Yes? Yes. Okay. Let's go on the record. Good morning, everyone, and welcome to the Arizona Corporation Commission. My name is Julia Madder. I'm the administrative law judge assigned to preside over this matter. This is the time set to commence the evidentiary hearing and the application of Foothills Water and Sewer LLC for an extension of its existing certificate of convenience and necessity to provide water and wastewater service. The docket number is WS21182ADash25Dash0171.
Let's take appearances for the record starting with the company. Good morning, your honor. Tim Sabo with the law firm of Osborne Maladon appearing on behalf of the applicant, Foothill Foothills Water and Sewer LLC. Okay. And for staff? Good morning, your honor. Bridget Humphrey appearing on behalf of staff. And with me today are Cam Aiten and Vicky Wallace, our two witnesses. Okay. Thank you. Alright. And we will start with public comment this morning. And before we get started with that, I wanna thank everyone who has called or come in person today to provide public
comment. Please be assured that although public comments are not considered evidence in the case, the commissioners do review them and consider them, when making their decisions. It doesn't look like we have anyone on the phone today. I do have one speaker slip. If there's anyone else, they should fill out a speaker slip. No idea where those are, but at least one person found one. Okay. Back there. And you can bring that up to me. But we will start with the one person we have here, and we do ask that you keep your comments to three minutes. As a matter of fairness,
we do that, but you can always provide written comments, in the docket as well. And if you need instructions on that, they're on the commission's website, or there's probably someone in this room who can help you with that. Okay. So with that, we will take, mister Aaron Solly. Aaron's good. K. You can come forward, and I there should be some sort of light on that microphone that's on. Okay. Alright. You may go ahead. Okay. Good morning, your honor. My name is, Aaron Sully. I'm a stakeholder in the affected area. We drove in from Yuma this morning because we think think this is a very important case for the future of the Foothills.
That's where I typically am involved and where I keep my focus of effort is Foothills and Foothills Development. We are absolutely not against development or developing in the future. In fact, that's how I lived when I was a child. My father was in construction and so it's not the development that we are opposed to. It is the rapid expansion of monopolies. So, I'll just stick with this statement. I want to address whether this application satisfies the legal standard of public convenience and necessity. First, this is this expansion is not necessary because existing septic systems in portions of the proposed service area already provide safe,
lawful wastewater, servicing. Granting exclusive utility rights where functioning systems already exist would eliminate viable private wastewater options without demonstrated public need. The application contains no engineering or environmental evidence showing that those systems are failing or pose a risk. Second, this request is premature. The applicant is seeking exclusive monopoly service territory before finalizing engineering plans, before obtaining construction approvals and without defining infrastructure routing or locations. Approval under these conditions would grant territorial rights based on speculation rather than demonstrated readiness
or necessity. Third, the demanding projections, the demand projections appear inconsistent with actual development history in the foothills. Portions of this region have taken decades to develop, yet the application assumes rapid growth and hundreds of new connections within only the first few years. These projections do not align with observed build out timelines and raise legitimate questions about whether projected demand reflects real conditions or theoretical modeling only. Fourth, local land use policy has materially changed since the beginning of this project.
Density allowances in key areas have been reduced to approximately five dwellings per acre in accordance with new Yuma County regulations for RBS that, Granite LLC agreed to. Lower density directly reduces wastewater volume projections and weakens any claim that large scale centralized sewer expansion is required in the near term. Fifth, because the applicant operates as a monopoly provider, service quality within its existing certified territory is directly relevant to whether expansion serves the public interest.
When a utility seeks additional exclusive territory, the commission and you should consider whether it is already delivering adequate service where it currently operates. A documented pattern of customer complaints, cost concerns, extra added fees and service dissatisfaction raises legitimate questions about whether expansion is appropriate before existing performance issues are resolved. Expanding territory before resolving present deficiencies risks, enlarging problems rather than solving them. Finally, speculative expansion,
can impose measurable economic consequences on property owners in areas where connection becomes mandatory. Recurring utility charges may materially affect property values and affordability. When projected depends on future assumptions rather than demonstrated necessity, granting exclusive territory risks authorizing a footprint larger than justified. For these reasons, I respectfully request that you deny or significantly reduce the proposed area that they're able to expand in. Granted, LLC, most specifically in the area that I'm concerned about, which I believe on that map at least,
ma'am, is Area 16 Ish and parts of Area 12. Those areas specifically have not even had the traffic study completed yet and they just came back with a very aggressive traffic study that's going to cost the developer millions. They've put the entire project on hold. I'm in constant contact with them, and I just believe this is premature to give the entire section to them as written. Okay. And, sir, just that, usually, we ask people at the start, and I forgot to do that, their affiliation. Are you a resident in Yes, ma'am. The area? Okay. Yes, ma'am. So, my name is Aaron Sully,
and my, Arizona parcel number is 72807001. We don't have an address. Are you a customer of Foothills? No. But their proposed routing will put me in direct relation to where they're they're gonna route. That's why we were notified. Okay. Also, if I can make a quick statement, your honor. Foothills Utilities, this is is not a hit on them at all. They've done an amazing job since they took over a failing utility to do aggressive changes in the area and in the vicinity of the house. They've done amazing things. Ed is always at community meetings, been very proactive in getting the community on his side.
I don't think that we should stop them from expanding. I think we should limit it to what we actually need at this time. Okay. Alright. Thank you for your comments. We do appreciate your time today. Okay. Any procedural issues we need to cover this morning from the company? No, your honor. Okay. From staff? None from staff. Alright. Opening statements, company? Yes, your honor. Thank you, and, good morning. Foothills appreciates your time this morning as well as the hard work of the commission staff in this matter, and Foothills is in full agreement with the staff report that's been docketed.
We also appreciate the waiver that the commission issued a few months ago, that allows us to be here today. And your honor, this is a somewhat unusual case, in that we have two alternatives that we're presenting to you today. Our primary alternative extends Foothill's wastewater existing water CCNN as well as adding two small parcels to both the water and wastewater CCNN. This primary request will result in a regional CCNN for both water and wastewater.
A regional CCNN allows for rational planning of both water and wastewater facilities as well as supporting economies of scale that benefit customers. Moreover, holding both the water and wastewater CCNN will enable Foothills to provide integrated water and wastewater service, providing a comprehensive solution across the water cycle. There has been no opposition other than what we just heard this morning, to this request, and this primary alternative is supported by the staff report.
In the alternative, Foothills is proposing a smaller alternative extension area, for both water and wastewater for only those parcels either already served by Foothills or that have provided a request for service. This alternative does not provide the regional planning, economies of scale or fully integrated service that the primary alternative provides. And for those, reasons, we are requesting the primary alternative instead. Foothills will be presenting two witnesses today. First, your honor, you will hear from Ed Fortner,
who's the regional manager for Northwest Natural Water. He will demonstrate that the company's, has the technical, managerial, and financial capability to provide the requested services and he will explain how the company will serve these areas. Second, you will hear from Ray Jones, who is attachments and exhibits to the application. Thank you, your honor. Alright. Thank you. And opening statement from staff? Thank you, your honor. Staff has carefully reviewed the application and other information provided by Foothills, and staff is recommending approval of the primary area rather than the alternative area. Staff agrees with
proposals I set forth or the information is set forth by the company. And staff appreciates the company's filing of a, response to the staff report indicating its acceptance of the staff report's recommendations in their entirety. Thank you. Sorry. Thanks, miss Humphrey. And just so you know, it's a little hard to hear you with what I assume is the air conditioning behind me. I'm doing okay, but whoever's sitting over there may have an even harder time, so you may need to speak up a little bit. Okay. Alright. With that, the company can call its first witness. Thank you, your honor. We call mister Ed Fortner. Alright.
