Thank you very much. Okay, great. Then let's go on the record. Good afternoon, everybody. Welcome to the Arizona Corporation Commission. My name is Sarah Harpring and I'm the administrative law judge assigned to preside over this matter. This is the time set for the pre hearing conference for the Pecacha Water Company rate and financing applications, docket numbers W03528A2550056, and W03528A250096.
And the Picacho Sewer Company rate and financing applications, docket numbers SW03709A250057, and SW03709A250097. 097. I'll now take the appearances of the parties on the record. Good afternoon, your honor. Thank you. Jay Shapiro on behalf from the Shapiro Law Firm, on behalf of the applicants, Picacho Water Company and Picacho Sewer Company. Okay. Good afternoon, your honor. Logan Elia from the Rose Law Group on behalf of the interveners Raul Sahlman and Scott Macbeth. Thank you. And once again, your honor, Bridget
Humphrey and Robert Ride Now are on behalf of staff. Okay. Great. Thank you for the issues matrix. I've seen that. Let's talk about witnesses and witness scheduling. Your honor, just as an FYI, there is at least one error in the matrix, which we will correct. The number 2,508,000 should be 2,501,000. Mister Ridenour and I discussed that. There may be some other things that need to be moved in or out of the matrix depending on your rulings today. So I just wanna let you know though that we will be filing at least
one revised matrix with correct numbers. Okay. Sounds good. I am gonna have some questions that I or areas that I wanna have addressed, but you're ahead of me. Sorry. That's okay. So for Picacho, I've got miss Schwartz, mister Williamson, mister Hansen, miss Barbee, and mister Barassa. Yes. If you want them in order, just move mister Williamson in front of mister Barassa, and that should be the order. Miss Schwartz, miss Barbee, mister Hanson, those two may depend on timing, as mister Hanson may have to get back to operate and then mister Williamson and
mister Barossa. Okay. Mister Macbeth has no witness. Correct? Correct, Your Honor. Okay. And mister Salmon is going to testify himself? By himself and that's it. Okay. And for staff, I've got miss Perez Palacios. I hope I said that well. Mister Parcel and mister Ayton. Correct. Is that the order in which they'd like to go? Well, we do need to address mister Parcel's schedule. He is only available on Monday. He has scheduling conflicts on, the rest of the week. I and I'm not sure if any of the witnesses have crossed.
I would imagine you have some questions for him, but, we would like to call him on Monday out of order. Okay. Have you talked about that? Yes, your honor. We have. And, you know, with all due respect to mister Purcell and his schedule, I think calling him out of order in the middle of our case is simply not fair to the to the applicants. It's really it's a cost of capital witness. I'm not sure what time he's available. I, for one, don't have questions of him, because we have accepted staff's sir a bottle position. But if mister Elia is gonna do extensive cross of a staff witness,
I don't think that should be in the middle of our case in chief. I have to say this has been scheduled for a long time. So why is mister Parcel not available? I believe he has other hearings on on Tuesday and Thursday. It doesn't really answer my question. I don't have a better answer than that. Okay. That he isn't he is isn't tied up in another matter on those days. What about next Monday? Next Monday? I think we I I I didn't inquire. I don't believe he's on the line this morning. I can check on that and and let everyone know on Monday.
We could we we could actually if if mister, miss mister Shapiro does not wanna interrupt his case, we could take him first out of order. Well, I guess if I so it's okay to ask mister Elliot how much cross he expects of mister Parcel, that might give us some idea. Not expect expensive cross. Again, we wanna be accommodating. Witnesses' schedules are important. If if he can't do it after we complete our case on Monday, then we would prefer to probably have him start off with the rip roaring cost of capital testimony. I'm actually gonna tell you most of my questions,
if not all, of them for mister Parcel today. It's just things that I want him to clarify. I don't anticipate that this hearing would take five days, But if he's not available Monday, I don't know how long your witnesses will take. No. Nor do I, nor do we know how long public comment will take, your honors. Right. And that is another, thing, and, certainly, the public is interested in this one. They are. Although, they may be less interested after mister Parsell testifies. But if he needs to go first thing Monday, we'll we'll we'll be accommodating on that if it's okay with your honor.
