City Strikes Neutral Stance Amid Controversial Water Rate Hike

On Tuesday, January 14, the Sedona City Council chose to adopt a neutral stance regarding the Arizona Water Company’s (AWC) proposal to raise water rates by nearly 50%. This decision came after a presentation from AWC executives, and the council opted not to send a letter of support or opposition to the Arizona Corporation Commission (ACC) as part of AWC’s rate increase case.

Councilman Derek Pfaff recused himself from the discussion due to a conflict of interest, as AWC is a client of his law firm.

Nick Liu, AWC’s Vice President for Rates and Revenues, addressed the council, stating, “The current rates customers are paying were based on cost information from 2017. This data has become outdated, and those rates do not adequately cover our service costs.” Liu emphasized that the utility has made significant capital investments since 2017.

AWC Division Manager John Snickers elaborated on ongoing projects, including the replacement of water mains along Apache Trail and Navahopi Drive in Uptown, accompanied by the construction of a booster station aimed at improving service reliability.

Vice Mayor Holli Ploog highlighted concerns regarding the justification for the rate increase, particularly discussions about providing adequate returns to investors. Liu acknowledged the community’s feedback, asserting, “We’re not the only utility that’s requesting a rate increase.”

According to Liu, the typical customer would experience an increase of approximately $15.62 per month, translating to around 36%. He explained that this figure results from combining existing surcharges with the current base rate, while asserting that the percentage would be 48% if calculated solely on the existing rate. Proposed adjustments would incorporate existing surcharges into the new rate.

During discussions, Councilman Brian Fultz raised concerns about future surcharges. Liu confirmed the potential introduction of new surcharges alongside the rate case, suggesting this could be a more expedient process than a full rate increase application that typically involves public hearings.

Fultz expressed skepticism regarding the ACC’s likely approval of any surcharge increase, stating that the committee is generally favorable toward utilities. Liu contested the term “rubber-stamp,” but Fultz reiterated that residents might not welcome any additional fees down the line.

In response to inquiries about the city’s water expenses, City Manager Anette Spickard indicated that Sedona currently spends around $200,000 annually, with projections suggesting costs could approach $300,000. The council, however, opted not to take an explicit position on the proposed rate increase.

Councilwoman Melissa Dunn mentioned that the city should focus on coping with the rate hike, even if residents are dissatisfied. Fultz voiced his belief that advocacy would unlikely alter the outcome, emphasizing the strong probability of an increase. Mayor Scott Jablow and Councilman Pete Furman echoed this sentiment, showing no inclination to take a stance on the matter.

The ACC is scheduled to host a public comment meeting on the proposed rate increase on Wednesday, January 29, followed by a public hearing on Monday, March 17.