Attorney General Kris Mayes is challenging a decision by Arizona regulators that will double water and sewage rates in an Arizona retirement community.
In early March, the Arizona Corporation Commission voted 3-2 to approve new rates for the Robson Ranch 55+ community in Eloy.
Residents had enjoyed below market rates for years that were subsidized by developer Robson Communities, which owned the Picacho Water and Sewer companies that served residents.
In 2024, Robson Communities sold the utilities to Phoenix-based JW Water, which is owned by a Netherlands-based investment firm. After the sale, the new owners sought rate increases to cover the actual costs of operating the utilities.
The average resident’s combined water and sewer bill will increase by $76.63 per month in April, according to the administrative law judge overseeing the case.
The commissioners who voted for the rate increase said it is needed to ensure the long-term viability of the utilities so that they can continue servicing the Robson Ranch community.
“The commission's job is not to freeze bills,” Chairman Nick Myers said. “It is to balance financial integrity of the utility, long term system sustainability and rate payer impact.”
But residents argued the decision will result in 100% rate increases and blamed Robson Communities for the “rate shock,” arguing the developer used its artificially low rates to attract homebuyers before turning around and selling the utilities to JW Water.
Mayes argued that “rate shock” is also illegal.
She pointed to the Arizona Constitution, which requires the commission to set “just and reasonable rates.”
“The Arizona Corporation Commission exists to protect ratepayers from exactly this kind of rate shock,” Mayes said in a statement. “Approving a 154% sewer rate increase and a nearly 23% water rate increase while Commission staff openly admitted they never considered the impact on customers is a failure of the Commission's constitutional duty.”
Mayes argued that Corporation Commission staff that worked on the rate case failed to consider the impact on rate payers, citing testimony provided by staff members during the rate case.
Briton Baxter, the commission’s utilities director, later tried to walk that comment back before the vote.
“So I don't want the commissioners to believe that staff doesn't care about the rate impact to the customers,” Baxter said. “We do, but, and I know there's going to be some cringing when I say this, as an accountant, sometimes the numbers are what the numbers are. We look very closely to find opportunities to recommend adjustments that make sense and that we're comfortable with.”
Mayes also said the commission should have reviewed documents related to the utility sale before approving the increase.
“Robson Ranch residents have no alternative utility providers, they are captive customers of Picacho Water Company and Picacho Sewer Company, with no ability to shop for better rates or switch to a competitor,” Mayes said in a statement. “Arizona's founders enshrined the Corporation Commission in the state constitution specifically to protect consumers from exploitation by monopoly utilities. When the Commission fails to fulfill that role, my office will step in to protect Arizonans.”
Residents had asked the commission to phase in rate increases, and requested commissioners look into the sale to ensure the new ownership group wasn’t using rate hikes to recover purchase costs.
An attorney for JW Water told the commission the rate increases are only meant to cover the costs to provide services to the community, but Mayes argued commissioners should have verified those claims.
“In addition to being relevant to the fair value, the terms of the purchase transaction (particularly the amount paid to the seller) would be relevant to what the Picacho utilities’ reasonable rate of return should be or whether the Commission should set rates based on an operating margin approach,” according to a filing by the Attorney General’s Office.
The Attorney General’s Office officially asked the Corporation Commission to hold a new hearing in the case and to subpoena purchase records from the sale.
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