RIO VERDE ACC DECSION0000162133.PDF

1 BEFORE THE ARIZONA CORPORA1 vvL.=I.IIuuIvI.
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IN THE MATTER OF THE APPLICATION OF DOCKET NO. WS-02 1 56A- 14-040 1
7 RIO VERDE UTILITIES, INC., TO EXTEND ITS
CERTIFICATE OF CONVENIENCE AND DECISION NO. 75091
8 NECESSITY FOR WATER SERVICE TO SERVE
PORTIONS OF RIO VERDE UNITS TEN AND
9 ELEVEN. OPINION AND ORDER
10 DATE OF HEARING: March 18,2015
11 PLACE OF HEARING: Phoenix, Arizona
12 ADMINISTRATIVE LAW JUDGE: Sarah N. Harpring
13 APPEARANCES: Craig A. Marks, Craig A. Marks, PLC, on behalf
of Rio Verde Utilities, Inc.; and
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Matthew Laudone, Staff Attorney, Legal
15 Division, on behalf of the Utilities Division of
the Arizona Corporation Commission.
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BY THE COMMISSION:
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This matter concerns an application filed with the Arizona Corporation Commission
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(“Commission”) by Rio Verde Utilities, Inc. (“Rio Verde”) to extend its Certificate of Convenience
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and Necessity (L‘CC&N’) to provide water utility service in Maricopa County by adding
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approximately 49 acres of land inadvertently omitted from its CC&N service area previously
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(“CC&N extension area”). Rio Verde has been providing water utility service to the CC&N
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extension area for more than 20 years.
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Having considered the entire record herein and being fully advised in the premises, the
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Commission finds, concludes, and orders that:
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S:\SHARPRING\Water&Watewater\CC&N\140401 roo.doc 1

DOCKET NO. WS-02156A-14-0401
1 FINDINGS OF FACT
2 Background
3 1. Rio Verde is an Arizona corporation engaged in providing water utility service to
4 approximately 1,700 customers’ in Maricopa County pursuant to CC&N authority granted by the
5 Commission in Decision No. 43509 (July 27, 1973) and Decision No. 5 1873 (February 19, 198 1).*
6 (See Ex. S-1.)
7 2. Rio Verde’s current rates and charges for water utility service were authorized in
8 Decision No. 63585 (April 24, 2001).3
9 3. Rio Verde recently discovered that a portion of the area to which it has been providing
10 water utility service for more than 20 years is not included within its CC&N service area for water.4
11 (Tr. at 25-27.) The omitted area is included in Rio Verde’s CC&N service area for wastewater. (Id.)
12 4. Rio Verde does not know when or how the omission occurred, but knows that the
13 omission was unintentional. (Id.)
14 Procedural Historv
15 5. On December 4, 2014, Rio Verde filed with the Commission an application for
16 approval to extend its CC&N to provide water utility service by adding the CC&N extension area,
17 which comprises approximately 48.72 acres in an area contiguous to Rio Verde’s current CC&N
18 service area and located approximately 5 miles north of Fountain Hills and 5.5 miles east of
19 Scottsdale in Maricopa County.
20 6. On December 9,2014, Rio Verde filed a Supplement to Application.
21 7. On January 5, 2015, the Commission’s Utilities Division (“Staff’) filed a Sufficiency
22 Letter stating that Rio Verde’s application had met the sufficiency requirements outlined in the
23 Arizona Administrative Code.
24 I This includes 52 customers located in the area for which a CC&N extension has been requested in this matter.
25 Official notice is taken of these decisions. Rio Verde’s CC&N has subsequently been extended by Decision No.
58865 (November 30, 1994), Decision No. 60929 (May 26, 1998), and Decision No. 64042 (September 18, 2001).
26 Official notice is taken of these decisions as well.
Official notice is taken of this decision.
It was during preparation of a potential CC&N application for a proposed development to be called Rio Verde
27 Highlands that Rio Verde discovered the omitted portion of the service area, for which approval of a CC&N extension is
requested herein. (Tr. at 25-27.) (Id) The proposed developer for Rio Verde Highlands subsequently decided not to
28 pursue the development.
2 DECISION NO. 75091

