II. Application

On January 31, 2002, AVR filed its Notice of Intention to file an application for a general rate increase. On March 19, 2002, AVR filed the above-captioned application seeking rate increases of 27.1% in 2003, an additional 3.8% in 2004, and an additional 3.7% in attrition year 2005 to produce a 12.00% overall rate of return on equity for the period 2003 through 2005. Customers were advised of the proposed rate increase through publication and bill inserts.

AVR stated that its requested rate increase is necessary because the present rates are insufficient, unjust and unreasonable in that they do not produce adequate revenue to yield a fair, just and reasonable return on capital invested and to be invested in plant, property and other equipment devoted to providing utility service.