MacGruder v. Acc
1 CA-CC 15-0002
| Ariz. Ct. App. | Oct 25, 2016Background
- EPCOR Water Arizona, Inc. filed a 2014 rate case seeking increases for five districts (four water, one wastewater) and approval of a Systems Improvement Benefits surcharge.
- Marshall Magruder, an EPCOR Tubac customer and intervenor, proposed: (1) consolidation of EPCOR districts so customers in same rate categories pay uniform rates, (2) a "water lifeline" low-income program offering first 3,000 gallons at a reduced rate, and (3) a tiered rate structure to promote conservation.
- The Administrative Law Judge held multi-day evidentiary hearings; EPCOR, RUCO, and intervenors submitted testimony and evidence.
- The Arizona Corporation Commission approved new district-specific rates and expanded EPCOR’s existing low-income program to additional districts, but declined to adopt Magruder’s uniform rates, lifeline, or tiering proposals; it directed EPCOR to file a system-wide rate case by July 1, 2018 to address consolidation.
- Magruder sought rehearing (deemed denied) and appealed. The Court of Appeals reviews under the statutory "clear and satisfactory" (clear and convincing) standard and affirms the Commission.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether approved district-specific rates are unconstitutional discriminatory or unreasonable | Magruder: differing rates across EPCOR systems constitute prohibited discrimination and are per se unreasonable; all customers in same class should pay uniform company-wide rates | Commission/EPCOR: rate differences reflect each district’s distinct cost of service, customer mix, and unique costs (e.g., arsenic removal); differences alone are not discrimination | Court: affirmed — Magruder failed to show similarly situated customers or clear and convincing evidence of unlawful discrimination or unreasonable rates |
| Whether past Commission orders required EPCOR to present consolidation proposals in this case | Magruder: earlier orders (2009, 2011)/legal history obligated EPCOR to include system-wide consolidation in this rate filing | Commission/EPCOR: consolidation is complex; prior orders gave Commission discretion on timing and process; consolidation better addressed in a comprehensive system-wide docket | Court: affirmed — Commission did not abuse discretion in deferring consolidation and ordering a future system-wide filing |
| Whether Commission erred by not adopting Magruder’s proposed "water lifeline" low-income program | Magruder: lifeline would better reach needy customers who don’t apply to the existing program; Commission should require it | Commission/EPCOR: expanded existing low-income program instead; surcharges and program details vary by district but are lawful; no evidence lifeline was required or superior | Court: affirmed — Commission’s choice reasonable; Magruder presented no clear and convincing evidence to overturn it |
| Whether Commission should have required more tiered rates to promote conservation | Magruder: additional tiers and lifeline better promote conservation; Commission should order them | Commission/EPCOR: rate design is within Commission’s broad discretion; existing structure supported by record | Court: affirmed — no abuse of discretion shown; declining Magruder’s rate-design proposals was lawful |
Key Cases Cited
- State v. Tucson Gas, Elec. Light & Power Co., 15 Ariz. 294 (1914) (Commission’s authority to set just and reasonable rates)
- Ariz. Corp. Comm’n v. State ex rel. Woods, 171 Ariz. 286 (1992) (deference to Commission’s legislative discretion in ratemaking)
- Tucson Elec. Power Co. v. Ariz. Corp. Comm’n, 132 Ariz. 240 (1982) (statutory standard for overturning Commission decisions equates to clear and convincing evidence)
- Litchfield Park Serv. Co. v. Ariz. Corp. Comm’n, 178 Ariz. 431 (App. 1994) (appellant must show Commission action was arbitrary, unlawful, or unsupported by substantial evidence)
- Gen. Cable Corp. v. Citizens Utils. Co., 27 Ariz. App. 381 (1976) (prohibits discrimination among similarly situated customers)
- Miller v. Ariz. Corp. Comm’n, 227 Ariz. 21 (App. 2011) (courts defer to Commission on when to address consolidation issues)
- Turner Ranches Water & Sanitation Co. v. Ariz. Corp. Comm’n, 195 Ariz. 574 (App. 1999) (Commission decisions will stand absent arbitrariness, unlawfulness, or lack of substantial evidence)
- Consol. Water Utils., Ltd. v. Ariz. Corp. Comm’n, 178 Ariz. 478 (App. 1993) (Commission’s broad power to classify and set rate categories)