Rancho residents could see 63% hike in water bills

Water bills for Rancho Sahuarita residents would go up 63 percent under a request before the Arizona Corporation Commission, giving them the highest rates in the area.

The Sahuarita Water Co. said in its 317-page request that it has not had an increase since 1995, and it needs the higher rates to pay for new wells, water mains, additional staff and other equipment.

The company is controlled by Rancho Sahuarita developer Bob Sharpe and began delivering water in 2000. According to its request, it needs higher rates to pay back most of a $4.7 million loan for arsenic removal and that its rate of return, which has slipped under 3 percent, should be 12 percent.

According to the request, the proposed new rate would increase the average monthly bill from $27.12 to $44.22, or 63 percent. It would generate 52.5 percent higher revenue overall because commercial, irrigation and larger residential customers would see lower increases than typical homeowners. Customers include the Sahuarita Unified School District.

The request is being reviewed and will go to a public hearing and then to the five-member commission for a decision. Members of the public can file to intervene or make comments at the hearing, which is expected to be held in Tucson.

COMPARING RATES

A survey published by the Green Valley Domestic Water Improvement District (GVDWID) in its March 2009 newsletter listed the following rates for homes using 6,000 gallons of water a month:

Farmers Water customers, $14.20. That would rise to $18.04 if a request before the ACC is granted.

Community Water Co. of Green Valley, $20.21. That would go to $26.51 under a rate request before the ACC expected to be resolved in early 2010.

Green Valley Water District, $25.90. It is seeking an increase to $27.01.

Las Quintas Serenas, $27.47.

Sahuarita Water Co., $28.30.

Quail Creek Water, $31.80.

Arizona American Water (Tubac), $32.94. A request would put that at $57.32; it also is asking $25.98 as an arsenic surcharge on top of the increase.

Sahuarita Water Co. serves 4,700 customers, the vast majority of them homes. It was formed in 1995 by Rancho Sahuarita, began providing water in 2000, and is two-thirds owned by Rancho Sahuarita and one-third by American Nevada Co., the developer of Mission Peaks.

The proposed rate structure would cost all customers more, but would hit residential customers harder, the request said, because for years they have been subsidized by commercial and irrigation customers.

The filing said the Sahuarita Water Co. and other water companies were urged by ACC chairwoman Kris Mayes to apply for stimulus money, and SWC was awarded nearly $1.9 million through the state’s Water Infrastructure Finance Authority. That money will pay off part of the company’s $4.7 million loan from WIFA for an arsenic treatment plant, but the water company said that there may be a federal tax bill attached to the stimulus grant, a possibility it had not known about earlier. If there is, it would seek to recover that cost from customers. It says that tax bill could be $700,000.

The arsenic treatment plant is to be finished and operating by the end of the year, treating 2,000 gallons per minute. It will cost an estimated $150,000 a year to operate and was necessitated because federal arsenic standards have tightened considerably in recent years. Many water companies have had to invest in arsenic removal plants.

SETTING RATES

The commission sets the total revenue amount that goes into the rates by adding operating costs to the product of the rate base (capital investment) times the rate of return.

The company said its current rate of return is 2.3 percent, and it should be at 12 percent. By comparison, the rate of return for Community Water Co. of Green Valley is 15 percent, company president Arturo Gabaldon said Thursday.

There is no set rate of return favored by the ACC for water utilities, as every rate case is decided on individual factors, ACC spokeswoman Rebecca Wilder said.

Sahuarita Water Co. owns one well, has a 99-year lease on another owned by the town of Sahuarita, and is building a third. It also owns storage tanks and miles of pipelines. It holds no CAP allocation and is connected to no other water supplier.

The company on July 13 filed for a rate increase before the Arizona Corporation Commission in docket number W-03718A-09-0359. The case filings are posted on the Commission web site, www.azcc.gov under E-Docket.

pfranchine@sahuarita.com| 547-9738