The Town of Fountain Hills has filed a formal complaint with the Arizona Corporation against Chaparral City Water Company and its parent company, EPCOR.

The complaint charges that the increased CCWC rates and charges are “unconstitutionally unreasonable and unjust,” and that the CCWC System Improvement Benefit (SIB) surcharge is unconstitutional.

The town’s filing with the ACC incorporates dozens of complaints the commission has received from CCWC customers in Fountain Hills.

The complaint states that “the Arizona Constitution requires that all ‘charges for service rendered by public service corporations within this state be just and reasonable.’”

It also states that “the Commission should order CCWC to appear and show cause why its rates and charges are not unjust and unreasonable and in violation of…the Arizona Constitution and why it should not be ordered to cease and desist from charging unjust and unreasonable fees and charges.”

The complaint also charges that CCWC’s SIB surcharge is unconstitutional because it permits annual rate increases without commission examination of CCWC’s fair value and its costs and revenue allows rate increases between rate cases.

“The commission should declare CCWC’s SIB charge illegal and unconstitutional and order CCWC to cease and desist from increasing its rates annually via a SIB charge,” the complaint states.

The complaint also cites testimony from EPCOR engineer Candace Coleman that the SIB surcharge is unnecessary.

“Why can’t the company make repairs and improvements and then request recovery in the next rate case, which is the traditional way things are done?” Coleman was asked during the hearing. Her response was, “We could.”

The complaint concludes that the Town of Fountain Hills asks that the commission:

“Direct CCWC to appear and show cause why its rates and charges are not unjust and unreasonable and in violation of … the Arizona Constitution and why it should not be ordered to cease and desist from charging unjust and unreasonable rates and charges.

“Enter an order declaring CCWC’s rates and charges unjust and unreasonable under … the Arizona Constitution.

“Schedule a hearing permitting input from RUCO, ACC staff, Fountain Hills and its citizenry and thereafter set reasonable rates and charges.

“Declare CCWC’s SIB charge illegal and unconstitutional and order CCWC to cease and desist from increasing its rates annually via a SIB charge.

“Set the time and place for a hearing upon this formal complaint; and

“Provide for such other relief as the Commission deems just and reasonable.”

The commission received about 60 complaints from Fountain Hills customers after new rates approved by the ACC took effect July 1.

Those complaints cite numerous instances in which individual water bills showed unexplained increases in water usage as well as costs beyond the approved 22 percent increase.

EPCOR spokeswoman Rebecca Stenholm said the new rates are the result of a rigorous process.

“We have not had a chance to fully review the Town of Fountain Hills’ filing with the Arizona Corporation Commission, but we do understand that a change in rates is an important process with many, often differing, viewpoints,” Stenholm said.

“Any request by a regulated utility to change rates undergoes a lengthy and very detailed review process.

“For our Chaparral City Water Company district, new rates that became effective July 2014 came after more than a year of review and discussion by the Arizona Corporation Commission, the Residential Utility Consumers Office, the Town of Fountain Hills and others.

“These new rates bring us closer to the cost to deliver safe, reliable water today, instead of what it cost in 2006.”

Customers also complained about the proposed SIB surcharge plan that allows CCWC to add increases for system improvements on an annual basis without a formal rate hearing.

The Residential Utilities Consumer Office, which had recommended a rate increase for CCWC of less than 10 percent, has asked a court to consider whether the SIB surcharge is constitutional.

“When it comes to SIB, we believe it’s important our customers understand the full picture – what it includes, the rigorous review process it undergoes as part of a rate case, the limited infrastructure categories it includes, and the re-approval it must go through before being applied to bills,” Stenholm said.

“All of the SIB-related work that is needed in our Fountain Hills service area is detailed in the application that was fully reviewed over the course of the past year as part of the rate case.”

RUCO also complained that the ACC granted the rate increase without consideration of recommendations of RUCO, ACC staff and its own administrative law judge.

According to Town Attorney Andrew McGuire, the town’s complaint will be heard by the ACC in a similar manner to the rate case.

Following its decision, a rehearing can be requested. The decision following the rehearing can be appealed to the Arizona Court of Appeals.

At its Oct. 2 regular session, the Town Council voted unanimously 6-0 to file the complaint. Councilwoman Cassie Hansen was absent.

The council vote was taken without discussion as attorneys had presented the legal options for the town during a previous closed executive session.