DOCKET NO. WS-02 156A- 14-040 1
1 8. On January 7,2015, Rio Verde filed a Motion requesting that a procedural conference
2 be scheduled to discuss a hearing schedule and the notice to be provided to property owners in the
3 CC&N extension area.
4 9. Also on January 7, 2015, a Procedural Order was issued scheduling a hearing in this
5 matter to commence on March 18, 2015, and establishing other procedural requirements and
6 deadlines, including a requirement for notice to property owners in the CC&N extension area.5
7 10. On January 15,2015, Rio Verde filed a Motion to Correct Official Caption, requesting
8 that an erroneous reference to “Rio Verde Highlands” in the application caption be deleted.
9 1 1. On January 16,2015, a Procedural Order was issued correcting the caption.
10 12. On February 9, 2015, Staff issued a Staff Report recommending approval of Rio
11 Verde’s application, with conditions.
12 13. On February 26, 2015, Rio Verde filed an Affidavit of Mailing showing that public
13 notice had been mailed to the owners of property within the requested CC&N extension area on
14 January 28,201 5, and had been published in The Fountain Hills Times on February 4,20 1 5.6
15 14. On March 18, 2015, the evidentiary hearing for this matter was held, with Rio Verde
16 and Staff appearing through counsel. Rio Verde presented documentary evidence and the testimony
17 of Ray Jones, utilities consultant. Staff presented documentary evidence and the testimony of Jian
18 Liu, Utilities Engineer, and Gerald Becker, Executive Consultant 111. No members of the public
19 attended to provide public comment. During the hearing, it was determined that Rio Verde would
20 file two documents from the Arizona Department of Water Resources (“ADWR’) as Late-Filed
21 Exhibits (“LFEs”).
22 15. On March 19,20 15, Rio Verde filed LFE A-6 and LFE A-7.
23 16. On April 22, 2015, the Commission’s Hearing Division issued a Recommended
24 Opinion and Order in this matter.
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27 The two filings appear to have crossed in the mail.
6 The mailing was timely. The publication was two days late, which Rio Verde attributes to the weekly publication
schedule for the newspaper. (Tr. at 34.) Rio Verde asserts that this should be considered harmless error because the
28 mailed notice was both timely and superior for effecting actual notice to those affected. (Tr. at 60-61 .)
3 DECISION NO. 75091

DOCKET NO. WS-02156A-14-0401
1 17. On April 28, 2015, Staff filed a Notice of Filing Updated Compliance Report,
2 including a copy of an ADWR Water Provider Compliance Report, dated April 3,2015, showing that
3 Rio Verde is in compliance with the requirements of the ADWR Modified Non Per Capita
4 Conservation Program (“MNPCCP) and with ADWR requirements governing water providers
5 mdor community water system^.^
6 The CC&N extension area
7 18. The CC&N extension area is located entirely within the northern portion of Section 7,
8 rownship 4 North, Range 7 East of the Gila and Salt River Base and Meridian, Maricopa County.
9 The legal description for the CC&N extension area is attached hereto and incorporated herein as
10 Exhibit 1. A map showing the CC&N extension area is attached hereto and incorporated herein as
11 Exhibit 2.
12 19. The CC&N extension area includes approximately 52 residential lots, the owners of
13 which were mailed notice as required by the Procedural Order issued on January 7, 2015. The
14 residential lots have been receiving water utility service from Rio Verde for more than 20 years.
15 20. Rio Verde’s water system includes nine active wells with a total pumping capacity of
16 6,5 10 gallons per minute (“GPM’), two storage tanks with a combined capacity of 1,040,000 gallons,
17 hydro-pneumatic pressure systems, and a distribution system serving 1,706 active connections at the
18 end of 2013. (Ex. S-1.) Rio Verde does not need or intend to add any plant facilities in order to serve
19 the CC&N extension area. (Ex. A-2.)
20 21. Rio Verde’s water system has adequate production and storage capacity to serve its
21 present customer base, which includes those customers within the CC&N extension area, and to
22 accommodate reasonable growth. (Ex. S-1.) No new developments are proposed to be built in the
23 CC&N extension area. (Ex. A-2.)
24 Regulatory Comdiance
25 22. Rio Verde’s water system is providing water that complies with the safe drinking
26 water standards enforced by the Maricopa County Environmental Services Department (“MCESD”).’
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’ Official notice is taken of the ADWR Water Provider Compliance Report of April 3,2015.
28 MCESD Public Water System Compliance Status Report of December 3,2014.
4 DECISION NO. 75091

