Sedona customers can expect to pay nearly 50% more on their monthly water bill if the Arizona Water Co. utility gets its approval from the Arizona Corporation Commission. 

AWC, the second largest private supplier of water in the state, filed an application to increase its rates for its Northern Group that includes Sedona, Rimrock, Overgaard, Pinetop, Lakeside, Forrest Towne, Pinewood and Valley Vista.

The proposed rate increases are: Residential 48.73%, Commercial 47.22%, private fire service 50.46%, other water revenues 48.8%. Industrial water users will not have their rates increased under the proposal.

“[AWC] asserts that for the test year [of 2023] its Northern Group had adjusted operating income of $1.6 million and an Original Cost Rate Base of $74.7 million, resulting in a rate of return of 2.18% on its OCRB,” according to its rate application. “[AWC] proposes rates and charges that would produce a revenue increase of approximately $7.46 million, or 48%, compared to current base rates. [AWC’s] proposed revenue increase would produce a 4.54% rate of return on its proposed fair value rate base of 157.9 million.”

“The requested increase is 48.73%,” Sedona resident Rosemary Mays wrote to ACC on Aug. 28. “This is an extraordinarily high percentage and it is not affordable. There is no way to cut back on consumption by that amount or to increase my income to cover this increase.”

Mays’ comments echo the sentiment of customer comments to the ACC with 57 residents across the AWC Northern Group voicing their opposition to the proposed rates as of Monday, Dec. 9.

“It is going to raise water residential costs by an incredible amount, especially for those of us who are retired and facing paying rising utility bills on fixed incomes,” Seth Ellis, a Sedona resident, wrote to the ACC on Aug. 19. “l am shocked at the audacity of this request for such a huge increase in water rates.”

AWC Vice President of Rates and Revenue Nick Y. Liu said that the actual bill to residents could increase 35% because two surcharges that are already on customer bills for System Improvement Benefits and its Arsenic Cost Recovery Mechanism.

On one sampled AWC bill the existing surcharges make up 10% of the total amount owed by the customer. 

In the July 30 primary election, by a vote of 2,579 to 399 across Yavapai and Coconino counties, Sedona votersgranted AWC a 25-year franchise agreement “to use the city’s public rights-of-way to operate its water system and supply water service within the city,” according to proposition.

“While their service has been fully satisfactory in the period I’ve lived in Sedona, the rates were acceptable and as such, voting in favor of continuation of them as the service provider made sense,” Sam Kaplan, Sedona resident, wrote to the ACC on Aug. 28. “There was no indication made relative to a significant rate increase request being made. If that information had been made public, it would have had a likely impact on voter’s decision for their retaining a very long-term monopolistic servicing capability.”

Liu cited inflation as the main cause of the new rates, which were last set on Aug. 19, 2019.

“At the same time we have made significant capital investment as well, which were needed to replace aging infrastructure and we have to build additional treatment facilities that are required to comply with the federal Safe Drinking Water Act,” Liu said.

“This 48% increase is a big deal, especially to the retired. I am going to have to consider getting a well,” Susan Brooks, a customer in the Rimrock Division of AWC wrote to the ACC on Nov. 13.

In addition to the rates, AWC is requesting the ACC approve adopting “a Sustainable Water Adjustor Mechanism to recover the costs of acquiring new sustainable water supplies; a Wildfire Protection and Public Safety surcharge mechanism to recover the cost of modernizing aging infrastructure to increase fire flow …; and “a Tax Expense Adjustment Mechanism to recover changes in income tax rates in between rate cases,” according to the rate application.

“In our Northern Group, we’re 100% groundwater, we do want to have a more robust, and sustainable water supply portfolio,” Liu said, discussing the other requests.

Liu confirmed that AWC is proposing to the ACC to continue the company’s Utility Bill Assistance Program, which provides a $10 discount on the customer bill to qualifying low-income customers and active military personnel.

To submit comments to the ACC ahead of its commission hearing on Monday, March 17, at 10 a.m. reference Docket Number “W-01445A-24-0117” and physically mail letters to: Arizona Corporation Commission, Consumer Services Section 1200 W. Washington, Phoenix, AZ 85007. Comments can also be submitted online at azcc.gov by using the docket number. For help with the process, contact ACC Consumer Services at (602) 542-4251 or (800) 222-7000.

If you have any questions concerning how the Application may affect your bill or other substantive questions about the Application, contact Arizona Water Co. and Nick Y. Liu by mail to 3805 N. Black Canyon Hwy., Phoenix, AZ 85015; by telephone at (602) 240-6860; or by email at rates@azwater.com.