Mister Fortner, please come forward. And we can have the court reporter swear you in. I'll do it. Usually, I do it. You can do it. It's not as comfy as it looks. Alright. Are you, all situated up there, mister Portner? Yes. Thank you. Could you tell us your name and business address for the record? I'm Ed Ed Fortner. Our business address is 12486 South Foothills Boulevard in Yuma, Arizona. And could you maybe slide the mic a little bit closer? Sorry, I'll repeat myself. My name is Ed Fortner, and our business address is 12486 South Foothills Boulevard,
Yuma, Arizona. And by whom are you employed and in what capacity? Northwest Natural Water is our parent company for Foothills Water and Sewer LLC, and that's my employer and I'm the Southwest Regional Manager under Northwest Natural Water. That's a bit of a mouthful. What are your duties and responsibilities in that position? They're comprehensive. I'm the Chief Executive Officer. I would guess it'd be one way to describe it, administrative, managerial planning, all matters related to regulatory,
including the commission and rates, CC and N, all things to do with management of that utility. And does that include the operation in Yuma as well as in, Kingman and in, Rose Valley? That's correct. We have three utilities in Arizona, in Peoria, as you said, Rose Valley and Kingman. That's Foothills Water and Sewer also, same parent company as Yuma and Foothills Water and Sewer in Yuma. And could you, briefly describe your background and experience? Yes. I've been in, utilities for longer than I should admit,
around forty years. I have an MBA. I've been a certified water and wastewater operator distribution collection. I've been a regulator in my job history for the Kentucky Department of Environmental Quality for three point five years. I've worked for the Kentucky Geological Survey. It's a varied background, but it's all been water or wastewater for the most part. I've been at a GM level or higher since 2005. And by GM, do you mean General Manager? General Manager, yes, sir. Thank you. Let's talk a little bit about the technical,
managerial and financial resources that the applicant has. When did Foothills purchase its water and wastewater systems in Yuma? 10/05/2022 was the closing date of that purchase. And could you describe the the condition of those systems, when they were acquired by Foothills? They were very much disadvantaged, I think, is the technical term that the commission uses. They were in disrepair, a lot of deferred maintenance. And, frankly, it was a huge challenge to get that utility up to where we have it
today, which is fully compliant and operating very well. There's in every utility, there's always more improvements to come and needed. But, I would say that we're, at the level where we can be proud to tell the community that, the systems are operating as they should safely and reliably. Has Foothills invested millions of dollars to bring these systems up to standard or at least closer to standard, since it acquired them? Yes. I Meant to get an exact figure, but approximately $50,000,000
has been invested in the Yuma utility since purchase. This year's capital budget is $34,000,000 So that is reflective of the need of the improvements. By the way, those investments have been well thought through and planned. We did a thorough master plan when we first took the bought the utility and continue to refine the planning and do our utmost to make smart, thoughtful decisions about where we invest the money. Thank you. And to the public commenters
note about customer complaints, have you seen a trend in terms of the customer complaints from when you took over to now? Very much. When we first took the utility over, it was, there were tremendous number of complaints. And it's been a big goal of mine, and I feel like we've been quite successful minimizing those complaints. Odor and the sewer system was one big area of complaints. And honestly, I can't remember the last time I got an odor complaint. I'm happy about that, very happy. We're about to complete a big multimillion dollar odor control project at our biggest wastewater
treatment facility. But yes, a huge reduction in the customer complaints. Thank you. There's still further work to go, though. Is that right? There is. We have many projects I could talk for a while about. Now, that, talking then about parent companies is one of Foothill's parent companies, Northwest Natural Water. It is. The hierarchy is there's Northwest Natural Holding Company, umbrella, parent of Northwest Natural Gas and Northwest Natural Water and Northwest Natural Services. We're under Northwest Natural Water and that's,
who I'm directly employed by. And Mr. Fortner, is it a correct statement to say that Northwest Natural Water provides water and wastewater utility services through its wholly owned subsidiaries to approximately 81,000 water and wastewater connections to customers in Oregon, Washington, Idaho, Texas, and Arizona? That is correct. And as you mentioned, the ultimate parent company is Northwest Natural Holdings. Is that right? That is correct. And does Northwest Natural Holdings have over one hundred and sixty years of experience in
the utility business? Yes, almost one hundred and seventy. And does Northwest Natural Holdings serve over 2,000,000 people? Yes, they do. And is North West Natural Holdings traded on the New York Stock Exchange, with the ticker symbol NWN? Yes. It is. Closer to home, how many employees does, Foothills have? At last count, 43. Is that just in Yuma or statewide? That is just in Yuma. Yuma. The, Yuma Foothills entity is the biggest entity that Northwest Natural Water presently holds.
And, do those 43 individuals include multiple operators certified by the Arizona Department of Environmental Quality? They do. And we recently hired a professional engineer, our new GM, Eric Ott. And, in addition to that in house, expertise from your certified operators and your professional engineer, does Foothills also have access to engineering and technical resources, including information technology, from both contractors as well as its affiliates? Yes, we do. We're very blessed,
particularly at the corporate level with all the support that we get from our parent company in engineering, GIS, SCADA, legal, accounting, it goes on and on. We also have a tremendous amount of expertise at the local level, as you had mentioned, with certified operators, engineers, technicians. It's a full service utility, if you will. And, Mr. Fortner, there should be a binder of exhibits for you. Do you see that? Yes, sir. Let's go through some of those. Let's start with exhibit a one, and that should be behind the tab number one there. Yes. I see it.
Could you tell us what exhibit a one is? It seems to be the application for this expansion of the convenience and necessity. And, within exhibit a one, can you go to attachment f as in Frank, starting with, Bates page number Foothill CC and N 0068? Those are the little numbers at the bottom of the page. Can you repeat that again? Sure. It's 0068. I'm sorry. I may have flipped it the wrong thing. A six? A one I apologize.
If I was thinking ahead, I would have put one of those old flags on there. And and which exhibit in there, Tim? Just look for page number 68. Okay. The little base page 68. I was looking in the master plan. Okay. I apologize. Exhibit a one? Yeah. And page what? So the you see the lower Six eight. Is that what you said? Yes. Attachment a? Yes. Yes, I have it. Okay. And are those the request for service that were received for,
not the entire area, but certain specific parcels within the proposed extension area? Yes, specifically Fortuna South and Fortuna Acres, yes. Alright. And then, if you could flip forward, then to page zero zero eighty five. Yes, I see it. And is that another request for service? It is. That's the Granite Yuma request. And is that the same as that Area 16 that gentleman was mentioning? A big portion of it, it's not the entire Section 16, but yes.
