Resident challenges council concerning electrical rates

During Founders Day 2009, Maricopa resident Jim Burgess collected more than 1,000 signatures protesting Electrical District No. 3 power rates. (Click here for link to story.) Burgess plans to hand the signatures over to the Maricopa City Council at the Nov. 3 meeting. Burgess e-mailed a letter to each member of the council, Mayor Anthony Smith, ED-3 General Manager William Stacey and InMaricopa.com. Stacey responded. Jim Burgess’s letter and William Stacey’s response are printed below.

Open letter to Maricopa City Council

For the last few years, families in Maricopa have been losing their homes in unprecedented and unfortunate foreclosure situations. It is true that many have made bad decisions in purchasing their homes. They still have lost their homes.

Electric District No. 3 has negotiated an unfair pricing agreement with Arizona Public Service that places ED-3 in a position where they cannot offer fair electric-utility prices to the citizens of Maricopa for five years.

Should ED-3 be allowed to stay in their home?

Should the citizens of Maricopa be asked to bear this burden for the next five years?

We have the signatures of more than 1,000 citizens in Maricopa who believe that this is unfair. We can get another 8,000 signatures, but that does not seem reasonable. We know that a substantial majority of the people in Maricopa do not want these rates.

ED-3 has given us their financial statements and they seem to be in order. We must not forget this issue during the winter months. It will be summer before we know it. Please resolve this NOW! We do not want unfair utility rates next summer!

Our petition makes two requests to our state legislature and omitted a third!

1. ED-3 be investigated for unfair pricing practices
2. That citizens be able to serve on the board without regard to acreage.
3. Not listed, but ED-3 should report to the Arizona Corporation Commission.

We are asking that the city give copies of these petitions to our elected state officials.

This is the third meeting where this discussion has been presented to the city council. The 1,000-plus citizens of Maricopa who signed these petitions are asking that you tell us where you stand on this issue. We are waiting for your response. Please do the right thing!

Jim Burgess

Electrical District No. 3 General Manager William Stacy responds:

I will be at the Nov. 3 city council meeting and will be happy to discuss any issues that you or other people have questions about in regards to ED-3. Let me expand on the issues that we talked about last week.

Electrical District No. 3 of Pinal County (“ED3” or “District”) was formed in 1926 by the board of supervisors of Pinal County pursuant to what is now Chapter 12 of Title 48 of the Arizona Revised Statutes. The District is organized as a political subdivision of the state of Arizona to distribute electrical power and energy to all within its service area as a nonprofit, public utility, which sets its electric rates to break even each year. The District is governed by a seven-member board of directors. The board establishes the policies for management and oversees the business affairs of the District, while the general manager of the District has management responsibilities for the District. ED-3 has 44 employees ranging from customer service representatives, journeyman lineman and administrative staff. I have enclosed ED-3’s audited financial statements for the last fiscal year to better explain how we operate as a nonprofit.

In March of 2008, when the housing bubble and growth was still going up and the electric market was predicting shortages, ED-3 entered into a new five-year power-supply contract with Arizona Public Service, locking up a significant portion of ED-3’s power requirements at a fixed price in what at the time was a very volatile market for power. While providing price certainty for ED-3 over the next five years, this new contract reflected the high-cost market conditions for power at that time. By the summer of 2008, the housing bubble had burst and the economy was in a tail spin, but ED-3 was required to honor the agreement and continue to buy contracted blocks of power from Arizona Public Service. Consequently, these increased costs have been passed on to ED-3’s customers through the Purchased Power Cost Adjustor (PPCA).

The intent of the PPCA is to pass along the rate impact of significant changes in power costs and energy sales from those used in the development the base rates. With a large component of our power costs being fixed and electric sales declining due to the poor economy (ED-3 has approximately 1,500 meters [homes], 8 percent of connected meters with no usage), the effect has been increased pressure on the average cost-to-serve. As a result, effective with the July 2009 billing, the new PPCA was set at $0.02851 based on ED-3’s estimate of the power costs and the projected energy sales for the remainder of 2009. In the coming months, ED-3 will review these estimates, as well as project the next 12 months power costs. Any over or under collection will be incorporated into next year’s PPCA estimates. In the future, we do plan to include with our bill any changes in rates or the PPCA.

ED-3 understands your difficulties and has implemented a cost-reduction plan, which includes reducing manpower, cutting contractor costs, restricting overtime, and cutting the majority of capital projects while continuing to work with several utilities and consultants to reduce our current and future power costs. We are also working on the ED-3 2010 budget, and if current conditions do not worsen, we do not project any increases in 2010.

I know that times are difficult and I would be available to discuss with you personally in a meeting or over the phone the steps we are taking to reduce costs and power bills. Please give me a call at 520-424-0420 or I will see you at the city council meeting.

Sincerely,

Bill Stacy

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