Mayes challenges ACC rate hikes for Robson Ranch residents

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(The Center Square) - Attorney General Kris Mayes is challenging a recent decision made by the Arizona Corporation Commission to raise water and sewer rates for people in Robson Ranch.

The Democratic Arizona attorney general filed a rehearing application this week with the ACC to challenge its recent 3-2 decision approving increases of water service fees by 23% and sewer service fees by 154% for the retirement community south of Casa Grande, a city that's halfway between Phoenix and Tucson.

In the application, Mayes said the commission’s rate increase decision violates its duty to set rates that are “just and reasonable.”

“Arizona courts have consistently held that ‘just and reasonable rates’ are those that are fair to both consumers and public service corporations,’ the application said.

Mayes said the rate increases approved from the Picacho Water Co. and Picacho Sewer Co. are “in complete disregard of the impact of those increases upon residential ratepayers,” calling them “unjust and unreasonable.”

Mayes argued the ACC’s rate increase is the “very definition of rate shock, constituting an utter disregard of the impacts to residential ratepayers – a violation of Arizona law.”

“Robson Ranch residents have no alternative utility providers. They are captive customers of Picacho Water Co. and Picacho Sewer Co., with no ability to shop for better rates or switch to a competitor,” the attorney general said.

“Arizona's founders enshrined the Corporation Commission in the state Constitution specifically to protect consumers from exploitation by monopoly utilities,” she added. “When the Commission fails to fulfill that role, my office will step in to protect Arizonans."

Thomas Van Flein, general counsel for ACC, said “the Commission takes each complaint or application for rehearing seriously.”

“However, policy disputes are not the same as legal error. The Commission follows the statutes, the Constitution and relevant case law giving it guidance. Policy disputes are not to be resolved in court or even in a rehearing,” Van Flein told The Center Square, answering questions by email.

Picacho Water Co. and Picacho Sewer Co., which are owned by JW Water Holdings LLC, had not filed a rate increase since 1998 and 1999, respectively. JW Water, a private equity firm, purchased the utility companies in 2024.

ACC Chairman Nick Myers said the commission “took significant steps to reduce ratepayer impact” by setting the return on equity rate to 9.65%.

Rachel Wilson, ACC vice chair, said JW Water is not “recovering revenue losses over the course of the past 25-plus years, nor are they recovering the purchase price of the utilities.”

She added that this rate case only pertained to establishing rates to “cover the cost of services.”

Both Myers and Wilson voted in favor of the rate increases.

Under the new increased rates, Robson Ranch customers will be paying $36.87 per month on average for water and $106.73 per month on average for sewer. Before the rate increases, the average water bill per month was $30.01 per month and $42.00 per month for sewer services.

ACC Commissioner Kevin Thompson, who voted against the rate increase proposal, said the rate increases “should adhere to principles of gradualism.”

“As a regulator, I felt I had a duty to advocate for a resolution that strikes an appropriate balance between all parties and not subject these ratepayers to the consequences of business decisions that were no fault of their own," Thompson said.

Commissioner Lea Márquez Peterson, the other ACC commissioner to vote against the rate increase, said JW Water should have conducted more public outreach and communication about the “sewer utility case to the ratepayers.”

“We received many public comments concerning the dramatic rate increase though an increase was certainly expected from a utility who hadn’t filed a rate case in over 25 years,” she said. “I believe that more could have been done to promote gradualism in the sewer rate case.”

The Center Square reached out to JW Water, but did not hear back before press time.