Okay. And the other thing I could do is I could I could certainly check with him after I don't think we have anybody who can check with him while we're here in the hearing today, but, I could certainly check with him and and let you know if he is available the following Monday. Okay. Which is, what, the twenty third or something, I think. I don't remember. I mean, your honor, I'm not sure that we all wanna come back if we're done on Tuesday or Thursday the following week. So, I mean, under the circumstances, I would say we should just go with Monday morning. Again, subject to you and your discretion. But, yeah, I don't know if it's possible just to take a brief recess.
Can it's not available, I thought. We could just call him and ask, maybe. We can do that if you think you can well, you can at least try to reach him. Sure. Okay. We oh, I'll just we are in recess until you come back. Okay. I'll I'll just grab my phone. I didn't bring it. Thank you. If you wanna hear from him or have any, you know, communication with him. We're gonna we have to go back on the record. So we're back on the record, and why don't you go ahead and tell me what you just said? Alright. Thank you. Thank thank you, your honor. Bridget Humphrey on behalf of staff.
I have mister Parcel on the line, and I did speak with him, about his availability the following Monday, which I believe is the twenty fourth, and he would also be available to by that day. So I I I think in in speaking with mister Shapiro briefly while we were on break, you know, we can choose between either putting him on first thing this Monday or come back to have him appear the following Monday. And he'll be appear appearing via Webex, so that might be an option for that Monday as well, the later Monday. What do you mean by that?
Since he's if he if he is appearing by Webex, you may want to have a have all the parties. I know nobody really is thrilled about coming back on the following Monday, and we and if if it would be acceptable to you, we could do that via Webex, since there's only one witness. Okay. Mister Shapiro, what is your preference? I would say those are a coin toss, your honor. They both have their pros and cons. I think, again, I don't think we'll be going five days either. So my preference would be to put them on this Monday first thing out of order. But it's close call. Okay. And when you say first thing,
you mean first witness after public comment is over? Yeah. Assuming after opening statements, public comment, either of the either and both. Yes. Yes. Okay. Mister Elia, you have an opinion? I agree with the coin toss, your honor. You know, after opening statements on Monday is fine with me or the next Monday. Okay. Alright. Then we'll let him be the first witness. Right. And, miss mister Parcel, I have you on speaker phone. So is that you will be available to to be our first witness at approximately ten somewhere between ten. I think that you may be overestimating how quickly or underestimating
how long public comment will be. We do not know. Know. Okay. Yes. Sure. Sorry, your honor. So we they the the the LJ's think believes that we may have a longer public comment, so it would be basically, you would be available all day Monday. Is that You are. Yes. Yes. Yes. Mister Carcel does advises me that he could be available next Tuesday, anytime before noon, or anytime after three. Okay. And when you say next Tuesday, what date are you talking about? Oh, I I will have to Do you mean the already scheduled hearing date,
Tuesday? Okay. Yes. Eighteenth. Yeah. Okay. Thank you. The eighteenth. I think that is preferable. How about you, mister Shapiro? Sure. I think there's a good chance that we'll be done or worst case, we would still have mister Barasa if mister and mister Barasa, they're talking about the same subject in part. So if that's easier to accommodate, I do expect to be here all day Monday and all day Tuesday. Okay. So remind me again what times is he available on Tuesday? He's available Tuesday from, 9AM to noon our time.
Okay. And after 03:00 our time. Okay. Okay. Then we will plan on having mister Parcel testify, Tuesday morning. Alright. And mister Parcel, I'm gonna confirm that he heard that. You heard that? You'll testify Tuesday morning? Yes. We did. I'll be in touch with you later. Thank you so much. Okay. Well, that was fun. Mr. Salmon doesn't have any availability issues, does he? No, your honor. He'll be here the whole time. Okay, great. And the rest of staff's witnesses also are fine?