Okay. And then, in terms of franchises, can you go to exhibit a one attachment r as in Ralph, and the page number for that is Bates page zero three four two and, again, 0342. Yes. I have that. Alright. Alright. And, is are those the franchises for water and wastewater service issued by Yuma County to, Foothills? They are. And then, if I could have you go back to
attachment I three starting at page zero two zero four. The water master plan? Yes. Yes. So is that the master plan for water that you were mentioning earlier? It is. We had a separate master plan for water and for sewer. Ko, Van and Lou completed this. It was a comprehensive study, performed over, I think, around nine months. And then, immediately after that on Page two fifty six, is that the master plan for wastewater?
Yes. It is. Alright. And then, can you identify the document, at tab number two, which is marked exhibit a two? Yes. It is a notice of filing before the commission. And, does that document that the, company sent notice to the all the landowners in the proposed extension area Yes. It does. December. And, miss, mister Jones will testify about how we compiled that list and so forth. Is that right? That is correct. And then, can you go to tab three,
the document marked as exhibit a three? Yes. I'm there. And are those the affidavits of publication and mailing? They are. And then can you go to the document marked as exhibit a four at tab four? Yes. And is that the response to staff report? It is. Yes. And do you adopt exhibits a one through a four as part of your testimony here today? Yes. I do. Now exhibits a five and a six will be addressed by mister Jones. So can you go to exhibit a number seven? And, again,
that would be at tab seven? Yes. And this is the, notice to the city administrator of the City Of Yuma, is that correct? That is correct, yes. And is that the only municipality within that one mile of the proposed extension area? It is, yes. And the city administrator is the name the city has for the city manager position. Is that right? That would be the equivalent position. Yes. And in reviewing, the company's files, for the hearing, did a question arise as to whether this letter was actually sent out,
with the application? Yes. Unfortunately, I could not find the proof of that notification. I did have the letter and it was signed, but I couldn't should have sent it, you know, with a with a notice where I would have seen it be received. I have since, emailed and called administrator Simonton, and he replied to me today by email. Happy to share that with you, judge, if you'd like, that the city has no comments or concerns about the application. We did also, hard mail, certified mail the same letter to the city administrator. We,
and and I had discussed this, application multiple times with mister Simonton in meetings. And, you mentioned certified mail. Could it be the case that that it was actually only sent by first class mail? I'm afraid that's probably what I did, and I didn't have record of it, unfortunately. So that's my fault. And then, in terms of these discussions that you've had, with the city administrator, what is kind of the city's thought process on serving outside of its city limits? They don't seem to have any desire to serve outside their city limits.
In fact, there's a small area, well, it's not numbered, but there's a small area I can point out later that, we serve sewer where the city serves water. So we have a very close, cooperative arrangement, working relationship with the city. But, yeah, they, they don't seem to have any desire to serve outside their city limits. No. And as you mentioned, email from the city administrator, stated the city has no objection to this application. No objections and no comments. Yes. Alright. Let's, talk about the extension area a little bit then.
In exhibit a one, could you turn to Bates page forty three zero zero four three? Zero zero four three? Yes. Yes, I have it. And, there should be a map there of the primary extension area. Do you see that? Yes, it is. It seems to reflect the display behind me. Alright. So, so that's the same as the poster board behind you? Yes. Using the poster board and, your remote mic there, can you kind of walk us through, some of the,
extension area, and perhaps start by showing the water CCNN boundary? Sure. Excuse me. Move that chair out of the way so the judge can see it. Would you like me to push this a little further this way, judge? If this is this if it's identical to what I'm looking at in the binder, then I'm I'm good with this. It is. So, Tim's question was the outline of the existing water service territory, the CCNN outline, and it's a bit hard to see from a distance. But it's this line that is, as you can see, pretty comprehensive around, the existing service area that also reflects our franchise agreement with the county.
And, can you show the two small parcels, that would be added to the water CCNN in the primary and extension area? I believe you're referring to area one, Tim, and area two. And and these were formally requested. The the previous CCNN, added, I think, this parcel and this parcel. These two, for whatever reason, were not included at that time. And so prior to that previous application, there was no service at all in that area. So that's why it's a request for both water and sewer.
The vast majority of this request is only for sewer expansion. And then can you kind of show the areas Question, judge. Yeah. Can I interrupt periodically just because I was gonna ask him to do this anyway? So if we could do it all at the same time. Can you just visually trace for me one more time where the water CCNN goes around those areas one and two just to make sure I understand? Yes, ma'am. So, the existing water is the bold blue line. Uh-huh. So it serves this parcel here. It does not serve the parcels in yellow.
And then it's, somewhat not contiguous. But it does serve this parcel as well in water, and and then it serves as you can see this outline along here. So there's a break in it sort of on either side of one and two. They touch, but they're not yeah. It's somewhat not contiguous. Okay. Thank you. Absolutely, interrupt, anytime you have a question. Mister Fortner, since we were doing the water CCN, can you just kinda trace the outline of where the proposed wastewater extension would be? And I guess is that the same as the yellow areas?
That is correct. So maybe a little history is in order. Yeah. Go ahead. The, the Foothills as, perhaps our community member might remember and agree was developed in a, I guess, a typical way perhaps in in a unincorporated area. The The water was pretty much developed comprehensively early on, and and there was a lot of septic served, systems or homes in in our service area. That's what is represented in the in the, areas that are not yellow or green or, here.
Those are primarily septic. And the and we'll get to another display later that show shows the sewer sheds, and that's basically how the sewer was developed over time. And it was in effect a new subdivision, like Mesa Del Sol would come into existence, and the developer would build a wastewater treatment facility that serves that specific area. So it became a kind of a disconnected set of polygons, for sewer, whereas the water service territory was much more comprehensive with around the service territory.
I'm sorry, Tim. Can you repeat the question? I got off on a tangent a bit. I'm sorry. You're you're doing good. So the, yellow areas are the proposed, primary. That is correct. So the additional, sewer service territory that we're requesting is displayed in yellow here, Area 16, Area 12, Area 1110. These areas here, 76, five, four, three, might be a little bit difficult to tell in the audience, one and two here. That is the additional sewer. These two also are we're asking for water, but the rest are all sewer.
What what's green? Green is existing sewer, CCNN. Is that that's correct. Right? Right? Yeah. So this this sewer, CCNN in green depicted in green is the existing sewer, CCNN. We already serve those areas in sewer. Okay. I mean, I have another follow-up on that, but you can keep going. It's a little complicated. Yeah. It, this has developed over the course of a number of decades. Is that right? That is correct. Okay. And, the prior owner of these systems was also a developer, so there's a lot of interactions there.
Is that fair to say? If I understand correctly, he developed one of the big, subdivisions we're discussing. And then you you noted the areas that are neither yellow nor green, and it looks like those all are subdivided with the old road. So those are the areas that have septic service. Is that right? They are. Like this area here, these areas that that don't have any color, they are served by septic systems. We have about 9,000 sewer 9,500 sewer customers in Foothills Yuma that we serve with centralized sewage sewage.
