Water Demand & Supply Analysis for an ACC Rate-setting Case

M&A’s work led to the first instance of a regulated municipal provider in Arizona obtaining approval for rates that assume future continued declines in demand.

Overview

For years, household-level water demands have been declining in many parts of the western U.S. — a trend that not only defies previous predictions but also poses challenges to those who make water planning decisions. Declining rates of municipal water demand create planning and budgetary problems for providers because their revenues drop faster than expenses. These problems are heightened for regulated providers, who typically try to avoid frequent, expensive rate cases, as well as the typical 2-year wait between the start of the test year and the effective date of the new rates.

Community Water requested that the Arizona Corporation Commission (ACC) factor the projected declines in demand into its new rates — a request that the ACC staff initially declined, as they have done for similar previous requests.

Services

M&A provided analysis, rebuttal, rejoinder, and oral testimony for this case. The ACC staff accepted the analysis and dropped their opposition to factoring in projected future declines in demand in the new rates. The administrative law judge concurred in her findings and recommendations, and the ACC commissioners unanimously approved.