They're fine. Great. Okay. And I had been under the impression that all witnesses were planning to appear in person, but I now know that mister Parcel is going to be via Webex. Is anyone else going to be on Webex? Not from the companies, your honor. No. Okay. No. You aren't. Okay. Great. Does each party intend to cross examine each witness presented by the other parties? I do as I mentioned, I don't think we'll have much cross examination for mister Parcel. We may have a few questions for mister Ayton
storage tank. I may have a couple questions for, Ms. Palacio regarding rate design, but I think it will all be minimal, given all be minimal, given our adoption of staff's rebuttal. Okay. Yes, your honor. But I do not anticipate that the cross examination from our side will be lengthy, for any particular witness. Okay. And staff? I do not plan to ask have any cross any, questions on cross for the company's witnesses, although we would reserve the right to, you know, to have a few but ifs if we do, they will also be minimal. I would imagine we'll have minimal cross examination for mister Salmon as well.
Okay. I don't believe that there are any pending motions. Am I right? There are no pending motions. There are motions that we do wanna bring today. Okay. Well, why don't we talk about those? What are they? First, your honor, I moved to strike, a portion of mister Salmon's testimony. It's at, surrebuttal eight twenty three through nine two. Finally, I have asked about the price paid for the utility stock. He goes on to discuss a discovery dispute. I don't think that a discovery dispute is relevant evidence. It's also worked its way into our matrix.
I don't think it belongs there either, and I don't think that the price paid for the stock of these companies is relevant to the determination of fair value rate base in this case. So there is no reason for that testimony to be in there. It is long established that the determination of fair value is based on the original cost less depreciation or the reconstruction cost new. The Arizona Corporation Commission versus Arizona Water Company case in 1959, made that very clear. It doesn't matter whether it was purchased by Gift Lottery,
and it makes clear that the price paid for the assets, and that was an asset sale, I believe, is not really relevant to the value for fair value. This is a stock sale, a stock sale that required no approval, a stock sale that was one transaction, and, their desire to use this is based entirely on speculation, one way speculation. Mr. Salmon has presumed, because we will not disclose the information, that we must have paid less for rate base. I asked him whether if we paid more for rate base, he would recommend a positive acquisition adjustment.
His answer was he won't speculate. So I guess he's a one way speculator. But either way, this information is simply not relevant to the determination of the issues in this case, which include a determination of fair value based on original cost less depreciation and the setting of rates thereon. So we ask you to strike testimony from his pre filed testimony that deals with both the discovery dispute and the stock price. Where's the discovery dispute? The discovery dispute is in the matrix, I believe,
under the negative acquisition adjustment section. Okay. No. Or or maybe under the mitigation measures section. I don't think anyone has offered that as an exhibit or intends to offer that as an exhibit. Yeah. Do you? Would. Oh, you would? Okay. We would. Just for clarification, in briefing. But, again, we were gonna refile it because of the error, and we would hopefully remove the discussion once you rule. Mister Elia? Yes, Mister Elia, we disagree with the position that the just because it's a stock sale, that it is irrelevant.
We've considered you know, we've made offers, that maybe this, information could be presented under a confidentiality agreement. You know, the sale of the utility occurred very shortly, before, this case was brought, and we understand that the purchase price of a utility, can be relevant in some circumstances, acquisition adjustment, or or a positive one. And so, you know, we don't understand, why it should be the case, that the actual free market sale of all stock in the utility is irrelevant to the question of what the fair market
value of the assets at the utility is. We also don't know anything about any of the terms of the agreement. We understand that there's been representations made that this utility will be subject to a consolidation request following this rate adjustment in the near future. We're curious to know if the the sale price is affected in some sort of larger deal, you know, if there are representations made about their their condition today. It just to me, the notion that there's no informational value associated
with, the sale price of the utility, because it's conducted through a stock sale, as opposed to an asset sale, when there's really not a lot of evidence that there is other value is surprising me, your honor. When you say other value, what are you talking about? Well, your honor, the assets of any utility are gonna be fixed in place. And so the the question of, you know, whether a a water or sewage system in one location, what value that is, whether you're is gonna be essentially the same.