DOCKET NO. WS-02156A-14-0401
1 23. For the period from October 2013 through October 2014, Rio Verde’s water system
2 had water loss of approximately 5.91 percent, which is well below Staffs recommended 10-percent
3 threshold for excessive water loss.
4 24. Rio Verde is in good standing with the Commission’s Corporations Division.
5 25. Rio Verde has an approved Physical Availability Determination (“PAD”) issued by
6 ADWR on October 27, 1992. (Ex. A-2.) The PAD includes the water demand for the CC&N
7 extension area, as the plats for the CC&N extension area were recorded and Rio Verde Unit Ten and
8 Rio Verde Unit Eleven were developed in the late 1980s. (Id.)
9 26. Rio Verde is located in the Phoenix Active Management Area (“AM,”) and is subject
10 to ADWR AMA reporting and compliance requirements. Since January 1,2010, Rio Verde has been
11 regulated by ADWR pursuant to the ADWR MNPCCP rather than the Annual Total Gallons Per
12 Capita Per Day (“GPCD”) Program.’ (LFE A-6; LFE A-7.) ADWR reports that Rio Verde is in
13 compliance with the MNPCCP and with ADWR’s requirements governing water providers and/or
14 community water systems.
15 27. Staff noted that Rio Verde’s most recent annual report filed with the Commission
16 indicated that Rio Verde was subject to a Gallons Per Capita Per Day requirement, which would be
17 inconsistent with Rio Verde’s participation in the MNPCCP and should be corrected by Rio Verde in
18 its next annual report, due in April 2015. (Tr. at 48-49.) Rio Verde indicated that it would provide
19 the correct information on its next annual report. (Tr. at 59.)
20 28. As of the hearing in this matter, Rio Verde did not possess a Maricopa County
21 franchise agreement for the CC&N extension area. (Tr. at 30.) Additionally, Rio Verde was
22 uncertain of its franchise coverage as to its existing CC&N service area in Maricopa County because
23 Rio Verde had been unable to locate in its files a franchise agreement for that area as well. (Tr. at
24 3 1 .) As of the hearing, Rio Verde had not yet contacted Maricopa County to determine its current
25 franchise coverage. (Id.) However, Rio Verde intended to communicate with the County, determine
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The parties agree that a water utility cannot be regulated under both the GPCD Program and the MNPCCP at the
28 same time. (Tr. at 42,45,47-48, 50,58.)
5 DECISION NO. 75091

DOCKET NO. WS-02156A-14-0401
he current franchise coverage, and apply for a franchise to cover the CC&N extension area and any
ither portion of Rio Verde’s water service area that is not currently covered by a franchise. (Id.)
29. A.R.S. 0 40-282(B) requires an applicant for a CC&N to show the Commission
:vidence that the applicant has received the required fianchise or other permit required by the
lpplicable county, city, or other public authority. A.R.S. 5 40-282(D) provides that if a public
service corporation has not yet been granted a franchise or permit, the public service corporation may
ipply for an order preliminary, or the Commission may make an order issuing a CC&N on the
:ondition that the contemplated fianchise or permit is obtained.
30. Mr. Jones testified that he has been involved in obtaining franchise agreements many
times and that it typically takes approximately 60 to 120 days. (Tr. at 3 1-32.)
3 1. Mr. Becker opined that there is no reason to believe Rio Verde would have any trouble
sbtaining a franchise from Maricopa County.
KO Verde’s Fitness and ProDerness
32. Rio Verde’s audited financial statements for 2013 show total assets of $13,215,601,
total operating revenues of $2,326,444, and net income of $367,876.
33. Rio Verde’s most recent annual report indicates that it has approximately 1,700
xstomers.
34. Staffs compliance database indicates that Rio Verde has no delinquent compliance
items with the Commission.
35. Rio Verde has on file with the Commission both an approved curtailment tariff and an
approved cross-connection control and backflow prevention tariff.
22 36. Staff did not indicate that Rio Verde has any outstanding complaints before the
23 Commission, and no customers or other members of the public have expressed opposition to Rio
I 24 Verde’s application herein.
25 37. Staff believes that Rio Verde is fit and proper to receive the requested CC&N
26 extension and that granting the extension is in the public interest. (See Tr. at 53.)
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6 DECISION NO. 75091

