News Release: From the Office of Commissioner Tobin

  For Immediate Release | 4-17-19      
  Media Contact | Holly Ward      
  Direct | 602-542-3847      
  E-Mail | hward@azcc.gov      
         
 

Andy Tobin Dissents to $8.6 Million EPCOR "Emergency" Rate Hike by AZCC

 
 
Arizona Corporation Commissioner Andy Tobin issued a scathing dissent Tuesday of the Arizona Corporation Commission's approval of emergency rate increases for EPCOR Water Arizona.

On March 28, 2019, the Commission voted 3-2 to forego a normal ratemaking process to instead approve an emergency interim rate increase in the amount of $8.66 million, which will increase average monthly bills for customers in EPCOR's Mohave, North Mohave, Anthem, and Sun City water districts by as much as 25 to 35 percent. The Commission entered its final order on April 16, 2019.

Chairman Bob Burns and Commissioners Boyd Dunn and Sandra Kennedy voted in favor of the increases.

Commissioner Justin Olson and Commissioner Andy Tobin rejected the proposal. Arizona's independent ratepayer advocate, the Residential Utility Consumer Office, also opposed the increase.

"The Commission decision was objectively a mistake and I am appalled by its unjust financial impact on hard working Arizonans and the historically unprecedented process the Commission used to get it approved," said Commissioner Tobin in his letter of dissent. "Even the mayor of Bullhead City came to testify about the crisis this will cause and the city's consideration of condemnation of their own water provider, EPCOR."

"Over 20 percent of customers in Mohave, North Mohave, and Sun City have annual household incomes of less than $20 thousand," Tobin continued. "I agree with Commissioner Justin Olson that it will not matter to those customers that our Commission has deemed these increases as 'interim' rates."

A table showing a breakdown of the rate increases approved by Commissioners Burns, Dunn, and Kennedy is included below.

"The customers need to know what happened," said Commissioner Tobin. "We had possession of this decision for less than 30 days and it seemed the only voice that mattered to the Commission was the one coming from EPCOR, the utility."

Tobin's dissent includes over two-pages of bullet points outlining issues Commissioner Tobin had with the way the Commission handled the case. It also includes over five-and-a-half pages of history detailing events that Commissioner Tobin believes raise serious questions regarding the Commission's accommodation of the largest regulated water monopoly in Arizona.

"I have never seen the Commission as zealous as it was with EPCOR to prioritize the interests of one of Arizona's largest regulated monopolies over the 'rate shock' concerns of the public," he wrote.

Wholly owned by the City of Edmonton in Alberta, Canada, Commissioner Tobin noted that EPCOR had annual revenues of $107.98 million before the Commission's approval. "Now EPCOR will comfortably gross over $116 million per year, even after my reductions to corporate bonuses of over $600 thousand," added Tobin.

"What was the rush?" he asked. "Clearly the water company was never in financial distress."

"The Commission took over 18 months to stop raw sewage from spilling in Johnson Utilities' streets," said Tobin. "That was a true public health and safety emergency, yet it took us only 60 days to maneuver 11 water districts into a single rate increase for EPCOR."

"The Commission's handling of the case begs serious questions regarding the legality of the Commission's decision and nondiscretionary treatment of EPCOR's 133,000 water customers," he said. "I would not be surprised if the citizens joined together in a rate referendum in order to make their voices more clearly heard."

Commissioner Tobin noted that previous rate increases of as little as 4 percent have been enough to trigger calls for Commission review.

"While Commissioner Kennedy should be commended for supporting low-income provisions similar to those I included in the APS rate case, the substantial rate hikes will far outweigh any relief these low-income discounts will provide for ECPOR customers."

