Rate case and resulting improvements will enhance reliability, and spread costs among the growing population of co-op Members.
The system is old and getting older, and a population that is putting increased demand on an already-limited system is growing by leaps and bounds.
The end result is simple; the current system has to be upgraded, with the cost in time and money it’s going to take to keep water flowing when and where it’s needed.
“Growth, and aging infrastructure, are what we face, and the real challenge is trying to upgrade a system that can’t keep up with current capacity or reliability or other needs,” said Phil Cook, Graham County Electric Cooperative (GCEC) general manager.
“For many years we really didn’t have a lot of growth here, until the mine went in across the river, we certainly didn’t see the kind of growth we’re seeing now.
“In just the last few months – and this is all residential - we’ve had approximately 100 calls and 60 meets per month for estimates for new services, and that’s a lot… even now, with mortgage interest rates up, we’re still having the same growth,” Cook said.
“That’s a challenge.”
It’s why the co-op in November of 2022 initiated a “rate case” with the Arizona Corporation Commission for – and Cook admits this is a painful number – a rate hike, on average, of more than 60%. The new rates went into effect in October 2023.
“We did all the required notices but it’s a hard thing to talk about; however, it should be pointed out the ACC approved this, but it doesn’t make it any easier for our Members faced with the increased rates for water,” said Cook.
The issue and how to address the cost of upgrading the system wasn’t arbitrarily decided by the coop, which went to an independent, third-party consulting firm to look at the issues and provide a recommendation.
“So, the cost-of-service study came back with a rate recommendation, and it’s the first time the water company will be able to stand on its own,” Cook said.
1 of the big challenges is replacing outdated “transit” pipe, a type of pipe that’s decades old and is leaking and in some cases, breaking up.
“Transite pipe is a concrete pipe that was extensively used in the 60s and 70s for water pipe, which isn’t used anymore. Our estimate is that about 30 percent of our system is transite pipe, in active service and it will have to be replaced with PVC pipe,” Cook said.
“So, the outcome and what needs to happen with the water system, is upgrading the main line sizes while at the same time getting away from the transite pipe and replacing it with C900 PVC pipe.
“And, we have to build for the future with a system that’s going to take us 5, 6 decades into the future, at the same time trying to ensure we have safe and reliable water production and delivery to the Members,” Cook said.
Cook said it’s important to remember that more revenue from steadily increasing residential growth will offset costs over the long term. The 2023 water rate increase is only the 5th increase since the water system was purchased in 1989. The 5/8”x3/4” meter charge has only increased $18.58 in 35 years. That is reasonable when considering the growth, compliance changes, and age of the water system.
There is 1 other cost the co-op can’t get away from, the “cost of compliance,” or regulation, at every level but especially with state regulators.
“When you initiate a rate case, the corporation commission is trying to promote water conservation, so they make the tiers different than what we used to have, so it’s a little more expensive the more water you use, and that’s applied to everyone in the state of Arizona, not just us,” said Cook.