Arizona-American
Water Company, Inc. - Mohave Water & Wastewater
Districts Rate Case
On January 13, 2006, Arizona-American Water Company, Inc.
("Arizona-American" or "Company"), a wholly owned subsidiary of RWE
AG, filed an application with the Arizona Corporation Commission ("ACC" or
"Commission") requesting approval of a determination of the current
fair value of the Company's utility plant and property; and for increases in
rates and charges based thereon for utility service provided by Arizona-American's
Mohave Water & Wastewater
Districts. Arizona-American is
seeking increases of 21.49 percent
and 30.82 percent for the Company's
water and wastewater districts
respectively.
On
March 9, 2006, RUCO filed a motion
to intervene
in the case with the ACC's Hearing
Division.
On
March 10, 2006, ACC Staff issued a Letter
of Sufficiency
informing the Company that its
application meets the filing
requirements of A.A.C. R14-2-103.
On
March 22, 2006, the Administrative
Law Judge ("ALJ") assigned to the matter
issued the procedural order that
will govern the case.
On
April 4, 2006, the parties to the
case (i.e. the Company, ACC Staff
and RUCO) filed a joint motion to
change the dates, established in the
procedural order, for the scheduled
evidentiary hearing and the filing
of testimony.
On
April 13, 2006, the ALJ assigned to
the case acted on the joint motion
filed by the parties to the case
and issued an amended
procedural order.
The
rescheduled evidentiary hearing on
Arizona-American's request will be
held at
the ACC's Phoenix office at 10:00
a.m. on Monday,
November 13,
2006.
On
August
25, 2006,
ACC
Staff
filed
a
motion
seeking
an
extension
on
the
filing
deadline
for
direct
testimony.
The ALJ assigned to
the case granted the extension and
issued
a
procedural
order
extending
the
filing
dates
for
direct
and
rebuttal
testimony.
During
the discovery phase of the
proceeding, RUCO's analysts conducted an audit of the Company and
performed a cost of capital analysis
to determine an appropriate rate of
return on Arizona-American's
investment in the Mohave Water and
Wastewater District.
Direct testimony on the
Company's application from ACC
Staff, RUCO and other
intervenors to the case was filed on September 5, 2006.
RUCO's
recommendations
are
as
follows:
REVENUE REQUIREMENTS
-
WATER
|
LINE NO.
|
DESCRIPTION
|
(A)
COMPANY
REQUESTED
|
|
(B)
RUCO
RECOMMENDED
|
|
|
|
|
|
|
|
1
|
ADJUSTED RATE BASE
|
$
11,020,663
|
|
$
8,874,569
|
|
|
|
|
|
|
|
2
|
ADJUSTED OPERATING INCOME
|
331,852
|
|
564,654
|
|
|
|
|
|
|
|
3
|
CURRENT RATE OF RETURN (L2 / L1)
|
3.01%
|
|
6.36%
|
|
|
|
|
|
|
|
4
|
REQUIRED RATE OF RETURN
|
7.93%
|
|
6.97%
|
|
|
|
|
|
|
|
5
|
REQUIRED OPERATING INCOME (L4 * L1)
|
873,939
|
|
618,557
|
|
|
|
|
|
|
|
6
|
OPERATING INCOME DEFICIENCY (L5 - L2)
|
542,087
|
|
53,904
|
|
|
|
|
|
|
|
7
|
GROSS REVENUE CONVERSION FACTOR
|
1.62860
|
|
1.62867
|
|
|
|
|
|
|
|
8
|
GROSS REVENUE INCREASE
|
$
882,842
|
|
$
87,792
|
|
|
|
|
|
|
|
9
|
CURRENT REVENUES T/Y ADJUSTED
|
4,089,750
| |
RUCO 