Like, if you're acquiring the utility, through an outright sale utility or through a a stock sale, we believe that you're gonna pay, a very similar price. Okay. That didn't really answer the question about how you just used other value, but maybe you didn't really mean to imply something else. I maybe I did not mean to imply something else. You're right. I think my only point is that I believe that the, stock value price of the sale is in fact informative of, the value of the assets, that,
you will then acquire by virtue, of holding, all of the stock. Are you well, no one in mister Salmon's case, because it's only mister Salmon, intends to challenge the value of the various rate based items. Am I right? Your honor, we don't know because we haven't been provided with the information that we've been seeking in order to do that. And and your honor, we don't know that this is an issue. That that's what's sort of astounding to us. It it the fact that they won't give us any indication of what, the sale value is,
is what concerns us, that there's something fishy about it, and we believe that we should be able to investigate that. I mean, if additionally, your honor, there are representations made that the risk, of the small utility, is informative of, the cost of capital. And I I don't know that that's the case if, the utility is acquired from one large sophisticated operator to another, to enter into a consolidation in the almost immediate future. And You do realize that consolidation is not currently an issue.
Right? I do realize that. We've just been told, repeatedly and assured, that that is absolutely the plan. Yes. Go ahead. Thank you, your honor. First off, our position would be the same if this was an asset sale. Second of all, I don't have the ability to disclose this information. It is so highly confidential. I would have to get permission from the seller. Second of all I'm sorry. Third of all, if I could just read and, I have copies of the case if you want, but let me just read a brief holding from this decision. The Arizona Supreme Court held that under the law of fair value,
you a utility is not entitled to a fair return on its investment. It is entitled to a fair return on the fair value of the properties devoted to public use, no more and no less. It has been stated that under this test, it makes no difference whether the utility bought it, received it as a gift, or won it on a lottery. Mister Salmon, with all due respect, his agreement to keep it confidential doesn't help. He's already represented this commission that he speaks for multiple people. I wouldn't want the man to be under that kind of pressure myself.
And, again, I've done a 100 rate cases. I've never used or seen anybody use the stock price to determine fair value. There's a reason. That's the law. I've heard the I've read the case. I've also been cited the case before. I am aware of it. I do have to ask you, though. I mean, you're not this isn't being tried to a jury. What's the harm of leaving the bearer allegations in there? Yeah. I'm sorry, your honor. If you're asking me if if they're not going to be allowed to refer to the stock price, to refer to whether or not, we've done something fishy,
which obviously is offensive and speculation, then, yeah, I'm I I it's not so much that, we're harmed by leaving that information in his testimony. I don't believe it belongs in the matrix, but, again, that's not the harm. Harm. The harm would be disclosing the information or playing this issue up, throughout the hearing, trying to build a record that we've done something untoward by not disclosing highly confidential, highly proprietary information. Okay. Yes. Alright. Alright. I mean, to to the extent that the the question is to generate a fair rate that generates a fair rate of
return on an investment, this utility was just purchased by investors. You know, any profit generated by the rate set is gonna flow to them by virtue of their stock ownership. And I don't understand how I I understand the the proposition, that if utility is gifted something, and it's of greater value, the fact that it's a gift does not deprive them of the right to seek a rate on this. But I don't the proposition that the free market sale, of the utility itself is a piece of information,
that should not be available as a matter of law, to the commission, in determining what the fair market value of the asset is and that that that an actual market sale that occurred months earlier, is fundamentally irrelevant always, to that analysis. Steph, do you have anything to add? Staff does not oppose the company's motion. We're not we haven't joined. I do not have the authority to join in the motion without speaking with my client. But generally speaking, we agree with mister Shapiro's, statement of what the law is.
Okay. I'm not going to grant your motion simply because I don't like striking things that have been provided in a record. I mean, it's already been filed. It's it's in there. But it's not relevant. It's not relevant what they paid. And if your client desired to challenge the rate base that's being, proposed and recommended, the way to do that would have been through an engineer who could speak to whether things are used and useful and whether the prices that are reported for them, or the values are appropriate.
It it's not by saying they bought stock and they won't tell us how much they paid for it. I I understand, your honor. Although, in another way, I don't understand because am I wrong in asserting that the price paid, in certain circumstances, is relevant when the commission wants to adjust the acquisition value. So if a utility purchases a distressed utility, that they allege is going to require some investment. They're able to argue, that in fact they should receive a higher rate of return on,
the the investment based on a higher rate of return than what the value of the asset is, based on their suggestion that it's gonna require investment in the future. And I don't know why it would be relevant then in the utilities discretion only in one direction always. In those cases, the utility has put it at issue. Right. Why is it that the utility may put it at issue, in its discretion, but no other party may place it at issue. The commission doesn't have jurisdiction over that stock sale.