And there's at least that many septic systems within this service area. It makes for quite a complicated service area on the sewer side. Did the judge have a question? Yeah. Let me do my follow-up now. So if you look at this map, I I assume I'm looking at little houses here. Yes. That's that's a aerial view. So so take sections fifteen and twenty two, for example. Yes, ma'am. That looks like it's the same neighborhood, and there's, you know, the green line going through it. So Yeah. So there's There's neighbors,
and one is on septic, and the guy next door is in the sue sewer CCNN? That's correct. Yes, ma'am. And receiving sewer service? That is that is correct to my knowledge. I'd I'd have to look at specific parcels. But, yeah, if it's in our service territory, that typically means we're serving it with sewer. So that would have been represented. That would have been a new subdivision that was created in the last couple of decades and was brought in for, centralized sewer service. Okay. So there's there's neighborhoods for or what we would think of as a neighborhood,
a a residential community that's some on sewer, some on septic. Yes. I think that's I think that's accurately stated. Yes. They're they're it's, it's quite a complicated service territory. Like, Foothills Boulevard is the main, thoroughfare through the Foothills area Along Foothills Boulevard it's a little hard to get my bearings here. Along Foothills Boulevard, we have a big sewer main, and then that same sewer main at Force Main runs perpendicular all the way to the sewer plant. But on each side of Foothills Boulevard and on each side of of 44th Street
is septic. So it's, it's just the way the area was developed. Yes, ma'am. Okay. So if an area is not yellow or green, I can assume that they are on septic, and that is why your CCNN extension request doesn't cover that area. That is correct, and that's intentional. We we did not choose to ask for, this existing septic areas to be brought into our CCNN, multiple reasons. It's a huge investment to, as you might imagine, tear up existing infrastructure to establish new sewer infrastructure.
And oftentimes, in that kind of a scenario, a community development district might get formed, and then we would work cooperatively with that district to provide a centralized sewer. But, it's just problematic that, thus, we left it out. Okay. I'll restrain myself. You can continue. I apologize. Thank you. All good questions. It's quite complicated. It's an unusual situation. And, just looking at these sewer parcels, it looks like they're fairly closely packed together. Is that fair to say, mister Fortner? Yeah. The Foothills in general is pretty dense.
The the typical lot size is medium to small. There's a couple or two or three different, zoning classifications in the Foothills, but there's a lot of, modular homes. There's also a large number of modern, homes that, you know, conventionally built. Would it ideally, be better for areas on septic to be, like, an acre or larger? Typically, in most areas I've lived and worked in, the requirement is to have at least an acre to to be able to, have a septic system. But,
clearly, that's not what was applied in the Foothills for the most part. They're smaller than that. Much smaller. And, can you kinda walk us through, since you're up at the map, what parcels in here are likely to develop first? Yes. So excuse me. I think don't we have a better display for that? The East Mesa here it is. East Mesa is the area that is the most, most imminent, if you will, for development. The developer there has met with us multiple times. We've done multiple reviews. They've I'm not sure exactly where they are with the county as far as their
submittal and approval of their design plat, but we've given our final review and approval of that. We're with the exception of some of the layout in regards they're they're gonna have to build a lift station there. And, they proposed, locating that in the the North West Corner, and and then they would, bore under the interstate, connect along south frontage, and then, ultimately empty that force main into Foothills Boulevard gravity system. I think there's around 450 units that are,
approved in that development area. That's a mixed use commercial single family. I think there's a a small amount of, of multifamily dwellings in that, But they are the most imminent. Beyond that, I think that Fortuna Acres and Fortuna South would probably come next. The granite is a is a much larger parcel, but it's farther along. It's it's much further down the line. I I'd be guessing five to ten years down the line. Okay. And, for the water extension area, those,
two, Fortuna South and, Fortuna Acres, how well service be provided to those? We we presently serve the areas that surround it, this, parcel here, this parcel here, and here. So it would be a pretty simple matter of extending the the properly sized water and sewer mains to collect and distribute that area. Great. And, we've got another map for the to show how the sewer will be provided. So we'll put a pin in that, briefly. Can you go in the book of exhibits to,
exhibit A1, page 53? Yes, I have it. And is that the same as the second poster board? Yes. It seem it seems to be the same. I think I'm getting feedback. It seems to be the same, Tim. Great. And is that the map of the, smaller alternative extension area? Yes, it is. And, could you walk us through the specific parcels in this, proposed alternative extension area? I think you've mentioned most of them already, but just briefly. Yes. East Mesa, as we discussed,
is the most imminent granite here. This larger parcel is the farthest out as far as, development. These two Fortuna South Fortuna acres are also close behind East Mesa. These areas, other areas we already serve, they were, contiguous and, but we have to we need to bring them formally into our CCNN. These smaller areas, Area 3 and Area 4, and the smaller I think it's a single lot here, Area 6. So though that is the smaller application for, sewer for Area 7,
Area 5, water and sewer for area two and area one. Thank you. Judge. Your honor? So the, the area designations, one, two, three, four, five, are different in your primary extension area and alternative extension area. They don't correspond? Okay. Correct, your honor. And, mister Fortner, in the in the book, can you go to, Bates page zero two eight two zero two eight two? Yes. I have it. And that should be a, very colorful map that's part of the wastewater master plan.
Is that right? That is correct. And does that happen to be the same as the third poster board up there? Yes. It is. And, since we have all these, code of many colors, can you, walk us through, what each of the colors is? Yeah. There is a legend here in the bottom left. So, this this is very clearly depicting the widely dispersed and disconnected sewer system that we presently own and operate. Section 14 in yellow is, by far our largest wastewater treatment facility, depicted in this cross hatch here. You can see the the area that is collected and and sent to that system.
By the way, pretty much a 100% of this request formally requested CCNN expansion, will be directed to Section 14. And we're undertaking studies and plans designing to expand Section 14 at the same time. It's at the point where it needs to be studied and expanded regardless, but reflective of this CCNN, that's the plan. So, green is Palm Shadows, which, you see here. This is the Palm Shadows Lift Station over here on the far west side of our system. That also,
ultimately ends up at, Section 14. Palm Shadows used to be a a wastewater treatment facility. It, at some point, got transitioned to a large, lift station. So now, as I said, all all the green also ends up at Section 14. The, this is the Del Oro, wastewater treatment plant. It primarily serves Mesa Del Sol. It's a development that I think began in the nineties, and that is landlocked and maxed out, very close to being maxed out in its capacity. I think it's rated at a half a million gallons a day treatment capacity.
And this, section here in purple is the, Seasons Wastewater Treatment Plant. Again, it only serves that area as depicted and clearly shows what I was trying to describe earlier of these kind of bicycle spoke disconnected wastewater treatment sheds in this case. These these represent the collection areas for each of these plants here and here, and this is the big lift station. Marwood is in blue or kind of a purple, and that is, that plant, we we have scheduled for abandonment.
As you can imagine, for 9,000 customers, this is way too many wastewater treatment facilities. The economies of scale and efficiency is not there with this disparate layout. So we have plans to abandon the Marwood, wastewater plant this year in 2026. And next year, the, there's a small plant Del Del Rey here in the light in the aqua, and we're gonna abandon that and redirect it to Del Oro. So trying to make the system more efficient and effective by abandoning two plants that also are our poorest performing.
