Anthem residents not buying rate hike
by Kathleen Stinson 

ANTHEM – A state‑of‑the‑art infrastructure, costing close to six times that of any other privately owned Arizona water company, did not impress Anthem residents at a public meeting who appeared  more concerned with dollars than dazzle.

Last Thursday, Arizona American Water held the first of two community meetings to explain its proposed rate increases under consideration by the state Corporation Commission.

To familiarize customers with AAW operations, the company played a color video showing the nine‑mile pipeline that carries water to Anthem. The presentation featured a virtual tour of the utility’s water campus and highlighted the many millions of dollars spent to construct the mammoth system.

Residents’ questions, however, focused on AAW’s proposal for a water and wastewater rate hike of 92.05 percent, according to data calculated by the Anthem Community Council, intervener in the rate case.

Anthem resident Richard Lindner said he was under the impression he had  already paid for his share of the community water infrastructure because that’s what he was told when he bought his house and “paid a $150,000 premium” on his lot. 

Lindner then turned to the audience and asked for a show of hands as to how many residents were not told the same thing when they bought their homes. Out of about 80 people in attendance, only one person raised his hand.

At that point an AAW representative said the company invited developer Pulte Homes (Del Webb Corp.) to speak at the meeting, but they did not join the presentation.

Pulte’s director of public affairs, Jacque Petroulakis, told The Desert Advocate this week that Lindner’s remarks were inaccurate.

“Lot premiums have no relationship to the larger infrastructure of the community,”  Petroulakis said.

According to Marylee Diaz Cortez, chief of accounting and rates for the Residential Utility Consumer Office of the State of Arizona, “It was known up front (10 years ago) that the water and sewer system built in Anthem would be more extensive.” She went on to say, “It was known that the fixed costs of water and sewer rates in Anthem would be five to six times that of the average water company in Arizona.”

RUCO also filed as an intervener in the current rate case on behalf of Anthem residents.

At the time Anthem was developed, nearby communities opposed Del Webb’s use of  groundwater, so the bulk of the system uses surface water–a more expensive source, explained AAW personnel.

“Del Webb got permission from the Arizona Corporation Commission for its Certificate of Convenience and Necessity (CCN) 10 years ago,” Diaz Cortez added. “We all knew, Del Webb knew – I can’t speak to Del Webb’s marketing (disclosure), but everybody knew Anthem was going to have the most expensive water system in the state.”

She said the Anthem water plant cost $94 million to construct and the sewer plant about another $70 million, adding that she does not know of another private, regulated water company in Arizona that cost more than $10‑$15 million.

Asked whether Del Webb disclosed to home buyers before a sale that the water system cost much more than other systems, Petroulakis said, “All of our disclosures such as utility disclosures, including water, are well within state law.”  

Anthem resident Ken Miller commented that a rate hike might not affect someone earning $350,000 a year but would  affect those making $30,000 annual salaries.

“Averages are great, but you have to take into account high and low incomes,” Miller said.

AAW spokesman Todd Walker responded by saying income level has nothing to do with the rate request, to which an unidentified woman yelled out that the community has a number of elderly residents.

Another resident, Noel Kurth, asked why Arizona American Water did not let residents know about these increases earlier.

“I am wondering what happened in the AAW planning process; the company must have anticipated this increase,” Kurth said.

An AAW representative related that the company bases its data for a 2007 increase on 2005 test‑year data.

“What’s going to happen in 2025 when water is less available?” Kurth asked. “I can’t imagine Desert Hills Water customers lining up to give up their water for Anthem. It’s altruistic to give them our water now.”

Arizona American last week signed a 10‑year contract with the Town of Cave Creek to provide up to 2 million gallons of water a day for Desert Hills and Cave Creek customers.

AAW’s representative explained all sales to Desert Hills Water are on an “as available basis.”

Lindner also asked why the minimum monthly charges are so high, stating he was gone for 15 days one month and the difference between his bills was $4.

Another resident asked why, when he vacated his house, his APS and Southwest Gas bills were minimal but his AAW  bills remained high.

An AAW representative said monthly minimum charges conceivably could be distributed differently to place the bulk of the burden on high water users, if the community wanted to change the rate design.

But Diaz Cortez said that is not practical because of the high cost of the infrastructure and the relatively few customers (about 8,600). It would not be fair to place the burden of infrastructure costs on a small number of high water users, she stated, adding that every customer should bear the cost of infrastructure to have the right to turn the tap on, regardless of how much water is used.