I € 2( 2' 2: Notice of Filing
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1 2 ARC SF'lTZER CHAIRMAN 3 M IRVIN COMMISSIONER 4 'ILLIAM A. MUNDELL COMMISSIONER 5 ZFF HATCH-MILLER COMMISSIONER 6 IKE GLEASON COMMISSIONER 7 .1 THE MATTER OF THE APPLICATION Docket No. W-01445A-02-0619 8 RIZONA WATER COMPANY, AN RIZONA CORPORATION, FOR 9 DJUSTMENTS TO ITS RATES AND HARGES FOR UTILITY SERVICE 10 URNISHED BY ITS EASTERN GROUP ND FOR CERTAIN RELATED 11 PPROVAL. 12 NOTICE OF FILING 13 The Residential Utility Conwmer Office ("RUCO") hereby provides notice of filing 14 ie Redacted Surrebuttal Testimony of William A. Rigsby in the above-referenced matter. 15 -he unredacted testimony of Mr. Rigsby is being filed under-seal and will be provided to I€ Iarties who have executed a confidentiality agreement. 1i RESPECTFULLY SUBMITTED this 3rdday of September, 2003. It 1: 2( Attorney V 2' 2: 2: 2, -I-4 1 AN ORlGiNAL AND THIRTEEN COPIES of the foregoing filed this 3'd day 2 of September, 2003 with: 3 Docket Control Arizona Corporation Commission 4 1200 West Washington Phoenix, Arizona 85007 5 COPIES of the foregoing hand delivered/ 6 mailed this 3'd day of September, 2003 to: 7 Teena Wolfe* Kay Bigelow Administrative Law Judge City of Casa Grande 8 Hearing Division 510 East Florence Blvd. Arizona Corporation Commission Casa Grande, Arizona 85222 9 1200 West Washington Phoenix, Arizona 85007 10 Tim Sabo, Attorney* Robert Skiba 11 Legal Division PO Box 1057 Arizona Corporation Commission Oracle, Arizona 85623 12 1200 West Washington Phoenix, Arizona 85007 13 Ernest Johnson, Director* Michelle Byers 14 Utilities Division PO Box 2771 Arizona Corporation Commission Apache Junction, Arizona 8521 7 15 1200 West Washington Phoenix, Arizona 85007 16 Ralph J. Kennedy* Thomas H. Campbell 17 Vice President and Treasurer Lewis and Roca, LLP Arizona Water Company 40 North Central Avenue 18 PO Box 29006 Suite 1900 Phoenix, Arizona 85038-9006 Phoenix, Arizona 85004 19 Norman D. James* Philip A. Edlund, Vice President 20 Jay L. Shapiro Superstition Mountain, LLC Fennemore Craig 8777 North Gainey Center Drive 21 3003 North Central Avenue Suite 205 Suite 2600 Scottsdale, Arizona 85258 22 Phoenix, Arizona 8501 2 23 -24 1 Mare Spitser* Chairman 2 Arizona Corporation Commission 1200 West Washington 3 Phoenix, Arizona 85007 4 Jim Iwin* Commissioner 5 Arizona Corporation Commission 1200 West Washington 6 Phoenix, Arizona 85007 7 William A. Mundell* Commissioner 8 Arizona Corporation Commission 1200 West Washington 9 Phoenix, Arizona 85007 10 Jeff Hatch-Miller* Commissioner 11 Arizona Corporation Commission 1200 West Washington 12 Phoenix, Arizona 85007 13 Mike Gleason* Commissioner 14 Arizona Corporation Commission 1200 West Washington 15 Phoenix, Arizona 85007 16 17 18 19 20 21 22 23 -24 SURREBUTTAL TESTIMONY OF WlLLlAM A. RIGSBY ON BEHALF OF THE RESIDENTIAL UTILITY CONSUMER OFFICE SEPTEMBER 3,2003 NTRODUCTION .................................................................................................. 1 SUMMARY OF ARIZONA WATER’S REBUTTAL TESTIMONY ......................... 2 TEST YEAR ADJUSTMENTS ............................................................................ 11 iECOVERY OF DEFERRED CAP CHARGES ................................................. 19 4PACHE JUNCTION/SUPERIOR RATE CONSOLIDATION ............................. 21 ..... ?ATE DESIGN ................................................................................................... 24 COST OF CAPITAL ........................................................................................... 25 1 NTRCSDUCTIBN 2 2. Please state your name, occupation, and business address. 3 4. My,Name is William A. Rigsby. I am a Public Utilities Analyst V employed 4 by the Residential Utility Consumer Office (“RUCO”) located at 11 10 W. 5 Washington, Suite 220, Phoenix, Arizona 85007. _. 6 7 2. Please state the purpose of your testimony. 8 A. The purpose of my testimony is to respond to Arizona Water Company’s 9 (“Arizona Water” or “Company”) rebuttal testimony on RUCO’s 10 recommended rate base, revenue requirement, rate design and rate of 11 return on invested capital (which includes RUCO’s recommended cost of 12 debt and common equity) for the Company’s Eastern Group. My 13 surrebuttal testimony will present the positions of both myself and RUCO 14 witness Timothy J. Coley. 