You understand that. Right? Well, I I understand that they can't regulate the stock sale. Mhmm. I just don't understand why the acquisition price can be put into issue by a utility in their discretion, when they seek higher rates, but the acquisition price cannot be put into issue by another party when they would like to use it to argue that rates should be lower, and that the utility may, affect this determination based on the structure of the sale agreement. It seems like the the corporate structure of the transaction is not determinative of the commission's ability to regulate the rate.
I The commission doesn't set rates based on how much they paid for the stock. It's based on the fair value of the property that is used and useful and was prudently acquired for service. That's not the same thing. Right. But how could the fair value of the property that's used and useful exceed the value of a 100% of the stock of the entity? We don't know that it does, do we? No.
We don't, your honor. That would be a little bit of fun. What difference would it make? Under the case law that exists, what difference would it make? Well, it would be informative whether or not, the underlying assets are accurately valued. Don't you think that's what engineers are for? I think that's one of the things that engineers are for, of course, your honor. And, you know, like, we don't wanna publish the information. We're only asking Mister Illey, I'm just gonna stop you because you seem to be inclined to argue with me, which is not fruitful, quite frankly.
I've already made a ruling. You're not going to ask about it. It is not relevant. We're done with that. Okay. Thank you. Was there something else? Yes, your honor. At the public comment session, you informed mister Salmon that he speaks for himself and himself only. Mister Salmon's testimony is replete with references to we. Again, I understand you'd rather not strike those, but we would ask for him to be directed to refile his summary, which refers repeatedly to the task force, refers to things that the task force has to say about things that have been
done to them by the company, and generally refers to people other than mister Salmon. So we would ask that mister Salmon, be file another summary that summarizes his testimony on his behalf and that mister Salmon and his attorneys be instructed that mister Salmon speaks only for mister Salmon, maybe missus Salmon, his marital community, but not for anybody else in our service area. At the time that mister Salmon was advised that he was unable to speak for anyone else, he did not have an attorney. And it would have been the unauthorized practice of law for him to try to
speak for anyone else. That was the genesis of my remark. I am aware that mister Salmon has been granted intervention as an individual because I'm the one who granted it. But I also know that he is president of this organization that he refers to as a task force. I am going to ask him how he is intending for his testimony to be taken. I noticed that he used I in his surrebuttal testimony, but he used we pervasively in his direct testimony.
I'm trying to remember when mister Rich came on board, and I don't. I don't know if maybe well, I mean, obviously, for the sir, but, mister Rich was on board, but I don't remember for direct. He was hired right after the public comment session. But, again, I don't think the fact that he has an attorney now means that the task force is a party. They are not. They're not even an official entity. So I don't know how an attorney can speak on behalf of an unofficial entity. Well, surprisingly, it's happened before. Okay. There are these loose organizations that have, on occasion, been allowed to intervene. This organization has not been allowed to intervene.
But if Mr. Salmon feels that he is speaking both as an individual and as as the president of this organization, whatever nature it takes. I don't think that that has a great bearing on the weight to be given his testimony. I don't think it necessarily matters, and I don't that organization to be a party. It doesn't have party rights. Fair enough, your honor. Okay. I do have one more. Listening. And in particular, in light of your ruling, mister Salmon has made affordability of rates an issue in this case.
He has spoke about people on fixed incomes. However, he has declined to answer questions about whether he can afford the rates or whether the community itself can afford the rates. And I don't think you can have it both ways. If you wanna make affordability an issue, then your ability to afford it, and in this case, the ability of the community to afford it is relevant cross examination rebuttal evidence to that. So I would ask that they be instructed to, answer questions regarding that we've asked regarding the community financials and mister and miss Salmon's
financials. I think those are relevant. They could be confidential. We're not doing this intending to try to broadly disclose that, but I don't think you can say I can't afford the rates and then tell us that you won't tell us what you're worth or how many homes you have or etcetera. So mister Salmon has been unwilling to answer questions regarding his own ability to pay the increases that have been proposed? Yes, your honor. I guess I guess I would say to the extent that, the commission does not set rates based on stock values. It would not set rates based on mister Salmon's Mister Delia?