DOCKET NO. WS-02 156A- 14-040 1
1 Staffs Recommendations
2 38. Staff recommends that the Commission approve Rio Verde's application to extend its
3 CC&N to include the CC&N extension area, as described in Exhibit 1, subject to compliance with the
4 following conditions:
5 (a) Rio Verde shall continue to charge its authorized rates and charges within the
6 CC&N extension area;
7 (b) Rio Verde shall file with Docket Control, as a compliance item in this docket,
8 no later than December 3 1, 2015, a copy of the county franchise agreement for the CC&N extension
9 area;
10 (c) Rio Verde shall not in the future serve any customers that are not located
11 within or contiguous to its CC&N area;
12 (d) Rio Verde should comply with A.A.C. R14-2-402(E) for serving contiguous
13 lots;
14 (e) Rio Verde shall provide notice to all affected customers, and those customers
15 shall have an opportunity to be heard;" and
16 (f) Rio Verde shall file with Docket Control, as a compliance item in this docket,
17 no later than December 31, 2015, an updated ADWR Compliance Status Report indicating that Rio
18 Verde is in compliance with ADWR requirements.*
19 39. Staff further recommends that the Commission's Decision granting the requested
20 CC&N extension be considered null and void, after due process, should Rio Verde fail to comply
21 with any of the conditions listed in Findings of Fact No. 38.
22 40. Rio Verde objects to Staffs recommendation for Rio Verde's CC&N extension to be
23 conditioned on acquisition and filing, by December 31, 2015, of an ADWR Compliance Status
24 Report showing that Rio Verde is fully compliant with ADWR requirements. (Tr. at 59.) Rio Verde
25 would not object to a requirement for Rio Verde to work with ADWR to have the compliance issue
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10 Mr. Becker confirmed at hearing that the notice issue had been resolved, as Rio Verde had provided notice
27 subsequent to the creation of the Staff Report. (Tr. at 53.)
l 1 An ADWR Compliance Status Report dated January 26, 2015, showed that Rio Verde was non-compliant with the
28 GPCD Program, that Rio Verde was compliant with the MNPCCP, and that the MNPCCP did not apply to Rio Verde.
7 DECISION NO. 75091

DOCKET NO. WS-02156A-14-0401
1 resolved and for Rio Verde to make filings with the Commission providing updates on the resolution
2 of the compliance issue. (Id.)
3 Resolution
4 41. Staffs recommendations set forth in Findings of Fact No. 38(a), (b), (c), and (d) are
5 reasonable and appropriate and should be adopted.
6 42. Rio Verde is in compliance with ADWR requirements. There is no need to require
7 Rio Verde to file an updated ADWR Compliance Status Report.
8 CONCLUSIONS OF LAW
9 1. Rio Verde is a public service corporation within the meaning of Article XV of the
10 Arizona Constitution and A.R.S. $5 40-281 and 40-282.
11 2. The Commission has jurisdiction over Rio Verde and the subject matter of its
12 application.
13 3. Notice of the application was provided in accordance with the law.
14 4. There is a public need and necessity for water service to be provided in the CC&N
15 extension area described in Exhibit 1 and shown in Exhibit 2 hereto.
16 5. Rio Verde is a fit and proper entity to receive the requested extension of its CC&N
17 service area to provide water service in the CC&N extension area described in Exhibit 1 and shown
18 in Exhibit 2 hereto.
19 6. It is just and reasonable and in the public interest to grant Rio Verde the requested
20 extension of its CC&N service area to provide water service in the CC&N extension area described in
21 Exhibit 1 and shown in Exhibit 2 hereto.
22 7. It is just and reasonable and in the public interest to adopt Staffs recommendations set
23 forth in Findings of Fact No. 38(a), (b), (c), and (d).
24 ORDER
25 IT IS THEREFORE ORDERED that Rio Verde Utilities, Inc.’s application for an extension
26 of its Certificate of Convenience and Necessity to provide water utility service in the area of
27 Maricopa County described in Exhibit 1 and shown in Exhibit 2 hereto is approved, subject to the
28 conditions set forth in the following ordering paragraphs.
8 DECISION NO. 75091

