The Arizona Supreme Court on Friday upheld the decision by state utility regulators to allow the state’s largest water company to consolidate customers from five wastewater treatment districts and charge a effective price.
The consolidation allows Epcor to evenly split water costs among its customers in Maricopa and Mohave counties, which will lower monthly bills for some residents and increase others.
The Supreme Court concluded that the rate changes did not violate a state law that prohibited discriminatory rates since all customers would receive the same service for the same price.
The judges, however, overturned a lower court’s finding that the Arizona Corporation Commission rulings should be presumed constitutional.
Residents and regulators should enter the courtroom on a “level playing field,” Judge Clint Bolick wrote.
The wastewater consolidation case is separate from Epcor’s water pricing case currently before the Arizona Corporation Commission. The company also wants to consolidate its 95,000 customers from 11 river basin districts into one – a change that could reduce some customers’ bills by 35% and increase others by 60%.
Sun City residents: rates are discriminatory
The Arizona Supreme Court ruling comes after the Arizona Court of Appeals rejected arguments by the Sun City Homeowners Association that Epcor’s wastewater rates were unfair, discriminatory and arbitrary and that decisions of the Corporation Commission should be presumed to be constitutional.
The Sun City HOA has asked the state’s highest court to review the discrimination complaint, arguing their rate hikes were discriminatory because providing them with water service was cheaper at Epcor than in other areas . “Cost causation” should be taken into account, which would lower their rates, Sun City residents argued.
The state’s highest court disagreed, arguing that state law prevents discrimination on charges for the same services.
“Cost causation” would matter if the court considered whether the rates were “just and reasonable,” which the Sun City HOA did not ask for, Bolick wrote.
Because customers in all five wastewater treatment districts would receive the same service for the same cost, and because the Sun City HOA did not dispute this claim, the group did not illegally discriminate against Sun City, the judges concluded.
The multi-year consolidation battle ends
The company’s commission in 2014 ordered Epcor to file a consolidation case to determine whether a tariff would reduce costs for most customers.
Epcor’s application, submitted in 2016, presented three options: five autonomous districts, a full consolidation, and an option to further separate the districts into seven.
The commission ordered the consolidation in 2017, with the tariff changes to be phased in over a five-year period.
Epcor spokeswoman Rebecca Stenholm said the endgame took effect in July. Distributing the costs among more people makes the sudden expense less on the individual districts, she said.
The required sanitation system upgrades in Sun City alone would cost $ 57.5 million over the next decade, Epcor said.
Justice: our system does not protect the public against corporate abuse
In a self-proclaimed “unusual” move, Bolick wrote a concurring opinion expressing his displeasure that the state system has failed to protect the public from corporate abuse.
Compared to a competitive market where dissatisfied water consumers might call other companies for better rates, Arizona’s “regulated monopoly” forces residents “to engage in a costly, lengthy and labyrinthine administrative process. Bolick wrote.
“It’s a process in which the odds, to paraphrase ‘The Hunger Games’, are decidedly not in their favor, “he added.
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