That's to control your your I I'm sorry. Attitude. I'm not trying to, be disrespectful. I'm not at all. I'm just saying I I I I'm not your honor. I I Okay. Yeah. I I I think the the position that mister salmon is taking is that a sudden increase in rates that is substantial as a matter of percentage is a shock to anyone's budget regardless of you know, I don't believe that he's articulating the argument they're not going to eat as a result of these rates. I don't think that's it. He's just saying, this became they're talking about almost doubling our rates overnight.
We didn't expect that. That's a that's a rate shock to us. You know, life is expensive already. I I and I I don't know. And I don't mean to and and maybe I'm wrong or wrong. I candidly I don't I don't practice a lot here. But but I'm not under the impression that the commission sets rates based on the consumers or net worth. They No. The commission does not set rates based on a consumer's net worth. It does tend to provide or,
I should say, approve low income programs to help people who really can't afford to pay. Yes, your honor. And and mister Salmon does not intend to to argue that this community is entitled to, low income special dispensation. I I think that Kennedy, his argument is just very simple. Wow. That's a lot. Overnight. Ouch. Is there anything that we can do about this, that can ease, the community into it? That's Yeah. I understand. I've read his testimony. I've read all the public comments. I've heard the public comments that have been made by people in person.
Affordability would have been an issue regardless of whether anyone raised it who was a witness because it's always an issue. I personally was going to ask mister, Salmon what he means by fixed income because you could be on a fixed income of a million dollars a year or you can be on a fixed income of, you know, dollars 15,000 a year. They're fixed incomes. One is very low and one is high enough that you probably can afford a rate increase. So I wanted him to clarify that. Whether he Oh,
Oh, I'm sorry. I'm sorry. Yes, your honor. I I if I think that's a fair question. Can he personally afford it? I don't think he should have to disclose all of his financial, information to support that allegation. Yeah. As long as he doesn't say, no, I absolutely can't afford it. I it'd put me in the poorhouse. And for some reason, Picacho has information to suggest that that would be untrue and would want to challenge his veracity. I don't think that his financial, you know, his veracity, I don't think that his financial you know, his net worth is not relevant.
So I don't think he needs to give you his financials. Okay? Yep. Understood. Okay. Any other fun motions today? Not from the company, your honor. Thank you. From anyone else? No. No, your honor. Okay. Alright. So I'm thinking that that took care of objections to testimony. Am I right? Yes. I assume that there'll be some objections to some of the questions. We'll see how the questions go, but, yes, we don't have any other objections to pre file testimony. Okay. Anybody else? No. You aren't. Great. Let's see. I had required that each party provide the hearing division two separate labeled hard copies
of all of their exhibits. I know that staff did it, and I know that mister Salmon did it. I do not know that Picacho did it. My understanding is that we did, but I will certainly check with miss Burke as soon as I leave here. And if she hasn't yet, they'll be here with us Monday morning. Okay. Because they were supposed to be here by one, which so that I could actually look. My understanding is that they were filed yesterday. So I Filed and provided to the hearing division are different things. True. And if you'd like, I can take a moment and check with miss Burke. Go ahead. Okay.
We are off the record. We're back on the record. What'd you learn? That they are on your way, your honor. And if miss Burke can't find the vendor with them, then she will be driving over here with some herself. Well, I hope she's not too far away. Guess that depends on which office she's working out of, but either way, we'll get them here to you today. Okay. Great. And I apologize for any delay. That's okay. And I'm more concerned about her having to be driving than I am about exactly what time they get here. K. Okay. Thank you. And I'm sure she's listening. Because it can get ugly in the afternoon on Friday.