DOCKET NO. WS-02156A-14-0401
1 IT IS FURTHER ORDERED that Rio Verde Utilities, Inc. shall continue to charge in the
2 zpproved extension area the currently authorized water service rates and charges for its Maricopa
3 ”ounty “I service area.
4 IT IS FURTHER ORDERED that Rio Verde Utilities, Inc. shall file with the Commission’s
5 Docket Control Center, as a compliance item in this docket, no later than December 31,2015, a copy
6 3f a Maricopa County franchise agreement covering the approved extension area.
7 IT IS FURTHER ORDERED that Rio Verde Utilities, Inc. shall not in the future serve any
8 Zustomer that is not located within or contiguous to the service area authorized in its Certificate of
9 Convenience and Necessity.
10 IT IS FURTHER ORDERED that Rio Verde Utilities, Inc. shall comply with the
11 requirements of A.A.C. R14-2-402(E) if it desires to commence service to any property contiguous to
12 the service area authorized in its Certificate of Convenience and Necessity.
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9 DECISION NO. 75091

DOCKET NO. WS-02 156A- 14-040 1
1 IT IS FURTHER ORDERED that the Commission’s approval of the extension of Rio Verdt
r L Utilities, Inc. ’s Certificate of Convenience and Necessity, granted herein, shall be considered null anc
- void, after due process, if Rio Verde Utilities, Inc. fails to meet the above conditions within the time:
4 specified.
I r( IT IS FURTHER ORDERED that this Decision shall become effective immediately.
6 p$Y ORDER OF THE ARIZONA CORPORATION COMMISSION.
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10 DECISION NO. 75091

1 SERVICE LIST FOR: RIO VERDE UTILITIES, INC.
2 DOCKET NO.: w5-02 156A- 14-040 1
3 Craig A. Marks
CRAIG A. MARKS, PLC
4 10645 North Tatum Boulevard
Suite 200-676
5 Phoenix, AZ 85028
6 Janice Alward, Chief Counsel
Legal Division
7 ARIZONA CORPORATION COMMISSION
1200 West Washington Street
8 Phoenix, AZ 85007
9 Steven M. Olea, Director
Utilities Division
10 ARIZONA CORPORATION COMMISSION
1200 West Washington Street
11 Phoenix, AZ 85007
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11 DECISION NO. 75091

EXHIBIT 1
Legal Desriptkn
Rio Verde Utilities, Inc.
Water CC&N Extension
That portion of Section 7, Township 4 North, Range 7 East of the Gila and Salt R’ier Base and Meridian,
Maricopa County, Arizona more particularly described as follows:
General Land Office Lots 2 and 3, except any portion lying south of the north right-of-way line of
McDowell Mountain Road, being more particularly described as follows:
Commencing at the Northwest Corner of said Section 7;
I THENCE South &9%5’51” East along the North line of said Section 7 a distance of 1,313.85 feet
to the Northwest Corner of said Lot 3 and the TRUE POINT OF BEGINNING;
THENCE continuing South 89O55’51 East along the North line of said Section 7 a distance of
1,320.19 feet to the Northeast Corner of said Lot 3 which is also the Northwest Corner of said
Lot 2;
THENCE continuing South 89’55’51’’ East along the North line of said Section 7 a distance of
1,320.00 feet to the Northeast Corner of said Lot 2;
THENCE South 0O000’2l’’ East along the East line of said Lot 2 a distance of 503.72 feet to a
point on the northerly right-of-way line of McDowell Mountain Road;
THENCE South &0°15’23” West along the northerly right-of-way line of McDowell Mountain
Road a distance of 459.36 feet;
THENCE South 80O27’24” West along the northerly right-of-way line of McDowell Mountain
Road a distance of 1,390.58 feet;
THENCE South 80O28’45” West along the northerly right-of-way line of McDowell Mountain
Road a distance of 827.22 feet to a point on the West line of said Lot 3;
THENCE North OOo01’13” East along the West line of said Lot 3 a distance of 951.76 feet to the
Northwest Corner of said Lot 3, the Point of Beginning.
DECISION NO. 75091

EXHIBIT 2
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DECISION NO. 75091