ACC Approves Picacho Water and Picacho Sewer Rate Cases in Split Vote

Phoenix, Ariz. - At the Arizona Corporation Commission's (ACC) March 4, 2026, Open Meeting, the Commission voted 3-2, with Commissioner Kevin Thompson and Commissioner Lea Márquez Peterson dissenting, to approve Picacho Water Company and Picacho Sewer Company's application for increasing their rates and charges for utility services. Both serve customers within Robson Ranch, a 3,000-acre community south of Casa Grande in Pinal County. Picacho Water serves approximately 1,900 customers, Picacho Sewer serves approximately 1,800 customers. The rates were established when the utilities were created in 1998 and 1999, the companies have never filed a rate case application before this.

"In this case, the Commission took significant steps to reduce ratepayer impact. It set the return on equity at 9.65%, rather than the company's requested 10.8%," said Chairman Nick Myers. "It set the capital structure at 60% equity with 40% debt instead of the requested 70% equity and 30% debt, which reduces the revenue requirement. The Commission also excluded over $1 million from rate base from the water company and over $1.3 million from rate base from the sewer company. It also considerably reduced the rate expense request. Though I personally would prefer not to approve rates increase, we have a constitutional duty as Commissioners to set just and reasonable rates."

"JW Water is NOT recovering revenue losses over the course of the past 25+ years, nor are they recovering the purchase price of the utilities," said Vice Chair Rachel Walden. "This rate case is ONLY about setting rates to cover the cost of service. I put forth a verbal amendment that was supported in full to ensure that future growth will pay for itself."

"Today's Picacho Water & Sewer rate cases were very difficult," said Commissioner Rene Lopez. "I fully appreciate that today's decision will significantly impact the Robson Ranch community. I do believe the Commission's decision ensures customers will continue to receive stable, safe, and reliable water and wastewater service. Additionally, today's decision maintains just and reasonable rates for current ratepayers without unduly burdening a growing deficit for future ratepayers."

The developer, Robson entities, previously owned the Picacho utilities and the plants were funded with the developer's equity. Residential customers paid an average monthly rate of $30.01 a month for water services, and $42.00 a month for sewer services. In her recommended opinion and order, the administrative law judge determined that an increase of $6.85 per month for water services, increasing the average monthly bill to approximately $36.87. An increase of $64.73 a month was proposed for sewer services, pushing the average monthly bill to approximately $106.73 a month. The Commission debated at length before casting their votes, with the Commission split on the topic of implementing a gradual increase for sewer services, ultimately, the majority of Commissioners recognized that route would result in customers paying more in the long run versus shouldering the 154% increase at once.

"I could not vote in support of the Picacho Water and Sewer Utilities rate case and felt that the Company could have done more to conduct public outreach and communicate the complexity of the sewer utility case to the ratepayers," said Commissioner Márquez Peterson. "We received many public comments concerning the dramatic rate increase though an increase was certainly expected from a utility who hadn't filed a rate case in over 25 years. I believe that more could have been done to promote gradualism in the sewer rate case."

"Ratemaking is an incredibly complex process that involves balancing just and reasonable rates for both the ratepayer and the utility," said Commissioner Kevin Thompson. "For decades, the developer chose to operate the water utility at a loss. No one disputes that the new owner is entitled to recover lost revenues and earn a reasonable profit on those investments. But rate increases should adhere to principles of gradualism, and as a regulator, I felt I had a duty to advocate for a resolution that strikes an appropriate balance between all parties and not subject these ratepayers to the consequences of business decisions that were no fault of their own."

The responsibility to cover costs of maintenance and upgrades to the infrastructure in order to maintain safe and reliable water and sewer services now falls on the new owner, with oversight from the Commission. JW Water took over the utilities operations and implemented professional utility accounting methods. As a result, customer rates are set to increase. The rate increase is driven by actual costs that reflect the current economy and the cost of providing services.

The Commission's duties include ensuring the utility is able to provide reliable water supply, safe wastewater treatment, compliance with all laws and responsible maintenance of its assets so as to avoid catastrophic system failure. The Commission has to balance financial integrity of the utility, long-term system sustainability and ratepayer protections from unjustifiable and unnecessary costs. Without having a financially stable utility in place to provide service, that service would be at jeopardy.

All documents related to this case can be found in the Commission's eDocket system at https://edocket.azcc.gov/, Docket Nos. W-03528A-25-0056, SW-03709A-25-0057, W-03528A-25-0096, SW-03709A-25-0097.