Appraiser: No evidence Sun Cities subsidizing wealthier EPCOR water users

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OPINION — I would like to help Sun City resident Jill Duckett, quoted in the Independent (EPCOR proposes water rate increase for Sun City), better understand EPCOR’s water rate structure.

I am an appraiser of privately-owned and operated — but regulated — monopoly water companies.

Duckett says she believes “there are too many fees on what EPCOR charges.” First, EPCOR uses what is called an increasing block rate pricing structure in charging its customers. First, EPCOR uses what is called an increasing block rate pricing structure in charging its customers.

More simply, EPCOR reserves a “block” of 1,000 gallons per month per person and charges for the full 1,000 gallons whether we use it or not. Water usage above 1,000 gallons/month (33 gallons per day per resident) is charged at a higher rate.

Private, investor-owned water utilities are monopolies and are not allowed to gouge its water prices nor charge a variable market rate. The Arizona Corporation Commission allows EPCOR to make about 9.6% return on its costs (actual, audited operating and replacement costs plus debt).

EPCOR’s overhead costs run about 33% and are subject to ACC audit and approval. However, taxes and costs to maintain the regulatory oversight of the ACC reflect about another 33%. EPCOR pays its fair share of property taxes to Maricopa County unlike a municipal water department which pays no taxes.

Here is the existing EPCOR charge per household per month per service area as found online ranked from high to low price (median home price in parentheses): 

Paradise Valley: $34.18 ($5 million)
Fountain Hills: $23.33 ($682,000)
Mojave: $16.47 ($380,000)
Sun City West: $14.83 ($385,000)
Sun City: $13.69 ($365,000 – SFR’s only) 

There is no apparent subsidizing of wealthier areas by Sun City.  

I am responsible for any errors in my understanding of the above and I have no conflict of interest with EPCOR.  

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