process.

“People know I’ve fought Global Water twice, once as an HOA president and I’ve done it as mayor,” he said. “We’ll clearly have a say in this, but Global is one of the few companies in Pinal County that has an assured water supply, which is absolutely critical to Maricopa’s growth in the future. And so, if we want to have all those things people want here, you have to be able to provide water for them.”

Price said it’s critical for the City and all of Global Water’s districts to work closely and important that the ACC ensure utilities are appropriately funded and sustainable, so the commission doesn’t have to come in and take over the utility. Price said the ACC needs to ask for rate increases periodically so they can examine the books of the privately held utilities it governs and the only way to do that is via a rate review.

“How do you regulate without being overly burdensome?” Price asked. “These are private companies, and we don’t want government overreach, but the ACC still has to do their job. At the same time, if they stay out too long without a review, the ACC doesn’t know what’s going on and they fear that Johnson Utilities is going to happen all over again.”

(The state sued Johnson Utilities in San Tan Valley for $100 million in 2019 alleging numerous violations and environmental mishaps. In late December, ACC voted to approve the sale of Johnson assets to EPCOR Utilities. Ownership is expected to transfer sometime this month.)

Price added he appreciated Global Water asking for a phased increase to the rates rather than having them jump all at once.

“The first rate case they went into, they asked for a huge rate increase all in one year,” Price said. “In subsequent ones and the current one, they’ve learned to temper that, so it’s more like a cost-of-living increase. They’re being phased in so it’s not hitting people all at once. Not all companies will do that.”