They're in full compliance, but they have many years of age and wear on them. So it just makes sense to abandon those. So, would five or at one time six wastewater plants, that's not how you would design that today? No. Ideally, for 9,000 customers, you'd have one wastewater plant. But, we'll be happy to settle for three. And, is so you talked about, consolidating and improving, the wastewater plants. Would essentially most of the flow from the primary extension area go to Section 14? Yeah.
Every bit of it every bit of it would end up at Section 14. You know, Granite is directly adjacent, and and it would be, I mean, it depends on that that design plat has not really been, developed yet. But it would probably gravity flow into Section 14. I described earlier the East Mesa, development. That's a, gonna have to be conveyed by a lift station and then turn to gravity on Foothills Boulevard. As I said, the two developments over here in the Southwest portion are surrounded by existing infrastructure that
would more than have the capacity to convey and distribute the water and wastewater back into the system. And the, the one that's north of the interstate would require a bore under the interstate? It would. The East Mesa would, they have a design, where their lift station is in the Northwest corner. It would, travel south, be bored under the interstate along South Frontage Road and then down Foothills Boulevard and end up at, Section 14. Okay. And you mentioned Foothills is in the process of, adding capacity at Section 14.
Is that right? Yes. We are. We have, we have a engineering plan before the Arizona DEQ presently to for multiple components of that expansion. And would the expansion be designed in a modular fashion, so you can add as the flows increase, you can add in reasonable increments? Yes. Good question. So Section 14 is a membrane bioreactor plant. And the nature of MBR technology is that it's, you can incrementally expand it in modules and trains.
Presently, there's three trains, we would add a fourth. And then in the future, be able to accommodate the growth as it occurs versus overbuilding and hoping for growth. We would be able to build the capacity as the growth occurred. And what does Foothills do with the reclaimed or recycled water generated by these treatment plants once it's purified and ready for distribution? It's put to beneficial use, specifically at Section 14.
It is discharged to support the Las Brancas Golf Course here for, for outdoor irrigation At Del Oro, similar thing, it's discharged to the Mesa Del Sol Golf Course for their use. And the Marwood, effluent is discharged to the, two adjacent golf courses for beneficial use as well. And then, what happens if, you have more, water than the golf courses need? We have, presently, we have three Vados zone wells that are able to discharge into the, the zone between the surface and the aquifer,
permitted by ADEQ at section 14. We're also designing, adjacent to the plant, two large infiltration basins that ultimately would recharge the aquifer in that zone as it filtered through the soil. So, we have we were able to, as I said, put to beneficial use all the existing effluent. And as we grow, we have plans to be able to discharge into that infiltration basin to continue to provide beneficial use of the effluent. And given that you have water CCNN in that area,
recharging the aquifer would be a benefit to your customers? Yes. We purchased our surface water from Yuma Mesa Irrigation District and that's our primary water source. But we also have a one hundred year reliability on the groundwater side. We have a number of groundwater wells distributor around our distribution area. And by recharging that aquifer, it would in fact continue to replenish the available groundwater for our service area. Thank you. We're done with the map part, so I can, let you sit down.
I appreciate the show and tell. Did you have any other questions, your honor? I have lots of questions. I mean, what? But none that I'll do right now. Okay. Thank you. Can you, provide just a little bit of additional color on discussions you've had with developers, especially the couple of parcels that are closest? Absolutely. I think I mentioned earlier that the East Mesa development, we've had many conversations with those groups. Also the Fortuna East and the two to the South there, we've had lots of conversations.
The documents frankly that we submitted for this application came from those developers, the capacity calculations, the those three have some conceptual well beyond conceptual for East Mesa design plats with the infrastructure displayed within those. We've given comments back on those and those will be reflected in their what should be their final for East Mesa, what should be their final submission to the county for their review and approval. So that's why I described the East Mesa as the most imminent and then the
other two close behind, the Granite being the farthest out. I think it was only time goes by a year and a half ago that they got through planning and zoning out at Granite. So, but they did formally request and gave us some conceptual numbers on what the full build out would look like in regards to the number of connections and customers it would serve. So yeah, we value all our relationships in the community with our elected officials, with the community members themselves, with the developers. Clearly,
we're in aligned business models. Developers help expand the housing stock and commercial development and we serve that stock with water and wastewater services. So, but we do have very positive working relationships with all the developers in the Foothills. And is it fair to say that East Mesa is especially eager to see the CCNN approved? Very much. I wouldn't call them a pest, but they've been very persistent in their communications. I say that in jest. They're great people. Yeah.
As part of your job is taking all those phone calls. Yes. Regarding the the gentleman that that's here, would the company have any objection to excluding his specific parcel that he owns from the No. None. Did you review the staff report that was filed in this docket? Yes, I did. And, does Foothills Utilities accept the recommendations in the staff report? Very much. And that's another relationship that we value very much by the way is with ACC staff. It's we have a great working relationship and respect the work they do. And there was a lot of back and forth.
We had multiple meetings. It was a collaborative effort and we very much agree with the outcome of the recommendation. And as we talked about earlier, this is an unusual request and has some unusual aspects both in the having two alternatives as well as having the septic component. So, this definitely was, took a little more effort from from the company and staff. Is that fair to say? It did. You know, when I first took the job back in early twenty three,
it became obvious to me that this was a very disconnected utility in regards to the service territory, water versus sewer. And it was an idea that I came up with early on. As we were doing improvements at Section 14, commissioner Myers happened to, ask to come visit, and and, and we were we were very welcoming of his visit with him and his family. And, I presented this concept to him at the time and he was very enthusiastic about it actually. And, I discussed it with Commissioner Thompson, similar kind of feedback.
And when we met with them a few months back with all the commissioners, which we try to do regularly, they they again urged us to bring this forward. So, I feel like we have their support. And and, you know, conceptually, frankly, it just makes sense. You know, we we serve that broader service area for water, and we just simply desire to, make sewer, centralized sewer available to those same customers, that want it, with the exception of the exist existing septic, which we've already discussed. And, mister Fortner, I I thank you very much for putting up with an hour worth of questions
on my part. Part. Happy to do so. Mister Fortner is, available for Cross. And, your honor, I would move exhibits a one, a two, a three, a four, and a seven. Any objection? No objection. Objection. Exhibits a one, a two, a three, a four, and a seven are admitted. Alright. Miss Humphrey, questions? Thank you. And thank you, Mr. Fortner, for that very thorough explanation. Yes, ma'am. I guess the only area of questions I really have would be the comparison between
the two proposed areas, the primary and the, the alternative area. And I understand that you have given us some of the reasons why the company is supporting, the primary area, as opposed to the alternative area. Are there any other reasons that that you believe that the primary area is more appropriate that you haven't discussed already this morning? Just speaking openly, the regulatory burden, if you will, of bringing back parcel by parcel to the commission and a CCNN application. I mean, we totally respect the process,
but as we attempt to best serve our community for for Sewer in particular, we just felt that the need would be much more streamlined to bring forward a larger, broader request. And that is a big part of the motivation behind this broader request. There's a large amount of development occurring in the Foothills or potential development. Yuma County, the City Of Yuma is built out, if you will, for the most part. The parcels, there's a kind of a buffer area between the City and the Foothills area that's
primarily owned by State and Federal property. But the available area in the Foothills is where the development focus will be for the most part in my understanding of Yuma County. That portion of Yuma County the counties in Arizona are huge, but that portion of Yuma County. And so we're just trying to, more effectively and efficiently serve our community in general. As I said, specifically for sewerage, that would be the only thing, I guess, I would add to what I've already said. Does that make sense? Yes. Thank you. And and and comparing the two areas,
it's my understanding that the only difference between the primary area and the alternative area is the primary area, can addresses customers who have customers who live in areas where no request for service has been submitted. Correct? That's exactly correct. And as required, we notified all those customers every parcel that we've requested to be added, whether it they had formally requested or not. And we did get a few, phone calls, but strictly for clarification.