Breakdown of EPCOR "Emergency" Rate Increases Approved by Chairman
Bob Burns, Commissioner Boyd Dunn, and Commissioner Sandra Kennedy

EPCOR District

Avg. Monthly Rates before ACC Approval:

Avg. Monthly Rates First Attempted by Commissioners Burns & Dunn* (01/25/2019):

Final Avg. Monthly Rates Approved by Commissioners Burns, Dunn, & Kennedy (03/28/2019):

Final Avg. Percent Inc./Dec. Approved by Commissioners Burns, Dunn, & Kennedy (03/28/2019):

Max. Number of Low-Income Customers that can Qualify for a $10 Discount:

Percent of Households with Annual Income Below $20,000/year:

  North Mohave   $27.30   $41.05   $37.21   36.30%   131   22.5%
  Sun City   $20.58   $28.81   $27.90   35.57%   979   22.6%
  Anthem   $52.40   $93.57   $70.80   35.11%   131   3.6%
  Mohave   $27.66   $35.05   $35.04   26.68%   620   22.5%
  Chaparral   $44.85   $54.23   $52.05   16.05%   326   8.9%
  Willow Valley   $37.94   $49.05   $43.70   15.18%   131   18.9%
  Sun City West   $32.05   $34.87   $35.63   11.17%   131   15.5%
  Paradise Valley   $53.62   $71.83   $57.97   8.11%   65   10.8%
  Havasu   $52.34   $54.94   $52.34   0%   131   29.4%
  Agua Fria   $43.94   $46.90   $39.84   -9.33%   1,305   9.4%
  Tubac   $66.92   $63.12   $48.82   -27.05%   52   13.7%

*Before applying Commissioner Tobin's amendment cutting EPCOR corporate bonuses and fixing accounting errors caught by the state's ratepayer advocate, the Residential Utility Consumer Office.

Link to Commissioner Tobin's Letter of Dissent: https://www.azcc.gov/commissioners/ATobin/Letters/Commissioner-Tobin-Dissent-EPCOR-Interim-Rate-Increase.pdf.

Link to the Commission's Order Approving EPCOR Emergency Interim Rates: https://docket.images.azcc.gov/0000197297.pdf.

Link to the Commission's Original Docket WS-01303A-17-0257 on EPCOR Rate Consolidation: https://edocket.azcc.gov/Docket/DocketDetailSearch?docketId=20138#docket-detail-container1.

Link to the Commission's Subsequent Docket WS-01303A-19-0011 on EPCOR Emergency Interim Rates: https://edocket.azcc.gov/Docket/DocketDetailSearch?docketId=22120#docket-detail-container1.

Link to Video Recording of the Commission's Vote: https://azcc.granicus.com/player/clip/3469?view_id=3.
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About Commissioner Andy Tobin:

Commissioner Andy Tobin was first elected to the Arizona House of Representatives in 2006 and served as Speaker of the House from 2011 to 2014. His leadership within the State of Arizona includes his time as former Director of the Arizona Department of Weights and Measures, Director of the Arizona Department of Insurance, and Acting Director for the Arizona Department of Financial Services. Mr. Tobin also served as National President of the U.S. Jaycees Foundation. He was appointed by Governor Doug Ducey to fill a vacant seat on the Arizona Corporation Commission in 2015 and elected to serve a full term in 2016. During his time at the Commission, Commissioner Tobin has focused on getting broadband (internet) connections into rural Arizona schools, been instrumental in establishing the Water Emergency Team to proactively protect Arizona's water supply, and introduced the Arizona Energy Modernization Plan, which calls for 80 percent of the state's electricity generation to come from clean energy by 2050 and advocates for an end to devastating wildfires through the adoption of biomass related energy.

The Arizona Corporation Commission was established by the state's constitution to regulate public utilities and business incorporation. The five Commissioners elected to the Corporation Commission oversee executive, legislative, and judicial proceedings on behalf of Arizonans when it comes to their water, electricity, telephone, and natural gas resources as well as the regulation of securities, pipeline, and railroad safety. To learn more about the Arizona Corporation Commission and its Commissioners, visit https://www.azcc.gov.