It can get ugly in the midafternoon on Friday. That's true too. Calm me down today. Okay. So, for things to go smoothly during the hearing, and I think that this well, it mostly applies to Mr. Parcel, I guess, because he will be on WebEx. I need for witnesses to have ready access to the exhibits of everyone, basically. If a party is going to cross examine, I need each witness to have access to the exhibits of each party that's going to cross examine them and I think that, generally speaking, everyone is going to ask questions of everyone. So please make sure that there is a paper copy of exhibits provided to the
witnesses. But for Mr. Parcel, please make sure that, I guess mister Barraza's schedules and everything are, you know, downloaded on his computer already. I don't like it when people say, oh, I just need to pull that up. And then we all wait while they pull that up And it depends on how good their connection is. Okay. There are some things that I wanna make sure are addressed because I don't think that they were fully addressed in the pre filed testimony. And this this is for you, Mr. Shapiro. I need someone to address the meaning of the limitation of damages language that's in
section 4.5 of the water tariff and section 4.3 of the sewer tariff. Because I read it and it sounds like it may mean that all the company would pay in damages for anything it does that isn't willful misconduct or gross negligence would be the monthly minimum charge. And that just I I'm wondering if it's supposed to mean something else. I need for someone to explain how the golf course and lake are served and
what type of water they receive, whether there's a separate system for them, whether it's it's potable or not potable. I would like to know who owns the golf course. And if there's a lake that isn't on the golf course, who owns the property that that is on? I would like to know who the 50 residential irrigation customers are in general terms and what they're irrigating and whether they're irrigating with potable or non potable water. And I know other people say potable, but I looked it up and potable is also an acceptable
pronunciation. But you all know what I mean anyway. I need for Mr. Barraza, presumably, to explain for Pecaca Water customers why or for Pecaca Water why residential irrigation are proposed to produce lower revenues than the costs indicated. And I have to tell you, before, the rejoinder testimony, I had many, many more questions that were cost related. So, that just, you know, I guess, be happy that it changed because I had a lot of Is your I guess, I don't mean to interrupt. Is your unaware that we've adopted staffs rate design at this stage?
So I am, and that's why there are fewer questions. Okay. Thank you. Because there seemed to be well, there was subsidization happening that I didn't understand. I would like someone to explain for Picacho Water where residential irrigation customers fall fall within the monthly minimum charges and what meter sizes are used for residential irrigation. I'm not sure it's clear where they go. And in Picacho Waters, and this also goes for staff actually. The rate design shows all classes
for 10 inch meters and 12 inch meters. But there is a separate 12 inch meter lake golf course irrigation, which means that all classes can't be accurate at least for the 12 inch meter. I need to know what the intention is. Picacho's rejoinder commodity rates for one inch meter customers, Picacho Water, uses the first and second tier rates instead of the second and third tier rates as staff's rebuttal did. I need to know whether that was intentional. And if it wasn't, then I need to know it needs to to be fixed.
And I want to know why Picacho Water proposes the second tier commodity rate at all gallons of usage for the lake irrigation and golf course irrigation customers, and this, I think, goes for staff as well, when other customers with the same size meters would also be subject to the third tier commodity rate for their high usage. And I'd like to see, in an exhibit preferably, where Paccaccio's proposed rate design, and bear with me because it's slightly different from staff's,
How much revenue would be collected from the basic service charge in first tier, how much from the second tier, and how much from the third tier? Staff had provided that in a surrebuttal schedule, but as I said, things changed a little. And then for Picacho Sewer, and this also goes for, staff, I want to know why the effluent price proposed is so low, and how much is recharged versus sold. And then finally, for Picacho Sewer, and I think this also applies for staff, why are residential customers,
proposed to produce higher revenues than the costs would suggest, and therefore, commercial customers less than the cost would suggest. For mister Salmon, I have no questions. Nothing. Well, I mean, I have questions, but not questions that I think anybody needs to work on in advance. I understand. Staff. I need for miss Perez Palacio to address what staff's position is on authorizing Picacho Water to charge a refundable hydrant meter deposit for a three inch Meter because Picacho has proposed a $740 refundable deposit,
and staff didn't address it in any way but also didn't include it. I need staff to clarify in light of Picacho's rejoinder what its recommended rate base, revenue requirements, and rate designs are. If they're identical or not, then if not, why? And I didn't see where staff calculated or provided the DSC and tier for Picacho Water and Picacho Sewer based on staff's recommended revenue requirements and recommendation for financing authorization.
