IV. Procedural History

By Resolution ALJ 176-3085, dated April 4, 2002, the Commission preliminary designated the captioned application as "ratesetting" with a hearing indicated. A Prehearing Conference was held on May 3, 2002 to establish issues and a hearing schedule. Following this PHC, on May 20, 2002 Commissioner Peevey issued a Scoping Memo and Ruling setting a schedule that included a public participation hearing (PPH) and evidentiary hearings (EH). Administrative Law Judge (ALJ) Galvin was designated the principal hearing officer.

On July 8, 2002 and prior to the Apple Valley PPH, the Commission's Office of Ratepayer Advocates (ORA) distributed two reports on AVR's requested rate increase. The first report addressed Cost of Capital, and the second addressed Results of Operations. Respectively, these reports are Exhibits 9 and 12 in this proceeding. Based on these reports, ORA recommended an effective 1.9% decrease to produce a 9.53% overall ROE for the period 2003 through 2005. This decrease represents the leveling of a calculated 0.6% increase in 2003, a 5.8% decrease in 2004, and a 0.7% decrease in attrition year 2005.

More than 100 customers attended the July 16, 2002 PPH held in the Apple Valley City Hall, approximately half attended the afternoon and half the evening session. In total, statements were received from approximately 30 customers. Almost uniformly, the speakers opposed any increase in rates. Some customers contrasted AVR's high rates to the low rates of nearby communities and expressed a concern over repeated ruptured or leaking pipes. Two customers raised the issue of AVR substituting its treated drinking water with reclaimed water for non-potable uses, such as for park and recreational landscape.

Apart from input of the PPH speakers, the Commission received approximately 50 individual letters opposed to any rate increase. Those writing letters voiced the same concerns expressed at the PPH.