Wastewater Consolidation 2016 Rate Application EPCOR Water USA - PowerPoint PPT Presentation

Wastewater Consolidation 2016 Rate Application

EPCOR Water USA  Water and wastewater service for approximately 350,000 customers  14 water, six wastewater districts  22 communities  Seven counties  Two states

Rates 101

Rate Setting  EPCOR regulated by Arizona Corporation Commission  We use a uniform system of accounts  Rates approved through formal rate application - All expenses reviewed and approved by ACC - Investment evaluated for prudency and used/usefulness - Customers noticed - Procedural schedule set by Administrative Law Judge  Process takes 24-30 months to complete

Wastewater Consolidation 2016 Rate Application

Summary  Using fresh financial data from 2015, EPCOR was ordered to evaluate three options:  Keep all five districts as they are today (status quo)  Consolidate all five districts into one large district  Create seven smaller districts based on “treatment facility”  EPCOR is recommending full consolidation  Proposed consolidated rate of $41.02/month - Phased in over three years

Option 1: Summary Status Quo

Rate Design – Current

Rate Design – Option 1

Option 2: Summary Consolidation

Rate Design – Option 2

Rate Design – Option 2

Option 3: Summary Deconsolidation

Rate Design – Option 3 1 Combined Sun City West & Northeast Agua Fria 2 Arizona Gateway only has Commercial class of customers

Why Consolidation?  It’s cost -effective and efficient  Provides economies of scale  Aging infrastructure in need of replacement  $41.02 is comparable to the area average for wastewater  It’s what customers expect - electric, natural gas, telecommunications and cities and towns are all consolidated

The ACC and Consolidation  Policy adopted June 24 favors consolidation  Considered for any utility  Decisions in context of a rate case

Infrastructure  ASCE 2013 Report Card gave water infrastructure D grade  Ongoing need to replace aging infrastructure  Investment needs total more than $1.7 trillion 1  Recovery of costs critical 1 Buried No Longer: Confronting American’s Water Infrastructure Challenge. AWWA

Investing in You $163 million in the next 10 years is needed to keep your wastewater system running properly.

Additional Elements of Case  Total revenue increase of $5.15M  Return on equity of 10.65%  Low Income Assistance Program - Increase participation - Focus on district impacted by increase  Capital investment costs completed within 18 months of the 2015 test year  Rate case expense - Costs deferred from 2014 - Complex process to develop three options

Next Steps  Procedural schedule  Ongoing communication  Explore options for settlement  Water consolidation rate case

Thank You Shawn Bradford Vice President of Corporate Services sbradford@epcor.com Office: 623.815.3136 24/7 Customer Care: 1.800.383.0834 epcor.com/wastewaterconsolidation