And we assured them that this their, their participation, their connection to our service is voluntary. It's not mandatory. I wanted to make that very clear to them. So, that was really the only point of clarification that, that I gave in response to those folks. And, we didn't get any concerns or complaints outside of that from any responses from those folks. You said you had forty years of experience in in water and wastewater. Forty? Yeah. I'm sorry? Forty? Yes. Yes, ma'am. Is it somebody else in my in my experience category? It's kind of refreshing.
Yeah. You know, it's a passion. All kidding aside, I love I love my I love my work, and, Northwest National is a great company to work for. And this is, my first deep dive experience in the private world, by the way, and it's been a pleasure working with the commission in these activities. Is it unusual for, people who live in new developments to start off on a septic system and ultimately convert to a a wastewater system if it's available? Is it unusual? No. You know, I I own a couple of homes back in Kentucky. Both of them are on septic systems,
and I understand that I'm not paying a bill for that. Right? But then again, are you? Because you have to have that system pumped regularly, inspected. I describe a lot of the septic systems, no offense to anyone, in the Foothills area as failed or failing. I know that sounds dramatic, but given the small parcel size and the age of those, all infrastructure has a life expectancy. And when you have a septic system that's aged thirty, forty years, you're gonna pay a big bill all at once to to get it replaced or repaired. So it's a bit of a fallacy that septic systems,
you don't pay a bill. You don't pay a monthly bill, but you will pay a big bill when it fails. So, and I think, you know, having done this for as long as I have, it's clear to me, and it may not be clear to everyone, but my strong opinion is that centralized sewage is the best value for homeowners. The property values of those homes go up, reflective of the modern nature of centralized sewer treatment. And, we're good stewards of that utility and, very proud of that. So I I very much advocate for this expansion due to those reasons.
What is the expected life of the sewer septic system if you can generalize? I would say thirty years is beyond its lifespan. And is that how long the most of the septic systems in this in in this particular system and standing. Yes, ma'am. They've, those homes were built, the eighties, nineties, mostly, beginning. And and, you know, it's not a judgment. It's just an observation. Ultimately, we would love to serve those areas. It's just there's a huge expense to retrofit an existing infrastructure, but love the concept of eventually, helping form a community development district and and working with them too.
Because we can't get grant money. Private companies can't. The community development districts can. So there's a scenario where they could form that, district, apply for grants, get their infrastructure in place, and then, you know, work with us to manage it over time. Thank you. That covers my questions. I Thank you. I appreciate your thoroughness. Thank you, your honor. Okay. Thank you. Just looking at the clock. I I do think a lot of my questions were answered, so this may not take too long. If it starts taking too long, we'll take a break, for our court reporter. So starting the staff report in a couple different places has a couple different figures
for the number the current number of customers, water and wastewater. Can you tell me that the approximate number in your view? Approximately 9,500 sewer connections. K. That's not customers per se, our our population, but connections. And approximately 17,800 water connections, top of my head. Those you know, we look at our connection count as active and and total. We have a lot of transiency in the Foothills. And so that's the most accurate number I can give you. We bill about 18,500
customers monthly. So there's sewer only, water only, water and sewer. It's a complicated system. And is Foothills currently providing either wastewater or water service to any customers that are technically outside of its CCNN for the respective service? There are a few. I think I mentioned earlier, there were a few that were contiguous, and by ACC rules, we're allowed to serve those without but also required to bring them forward in such an application to formally bring them into the CCNN. Am I understanding your question correctly,
judge? Yes. And are those water or wastewater or they're some of both? Some of both. Mostly water, but, yeah, some of both, I believe. And all of the areas of the primary extension area are outside the city of Yuma limits? With the exception of, if I if I can show you on the display? Yes, please. Oh, you'll need the microphone, if you're gonna do that. Mr. Fortner, if you go back to the first, poster board, it does have the city limits on it. Okay. So, this this blue line is our water service territory,
but and but the, don't see the legend, but I think this orange is the city limits. So this section right here, this green section right here, it's West Of 10 E, is an area that the city serves water and we serve sewer. That's the only area that we serve in the city limits, and that's a that's a, must have been a request from the city at the time. I know I've spoken with the city sewer out that far for whatever reason. So those houses that would be to the left or what I assume is the west of that green section,
you can see a little sliver of houses. Those are That's the city. Set. Both. I'm on septic? No. I think it's city sewer. City sewer. I believe. Okay. Alright. Thank you. You. That's all I have that I think you'll need the map for. Yes. Maybe. Does Yuma County provide any, water or wastewater service? No. They do not. They have the typical arrangement with ADEQ as far as regulatory review for, any and all development, including utility development, but, no, they don't, provide any utility services. Okay.
So there's no other municipalities that reasonably could provide service in the areas that we're talking about other than the city, and they've communicated a lack of interest in that. Yes. That is correct. Okay. With the exhibits that were filed on Friday, there were revised legal descriptions for the wastewater primary extension area. Are there any modifications that need to be made to the maps that have been filed, or is it just the legals? It was just the legal, your honor. Okay. And so you there's been request for service for the alternative extension area in its
entirety. Are there any portions of the primary extension area for which you've had a request for service that's not also part of the alternative extension area? No, ma'am. And, judge, just a clarification on the alternative. There are, areas where we have request for service, and then we did include those contiguous parcels that we're already serving. So we don't have a a request for service for those because we're already serving them. So the alternative area is made up of requests for service
and existing customers? That is correct. Yes, ma'am. Are there existing customers in the primary extension area that's not also the alternative extension area? Can you repeat that, please? I could try. Okay. I'm sorry. Are there any existing customers that are in the primary extension area but not the alternative extension area? Does that make sense? Am I saying anything that makes sense? So the the broader application, the the one we are are recommending has includes everything that the more narrow application
includes. Okay. Maybe I said the reverse of what I meant. The alternative extension area is the smaller area. Correct. Does that encompass all of the existing customers such that if the commission were to only approve the request for that, all existing customers would be brought into the CCM? Yes. Yes, ma'am. I understand your question. Yes. So the the smaller the smaller request includes all existing customers, contiguous customers that we presently serve and the formerly requested additional Okay. If that makes sense. The staff report says that Foothills has additional water systems in Mohave County.