I'd like to get that in an exhibit, if possible. And, in mister Ayton's cost direct testimony, he stated that miss Perez Palacios would address the cost as prepared by mister Barraza and how the results compared to the proposed rate design. But I don't recall seeing anything that actually addressed that. Address the numbers shown in his surrebuttal schedule 15. Specifically, looking at schedule six, page five, how he determined the DCF range to be nine to 10. Looking at schedule eight, how he determined the median CAPM to be 9.8.
Yeah. Do you want me to go back to the first one? That's a mic question. I I don't know. But I'll I'll repeat myself. Okay. So the first one. Well, you understood this is in reference to what he's showing in schedule 15. Okay. And yeah. So looking at schedule six at five, page five, the DCF range of nine to 10, I want him to explain it. Looking at schedule eight, the median CAPM result of 9.8, I want him to explain it because I'm thinking it might be 9.6.
Look up when you're ready for me to continue. Okay. Looking at schedule nine, how he got the comparable earnings range of nine to 10 and the midpoint of 9.25. Because for me, the midpoint of nine to 10 is 9.5. And looking at schedule 12, how he determined the risk premium range to be 9.5 to 10.9 and the midpoint to be 10.5 because seems to me that the midpoint would be 10.2. Your honor, which schedule was that within 15,
the last one? That was scheduled twelve. Thank you. And finally, and this one is just because I'm mystified. I need him to explain the statement he made in his sura bottle at page eight that value lines reported growth rates are not based on an arithmetic basis, but rather on a geometric basis because he said that exhibit d c p three schedule one shows this. And I looked at it, and I don't get it. And maybe I'm just stupid.
It's possible. Or maybe we'll we'll use ignorant. Does anybody want me to repeat any of those? No? Okay. No. I was just gonna ask if, related to the, information you wanted, that's obviously gonna come from mister Brass on rate design. Does that is would it be helpful to you for us to call him earlier to allow that information to be available earlier. If it it would be helpful overall, we will. If not, then we'll continue as planned. But I there's a lot of questions, and I wanna make sure you have that information at the right time. When I really need the information is when I'm writing. So I can wait until he falls in his natural
space. Sure. So are there any other issues that we should address before the hearing begins? Monday? Not from the company, your honor. Thank you. Okay. No, your honor. Okay. Thank you. Nothing. Nothing. Yeah. Okay. Do you have any questions for me? Again, not from the company. Okay. Thank you. I would make one comment, for the for the convenience of the parties. In reviewing, staff's exhibits today, I found an air if you look at the staff's, exhibit list, with regard to mister Aiden's testimony, s six and s seven.
They're all correctly labeled, but the names are incorrect. S six, we have a note that says this is regarding direct cost of service studies. It's really great design. And then for s seven, our description says it's rate design. That really talks about the cross the cost. See what it says. So you're saying that s six and s seven as described on the list are switched. Okay. The the the I I will go in and and and, actually, there was an error in the rate design testimony that calls it,
it calls it wrong. So we're gonna have to correct that. I just want people to understand what that switch is, and I'll I'll get it corrected by Monday. Okay. Okay. Any questions for me? No? Are you sure? Because I saw that staff was talking to you. Oh. You saw it. I didn't. Is that the only thing that we have to supply? Was the sure. Was the, the only exhibit that we needed to provide is on the DSC, on the revenue requirement and and financing? It is the only one that I asked you for. Okay.
If staff chooses to show its rate design in a different way through an exhibit, that's fine. Okay. Okay. This is last call. Anyone anything? No. Oh, okay. Kind of briefing everything. Alright. I hesitate. I I don't wanna argue. I I I legitimately just don't understand, so maybe I should research more. Why an asset sale price is is different than a stock sale price in a in a situation where the the entity owns a 100% of its stock to begin
with. I think that maybe you should read the case that, mister Shapiro referenced and maybe talk to mister Rich who has spent a little more time at the commission. I don't know how else to address what you're saying. And yeah. I understand you're fine. Yeah. Thank you, Yaron. Mhmm. Okay. That's it. Then I will see you all on Monday morning, and we are adjourned. Thanks for being here.