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CHAPARRAL RATE CASE

CHAPARRAL RATE CASE. Discussion of recent rate case and effect on ratepayers. REVENUE REQUIREMENTS COMPARISON. PROPOSED BY Company - EPCOR $ 2,727,122 Commission – APPROVED – YR 1 $ 2,054,093 ROO / Adm. Law Judge $ 1,625,544 ACC Staff Analysts $ 1,304,325 RUCO $ 754,940.

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CHAPARRAL RATE CASE

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  1. CHAPARRAL RATE CASE Discussion of recent rate case and effect on ratepayers

  2. REVENUE REQUIREMENTS COMPARISON PROPOSED BY Company - EPCOR $ 2,727,122 Commission – APPROVED– YR 1 $ 2,054,093 ROO / Adm. Law Judge $ 1,625,544 ACC Staff Analysts $ 1,304,325 RUCO $ 754,940

  3. Commission Decision and the Effects on Ratepayers Commission Approved Revenue Increase $ 2,054,093 Administrative Law Judge (ALJ’s) $ 1,625,544 Additional Costs to Ratepayers – Year 1 $ 428,549 The additional revenues of $428,549, approved by the Commission, represents a 26.4% increase over and above what the Administrative Law Judge recommended. The additional increase was approved by the Commissioners and not one asked the effect the additional increase would have on the ratepayers.

  4. BUT IT’S GOING TO GET WORSE SYSTEM IMPROVEMENT BENEFIT CHARGE INCREASE INCREASE YEARPER YEAR PER MONTHPERCENTAGE 2015 $ 308,618$ 1.76 3.87 % 2016 $ 296,752 $ 1.69 3.72 % 2017 $ 302,579 $ 1.73 3.79 % 2018 $ 303,159 $ 1.73 3.80 % 2019 $ 291,406 $ 1.673.67 % TOTALS $1,502,514 $ 8.58 19.23 % The System Improvement Benefit (“SIB”) projects have already been approved by the Commission. Once the expenditures are made in the respective years the above rates will go into effect when submitted to the ACC Staff for review. No additional rate case is required to implement the addition to rates.

  5. BUT IT’S GOING TO GET WORSE –SLIDE 2 INITIAL SIB CURRENT INCREASE INCREASE ADJUSTED YEARRATE PER MONTHPERCENTAGE RATES 2014 $ 37.85 $ 7.68 -0- $ 45.53 2015 $ 45.53$ 1.76 3.87 % $ 47.29 2016 $ 47.29 $ 1.69 3.72 % $ 48.99 2017 $ 48.99 $ 1.73 3.79 % $ 50.71 2018 $ 50.71 $ 1.73 3.80 % $ 52.45 2019 $ 52.45 $ 1.67 3.65 % $ 54.11 The Order as approved by the Commission states that the rate increase on the average residential ratepayer is $7.68 per month or 20.3%. In reality, the rates increase each year and at the end of year five the rate has increased to $54.11, a percentage increase of 43.0%.

  6. WE’RE NOT FINISHED YET • COMMISSIONERS APPROVAL vs. ALJ • Additional Depreciation Expense through the use of the Group Depreciation Method as opposed to the modified Vintage method, and the continuation of over-depreciating Utility Plant Assets. • Changing the Rate of Return on Rate Base from 8.06 percent to 8.95 percent. • ADDITIONAL APPROVALS • Declining Usage $ 22,174 • Tank Maintenance Expense (18years) $ 202,184 • Additional Post Test Year Plant over what • RUCO recommended $ 2,278,882 • System Improvement Benefit $ 1,502,514

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