Yes, ma'am. Can you tell me a little bit more about that? Same parent company, Foothills Water and Sewer LLC. It's the formerly, Surbat Water Company and Truxton Canyon Water Company. About 1,400 connections up there, two separate systems, PWSIDs, one East of Kingman, one west. In fact, we call them Kingman east and west. Okay. And can you just tell me a little bit more about any feedback you've received from customers or landowners in the proposed extension areas? All positive. As I mentioned earlier,
as far as any of the properties that we're requesting in the broader application, they only asked for clarification. And I explained to I think there were only two that I spoke with. Eric, our GM, may have spoken to another, and they were all similar questions, primarily around would they be, mandated to connect to us, and and I tell them, no. It's voluntary. It's, if they bring forward a development, we have the right to serve them. We're we're not gonna make them take our service. So a developer could still put homes on septic?
We would not want that, but there's you know, we live in a free country. You can if you have a large enough parcel and and you're not close enough to our sewer service, existing service, then, yeah, you can still develop septic, unfortunately. I think it's a bad idea, but same thing with well water versus our water. I wouldn't advise any individual to go into the utility business. It's quite expensive. Okay. So I'm looking at the primary extension area map again, which is what is up right now. Mhmm. So looking at the yellow areas,
areas, that's the proposed sewer extension, it looks like most of those areas don't have anything in them. There's what looks like some sort of structures below the East Of Mesa wording and some stuff in areas eight, four, and five. So are are those current sewer customers that are serve are they what's happening? They were, predominantly within our water service territory in the existing water CCN. Again, as displayed with the blue outline around the perimeter.
So basically everything in that drawing is in the water service territory presently with the exception of area 1 And 2. I think those are the only two that were requesting added water service. So now, are they presently customers? That's a different question. So mostly, no. It's undeveloped. East Mesa is undeveloped. It's new development. Okay. So they don't have either water or sewer, but they are in our existing water CCNN. Maybe a separate, drawing with just the water service territory would have been beneficial.
Yeah. Maybe I wanna ask a different question. A 16 yellow areas that have some sort of structure, whether it's a residence or a commercial building. And they currently have a septic system, and they're gonna be brought in or you're requesting to bring them in to the sewer CCNN. No. Not to my knowledge. Okay. And, And, your honor, we do have mister Jones teed up to provide a little more detail on the the areas with existing customers and them. Okay. Miss maybe mister Jones can tell me a little bit about,
like, areas four and eight where it sort of looks like they're houses, and if those what's what's going on in those areas? I just wanna understand a little bit better if the new primary extension area for sewer, if all of those areas are potential areas for new development or if there are existing people living there with homes or businesses that are that must be on septic or are already receiving service? There could be. I think if there are,
there's very few, but I can't think of any. Okay. Ray, mister Jones might have a different opinion or knowledge. He he developed most of these maps, so it's more familiar. And I guess I'm I'm also curious if if someone has a house in a septic system and they get brought within the umbrella of your CCNN and they and they say, oh, shoot. My system's thirty years old. I and I know I need to do something about this. I'm gonna call it Foothills and say, I'm in your CCNN now.
Please provide me sewer service. What would that process look like? That's a great question. So first of all, it would be voluntary. The only exception to it being voluntary would be if we have existing sewer infrastructure, and this is a county policy, not our policy, within 300 feet of existing sewer infrastructure, they would be required if their system failed to tie into our centralized sewer. If it were a, but if they're in our CCNN, they typically would tie into our sewer. But, yeah, again if they have a septic system existing and it fails,
they would, if they were within 300 feet of our existing sewerage, they would be required to tie into us as a new customer. They could also voluntarily tie in and we would work with them with a line extension agreement or whatever to get them service. We've done that with a few customers that are, you know, directly, contiguous in our CCNN. Okay. And in terms of the availability of customer service for those who may get brought within the CC nine or developments that occur. It it looks like from the maps that the new areas are all pretty close
to the existing areas, so would be served by the same office as personnel? Yes. We have a local customer service group there in Yuma. We the company has centralized customer service recently. So we had it's in nodes and we have a big presence in Yuma, but its customer service is being handled on a corporate level at this point. But there, there is a local, presence, and and we we interact with our customers regularly. Okay. And the company is gonna charge its existing water and wastewater rates in the extension area? Yes.
And it does the company have current plans for a rate case? We are, we are, getting ready to file a new rate case. Yes. Do you anticipate that would be filed this year? Yes. That would be filed this year? Yes. We do. The customer complaints that you now see, what are those typically about? More often than not, they're billing questions, or complaints. Misunderstandings is how I would characterize most of them, quickly resolved and courteously and professionally. You know, there's unfortunately always gonna be those kinds of, you know, misses if you will, where, you know, a meter we have we we do have AMI meters now.
So it's very automated, and and that's another reason that the complaints have gone down so dramatically even on the billing complaints is that now we have a very automated system. It even has built in leak detection that we notify our customers. So, yeah. And the staff report had noted some ADQ issues, but that they had been resolved. Can you confirm that there's no current outstanding ADQ issues with any of the water No. There water? We're fully in compliance. The, the one, I guess, you would say exception to that is we,
we have a consent agreement with ADQ on the odor issue, but we're in full compliance with that agreement. That's the project that we're getting ready to complete at Section 14. And then we're gonna do the same thing at Del Oro and at Seasons. We do have temporary odor control in place and it's very, very effective. As I said, we've gotten next to no complaints recently. So we're we take it seriously. We've invested over $2,000,000 at the Section 14 plant for odor control. We have a bio filter, technology that we're getting ready to put into service.
And in addition to that, granular activated carbon as a backup to that. So, again, those complaints are next to none. But in full transparency, we are in a consent agreement on the odor control issue. Was that consent agreement entered into with the prior company and transferred to Foothills, or is it a Foothills consent agreement? It's our consent agreement. The issue certainly existed much more dramatically with the previous owner. It was one of the big problems we had to overcome. Okay. And staff determined that the Section 14 Wastewater Treatment Plant doesn't have sufficient treatment capacity
to provide service to the extension areas at full build out, but it it sounds like you described some plans to increase that treatment capacity. Yes. We're, at or near the threshold that requires a a study and a design to expand the treatment capacity. I think we're on average our permit is an average maximum daily flow on a monthly basis. It's sort of complicated, but we average about 800,000 gallons a day.
The plan is permitted at 1.3. That sounds like a big buffer but it does you know the way the permit is written it doesn't take into account the peak day per se. So the trigger is there and we are, as I said, we've already submitted a professional engineering study to ADEQ for their review and approval and includes expansion components of the plant. We just completed last year the screen and press project at Section 14, upsizing and improving the screening on the front end of the treatment process and the
solids handling on the back end of the process. So we've been engaged in I don't know if you call it expand. It's really improving and getting things up to where they should be at the plant. But, yes, we do have plans in place to expand Section 14 under review by ADQ. And what's your confidence that that capacity will be available and ready when the developments are or that, you know, you don't wanna get it ready too early. Right? But that that timing will align in the way that it's supposed to. I feel like we're perfectly aligned.