15 16 2. Has RUCO filed any prior testimony in regard to this case? 17 4. Yes, both Mr. Coley and myself filed direct testimony on July 8, 2003. Our 18 direct testimony presented RUCO’s recommended rate base, revenue 19 requirement, rate design and cost of capital figures-for the instant case. 20 Mr. Coley presented direct testimony on RUCO’s recommended rate base 21 and revenue requirements for the Oracle, San Manuel, Sierra Vista and 22 Winkelman systems. My direct testimony presented RUCO’s 23 recommended rate base and revenue requirements for the Apache 1 ;ur;ebuttal Testimony of William A. Ricjsby locket No. h’-014454-32-0619 ~. I Junction, Bisbee, Miami and Superior systems. My direct testimony also 2 presented RUCO’s recommended rate design for each of the eight 3 aforementioned systems that comprise the Company’s Eastern Group. I 4 also filed, under separate cover, direct testimony which presented 5 RUCO’s recommended rate of return for Arizona Water’s invested capital -- 6 in the Eastern Group. 7 8 ;UMMARY OF ARIZONA WATER’S REBUTTAL TESTIMONY 9 1. Have you reviewed the rebuttal testimony of Company witnesses William 10 M. Garfield, Sheryl L. Hubbard, Ralph J. Kennedy, Walter W. Meek, 11 Michael J. Whitehead and Dr. Thomas M. Zepp? 12 4. Yes, both Mr. Coiey and myself reviewed the rebuttal testimony that was 13 filed by the aforementioned Company witnesses on August 5, 2003. 14 15 2. Please summarize the Company’s rebuttal testimony. 16 4. Mr. Garfield’s rebuttal testimony provided an overview of, and presented 17 positions on, issues that were addressed by the Company’s other five 18 witnesses. Mr. Garfield’s overview includes the following issues: RUCO’s 19 recornmended cost of capital, RUCO’s recommended treatment of the 20 Pinal Creek Group (“PCG”) matter, RUCO’s recommendation on rate 21 consolidation for the Apache Junction and Superior systems, and RUCO’s 22 recommendations for the recovery of deferred Central Arizona Project 23 (“CAP”) charges in the Apache Junction System. Mr. Garfield’s rebuttal 2 1 testimony also contains an in-depth discussion of the PCG matter and 2 presents the Company’s position on RUCO’s recommendations regarding 3 the PCG matter as it pertains to the Company’s Miami system. 4 Ms. Hubbard’s rebuttal testimony directly addresses RUCO’s adjustments 5 to the Company’s test year ended December 31, 2001 (“Test Year”) and 6 indirectly addresses RUCO’s recommended level of accumulated 7 depreciation which was calculated under a half year convention. Her 8 rebuttal testimony also presents revised rate base schedules. 9 Mr. Kennedy’s rebuttal testimony concentrates on the PCG matter, rate t 10 consolidation for the Apache Junction and Superior systems, and RUCO’s 11 recommended monthly minimum charges. Mr. Kennedy also addresses 12 the company’s request for arsenic recovery that is moving forward in a 13 separate proceeding before the Commission. 14 Mr. Whitehead’s rebuttal testimony addresses post-test year plant 15 additions and rate consolidation in the Apache Junction and Superior 16 systems. 17 Both Mr. Meek and Dr. Zepp address cost of capital issues. 18 19 Q. How is your surrebuttal testimony organized? 20 A. Because many of the issues summarized-above were addressed by either 21 two or more of the Company’s witnesses, my surrebuttal testimony will be 22 organized by the issues associated with the case 2s opposed to being 23 organized by individual witness. 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 4 irreburtal Testimony of William A. Rigsby ocli21 NO W-G1~15A-G2-C619 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 uriebuital Testirnoriy of VJilliim A. Rigsby ocket NO. Vl-01445A-02-0619 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 a 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 I 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 2 3 4 5 6 7 8 9 EN D C 0 N FIDENTI AL] 10 11 12 rEST YEAR ADJUSTMENTS 13 2. Please discuss the Company’s position regarding RUCO’s adjustments to 14 Test Year revenues and expenses. 15 4. In her rebuttal testimony, Company witness Hubbard has described 16 RUCO’s revenue and expense adjustments to the Test Year as an 17 “unadjusted test year.” Ms. Hubbard claims that RUCO’s approach in this 18 case violates the definition of “test year” per A.A.C. R14-2-103(A)(p). She 19 further urges the Commission to reject RUCO’s recommendation. Ms. 20 Hubbard’s rebuttal testimony includes revised rate base schedules which 1 21 will comment on later in my surrebuttal testimony. 22 I Do you agree with Ms. Hubbard’s characterization of RUCO’s approach in 2 this case as an “unadjusted test year?” 3 No, I do not agree with the characterization of an “unadjusted test year.” 4 Contrary to Ms. Hubbard’s allegation that RUCO is proposing to “change 5 the test year used in this proceeding,” RUCO has simply made - 6 adjustments to the Company’s pro forma estimates to reflect actual known 7 and measurable changes to test year revenues and expenses.