Lea Márquez Peterson
Commissioner

PHOENIX - State public utility regulators voted unanimously on July 14, 2021 to adopt two proposals from Arizona Corporation Commission Chairwoman Lea Márquez Peterson. The policies will help the Commission prepare for a shortage declaration on the Colorado River and a future in which drought conditions, aging infrastructure, and water conservation will be unavoidable considerations in the ratemaking process for regulated water providers. 

 The first proposal institutes an annual Water Preparedness Meeting, which will keep the Commission informed of immediate water scarcity issues and infrastructure needs. The second proposal establishes a Water Task Force, composed of key stakeholders, which will evaluate an array of policy options and best practices and report back to the Commission with recommendations tailored for Arizona and its needs.

 “Establishing the annual Water Preparedness Meeting and Water Task Force represent vital steps towards protecting Arizona’s ratepayers and addressing the issues water utilities will face in the future. By inviting stakeholders from across the state to participate, we can receive the most up-to-date information to act promptly in the interest of Arizonans,” said Chairwoman Márquez Peterson.

 Background: This August, federal authorities are expected to declare a shortage on Lake Mead. Due to extended drought conditions and over allocation of water rights, water levels in Lake Mead have been at their lowest levels since the reservoir was initially filled in 1935. A formal declaration will require water users in Arizona that rely on water from the Colorado River to curtail their usage and conserve.

 “The results of a declaration of shortage on Lake Mead could have disastrous impacts on our state’s economy and growth,” said Chairwoman Márquez Peterson.

 The ACC regulates and sets the rates for Arizona’s largest non-municipal water utilities, such as EPCOR Water Arizona, Global Water Resources, Arizona Water Company, and Liberty Utilities Company. The Commission does not regulate municipal or quasi-municipal water utilities such as the City of Phoenix Water Services Department, Tucson Water, or the Salt River Project. 

 “A shortage on the Colorado River could result in both direct and indirect impacts for our regulated water utilities,” said Chairwoman Márquez Peterson. “This, in turn, could result in hard decisions for our elected regulators, including decisions about increased rates or increased requirements to conserve water.” 

 “I believe effective regulation is about getting out ahead of the issues and looking for solutions that achieve common objectives for everyone, while minimizing the financial impact to all parties involved. This is what I believe the Water Task Force’s recommendations can provide us.” 

 On July 9, 2021, Chairwoman LMP filed a letter with her fellow commissioners, bringing attention to the problem and calling on the Commission to act on her proposals. (Letter).

 LMP’s Letter: The Chairwoman’s letter included the following:

• A summary of the potential direct and indirect consequences of a water shortage on Arizona’s economy, as well as on the electric and water utilities the Commission regulates.
  
  

• A brief history of the water-energy nexus in Arizona including the actions the Commission has taken in the past to promote conservation and the efficient use of scarce water resources among its regulated electric and water utilities, which the Commission could build on in the months that come.
  
  

• A comprehensive list of policies and proposals that stakeholders engaged in the task force could consider, separated into three broad categories: water energy efficiency and demand-side management; water conservation and utility rate designs; and resilient infrastructure.

The Chairwoman’s letter called on her fellow commissioners to join her in taking action at the July 14th public meeting.

 Commission Action: With the 5-0 vote of the Commission on July 14th, the Commission took the following actions:

• Instituted an annual Water Preparedness Meeting, similar to the summer and winter preparedness meetings the Commission hosts for electric and gas utilities, which will keep the Commission informed of any immediate water scarcity issues or needs that could put Arizona’s ratepayers at risk.
  
  

• Established a Water Task Force composed of Commission staff, state agencies, water utilities, and interested stakeholders which will meet regularly and report back to the Commission with recommendations on questions and proposals that commissioners have posed.

Next Steps: Commissioners anticipate the first Water Preparedness Meeting will be held this August or September.

 The Commission’s staff is preparing a list of potential participants for the Commission to invite on the Water Task Force. Once complete, the Commission will vote to confirm the makeup of the task force or make any amendments to the list.

 Stakeholders interested in participating on the Water Task Force should contact the Commission’s Utilities Division and complete a public comment form here: LINK. Reference Docket No. W-00000C-16-0151. In the “opinion” section state your interest in participating on the Water Task Force. 

 Links:

 A copy of Chairwoman LMP’s letter can be found here: LINK

 A link to request to participate on the Water Task Force can be found here: LINK