News Release

 

To: Editors, News Directors

Date: February 12, 2003

For: Immediate Release

 

 

Commissioners Approve Cap Pipeline Engineering Report
Decision does not affect consumer rates at this time

PHOENIX - By a unanimous vote, the Arizona Corporation Commissioners voted to approve construction of a pipeline that will allow Central Arizona Project (CAP) water to be used in the Sun Cities. The measure will reduce reliance on groundwater pumping in Sun City and Sun City West.

At present, only groundwater is available to customers of Arizona-American Water Company, the utility serving several West Valley cities including Sun City, Sun City West and Youngtown. When completed, the pipeline will deliver 6,561 acre-feet of CAP water to replace groundwater use in Sun City and Sun City West. As a result of this project, 6,561 acre-feet of groundwater will be saved every year, groundwater that otherwise would be pumped to water golf courses.

Water supply issues in the West Valley have been the subject of numerous studies and a great deal of research. Presently, the underground aquifer is being overdrawn - that is, more water is being used than is being replenished through rainfall or recharge. Today's action will have a major impact on securing the aquifer.

Overdraft of the underground aquifer can have severe and costly consequences, including subsidence, which is already evident in the region. The area around the Sun Cities and also near Luke Air Force Base is experiencing subsidence - cracks, fissures or dips in the surface of the earth - because the water deep underground that provided physical support is no longer there. Subsidence is caused by excessive groundwater pumping.

Other consequences of groundwater depletion include the need for more and deeper wells and the risk of periodic water outages. The well-publicized drought conditions throughout Arizona prompted the Commissioners to vote for additional measures which will encourage water conservation.
  • Separate amendments offered by Chairman Marc Spitzer and Commissioner Bill Mundell were modified and merged together. The revised amendments recognize that all ratepayers should bear a proportionate share of the additional costs of the pipeline. Today's order did not approve a rate change. The rate impact of today's decision will be dealt with in a future rate case.

The Commissioners also directed staff to consider revising the company's inverted block rate design. Inverted block rates result in higher volume water users paying a higher fee for water and thereby encourage conservation by providing an economic incentive to use less water. Presently, there is a slight increase in rates for high volume users but the Commissioners wanted staff to consider modifying the tariff as a means of encouraging conservation. (Revised Spitzer 1 and Mundell 2)
  • Commissioner Mundell's fourth amendment also directed the Arizona-American to propose a low income program within 60 days of the Commission order to help such customers if they face a hardship in paying their utility bill. Several other regulated utilities have similar programs for low-income customers. (Revised Mundell 4)
  • The Commissioners directed the utility to impose a specific hook-up fee for new service connections in the communities when new residential or commercial development occurs. Hookup fees are one-time fees to establish a new connection to an existing system. These fees are distinct establishment/disconnect fees paid by existing property owners. (Revised Mundell 3)
  • Commissioner Jeff Hatch-Miller sponsored an amendment to require greater emphasis on water conservation awareness programs. The company testified that the utility maintains a speaker's bureau, website (www.saveh2oarizona.com) and promotes water conservation through bill stuffers and other materials. The amendment directs the company to review the company's water conservation initiatives and submit the results of its review to the Utilities Division and the other parties to the case. (Revised Hatch-Miller 1)
  • The Commissioners approved an amendment sponsored by Commissioner Mundell that references comments offered by the public in prior public comment meetings. Members of the public and attorneys for the Sun City Taxpayer's Association have argued that the Recreation Centers have transferred water rights by entering into the agreement to take CAP water through the pipeline project.

The amendment states that a Superior Court judge has determined that the agreement between the Recreation Centers of the Sun Cities and Arizona-American does not constitute a "transfer" of water rights but instead is a water-for-water exchange contract. As stated in the Court's decision, "[a] relinquishment, conveyance or transfer of RCSC's [Recreation Center] groundwater rights does not occur" because if CAP water becomes unavailable, the Recreation Centers can immediately resume pumping of groundwater. The Taxpayer's Association has appealed the Superior Court decision.

Comments from the Commissioners

Commissioner Mike Gleason:

"This question is not whether the Commission should authorize construction of the pipeline but rather, whether the preliminary engineering report has properly addressed the details of the pipeline. And this case is not about irrigation of golf courses...it is about land subsidence and the lowering of the water table. If [groundwater pumping] is allowed to continue, it would have a drastic effect on the property values of the community. For these and other reasons, I vote in favor of the project."

Commissioner Jeff Hatch-Miller:

"Almost 23 years ago, leaders of Arizona got together and recognized that water is vital to the future of our state with the passage of Arizona's Groundwater Management Act. A decision was made at that time that decreased reliance on groundwater was necessary and that's when the CAP canal system was completed. We would not be where we are today if this vision had not been carried forward. Conditions in the state and its continued growth require that we address this issue by approving this project."

Commissioner Bill Mundell:

"As the current drought clearly shows, Lake Powell is at its lowest level since it was being filled. The state is in its worst drought since recordkeeping began in the 1880s. We need to think of our children, our grandchildren and our great grandchildren just as our forefathers thought of us when they wisely paid for and built Arizona's dams and the Central Arizona Project."

Commissioner Jim Irvin:

"This has been a long process and it's not over yet. There is a case on appeal and the future rate case to deal with. I hope after today's decision we can start to bring the community together to find common ground and preserve water with a regional approach. The amendments we joined together to approve do protect ratepayers. I will remain a very strong advocate...to see that ratepayers are protected and that we address with fairness the allocation of costs among the communities."

Commission Chairman Marc Spitzer:

"Morris Udall had several witticisms but I want to bring one up ‘Where you stand depends on where you sit.' From where I sit, there are three things that need to be considered:

public health and welfare, representative government and the future of the state of Arizona. It was alluded to that but for the foresight of the founders of this state, Arizona would not exist as it is today. Entire civilizations have come and gone - in this state - because they failed to plan adequately for the water needs of the future. There are three things that money can't buy - public health and welfare, representative government and the future of the state are just three of those things. We are taking a step today to make sure we don't gamble away the things money can't buy."

Procedural History

Citizens Utilities Company, now Arizona-American Water Company, conducted a water resource study in 1994. The study concluded that continued reliance on groundwater would result in decreased water levels, well failures, increased pumping costs, diminished water quality and land subsidence.

In a 1995 rate case, the water company sought recovery of CAP water costs. The Commission denied that cost recovery in a 1997 decision and required the utility to develop a CAP water utilization plan by December 2000.

A task force was formed in 1997 to study the most cost-effective and reasonable means of utilizing CAP water. The group represented a broad cross section of community representatives and ratepayers. The task force studied several options for putting the CAP allocation to beneficial use while minimizing costs to ratepayers. Because the pipeline plan does not require the construction of a costly water treatment plant, this plan represented the least-cost alternative.

A subsequent Commission decision approved the concept of the Groundwater Savings Project. Several Commission meetings and a hearing on the preliminary engineering report ensued. The Sun City Taxpayers Association also filed suit against the Commission but the suit was dismissed by a Maricopa County Superior Court judge.

The proceeding today approved the preliminary engineering report and will allow the company to move forward with construction if and when it chooses to do so. The Commission decision does not result in an increase in rates today. The rate impact of today's decision will be assessed in a future rate case.

 

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