I don't wanna sound overconfident because things can happen. But, we are we're we're right in the sweet spot of, you know, the timing of the CCNN expansion, the development that we're aware of that we've entered into mainline extension agreements, and the expansion plans for the Section 14 Wastewater Treatment Plant and the Water Treatment Facility. We are also undertaking an expansion program there as well, design and and construction that'll be begun seriously in '27. And for the areas in the primary extension requests for which there are no specific
development plans, what types of developments do you think would be suitable in those areas? Would it would it primarily be residential, industrial? We have zero industrial customers in the Foothills. We would accept an industrial customer, but we don't presently have any. We have, what I would characterize as light to medium commercial for the most part. I would expect that it would develop similarly as the rest of the Foothills is, which is 95% residential and five to 10% commercial. Okay. I think Everybody wants the new, you know, shopping center and and grocery store.
We just got a new Sprouts we're proud of. Alright. I don't I don't think I have anything else that I need to ask you. We can wait for mister Jones. Okay. Redirect. Mister Fortner, there's been a a not a bit of discussion about septic and conversion. Just so we're, the record is clear, although you'd be a big supporter of that, there's nothing currently in in the works, for a conversion of those septic areas? No. There is not. And as I stated earlier, that that would have to start with the community, not the utility. Could you, talk a little bit about what problems,
you might see with these closely packed septic, especially now that a lot of them are at the end of their service life? Well, when when we were getting more of the odor complaints, I would often mention that again, we have 9,500 sewer customers. There's 10,000 septic systems in our service territory. Especially when the time when the transients come back and forth, the snowbirds if you will, come back and forth, start up a system that hasn't been in use for months and
odors can emanate. So that's one negative symptom. But just environmentally, when a septic system fails, then you're potentially leaching, you know, human waste into the into the system. And, sys by system, you mean into the groundwater? Into our environment that we live in. Yeah. Alright. Thank you. Miss Humphrey, do you have anything final? No further questions, your honor. Okay. Thank you, mister Fortner, for your time and your testimony today. We really appreciate your, descriptions of everything. I think before we go to mister Jones,
we will take a break. So it is 11:34. Let's come back at 11:45. And with that, we can go off the record. Thank you. Alright. Let's go back on the record, and you can call your next witness. Thank you, your honor. Foothills call is mister Ray Jones. Alright, mister Jones. Please raise your right hand. Wait to be sworn by the court reporter. Yes. I do. Mister Jones, can you give us your name and business address for the record, please? Yes. My name is Ray Jones, and my business address is, excuse me, 1630 Cougar Trail in Prescott,
Arizona. And, could you, walk us through a bit of your background and experience? Well, like Ed, I've got just a little over forty years of experience. It's all been here in Arizona. I started my career, doing in the engineering group at Citizens Utilities Company and worked my way up through the ranks there. We were ultimately acquired by Arizona American Water Company and I was the President of Arizona American Water Company for about two years. And I left there in 2004 and started my consulting company,
Ericor Water Solutions, which is the work I currently do today. And, is Arizona American the systems, now owned by EPCOR Water Arizona? Yes. EPCOR Water Arizona is the same corporation as Arizona American Water Company. It is they actually acquired that and changed the name. And, mister Jones, as in your role as a consultant, have you testified in numerous, rate cases, CNN and other proceedings before this commission? Yes. I think I included probably a a resume. Well, maybe not in this case since it's a CC and M, but, yeah,
dozens and dozens of cases. Yes. And, yeah, I was feeling like I was getting to be an old guy, but, compared to you and mister, Fortner, obviously, I've got a I've got some I've got, a ways to go to to catch up to your wisdom and experience. So I I appreciate you helping us out here. Let let's start. The judge had some questions on, areas, in the primary extension area where, service, may be, provided already to either water or or wastewater service to customers.
And I know you you put all these maps together, which was not a, easy task. So we appreciate that. Can you kinda, use the pointer and kinda walk us through that where it is the case that there are existing customers in the yellow areas? Yes. I I can do that. I'll just before I stand up, I'll just say that, yeah, mister Fortner tasked me with doing the detailed research involved in preparing these maps. So, yeah, I think I can do a pretty good job of walking through that. Test if this is working. Yes. It is. And I think I'll just if it suits your honor,
just go through them in order and just talk about each one a little bit. Area one is, of course, water and wastewater extension. There's no existing customers of any sort in there. It's a proposed development. Area 2 is also water and wastewater. There is a proposed development of Fortuna Acres and a I guess, I'd kind of describe it as a future expansion of these Fortuna developments that's also part of Area 2, but there are no existing customers of any sort in there.
Area 3, I believe, is a blank parcel with no current customers. Area 4 And 5 both have some level of development. I know there's at least one church in here and some privately owned property. I think there's little something in Area 4. Those are not customers of Foothills. They would have septic systems, for their sewer service. Areas 6 And 7 are both land owned by the State of Arizona. There's no development of any kind or any customers within Area 6 Or 7.
Area 8 is a I describe it as a mostly developed strip of commercial properties. They were originally developed using septic service. And I'm not sure of the exact number, but two or three of these, I'm going to guess, somewhere in that neighborhood are now customers of Foothills because they're either they've expanded their facility or their septic system has failed or something like that.
There's a sewer main in, I think this is Fortuna Road, and they're within 300 foot of that. And so they have been forced to become customers of, Foothills Utilities. And the reason we've been Mister Jones Yes. When you say forced to become customers, you mean wastewater customers? They were already water customers? Yes. I should be clear about that. All of those people are water customers as well, but they've been forced by I believe it's the state regulations regarding septic tanks because
septic tanks and all that are now covered under the aquifer protection permit regulations. It's really governed at the state level, but administered at the county level. And as I understand it, it's if you're within 300 feet of a sewer, you're gonna be, I guess, forced is the right way to say it, to connect to that sewer unless you're able to obtain a variance. There is a variance process. But I don't think variances are that easy to get, and you'd have to show some sort of a extraordinary circumstance not to have to go ahead and connect to sewer. So our goal in outlining all these with area of eight is that and and
we use the same logic in all of these. We tried not to include anybody that we didn't think would likely be forced to come in and select sewer service at some point. That's why we tried to capture them. We're not. There was no effort made to capture pieces of property where we didn't think they would they would otherwise need to get sewer service from Foothills. So all these residences to the right of Area 8 are not included because they're outside that 300 foot.
Well, they're not included. I don't know if they're all outside of 300 feet or not. They're not included because this is one large residential subdivision. And I guess it would be our belief or my belief that that would probably one or two things could happen. We we don't think it's that likely that a single homeowner over here would be forced to come through some sort of commercial property where they have no access to and connect. They'd probably be eligible for a variance of some kind. It would be our belief. It's not very likely an individual homeowner would get forced to make that kind of
expenditure to obtain sewer service. And so that's why we excluded those. It really wasn't about whether they were within 300 feet or not. Okay. Then moving on, Area 9. This is actually a relatively new commercial area, probably ten years old, maybe slightly less than that. There's a gas station and a couple of Fast food. Fast food restaurants in there. They were, for whatever reason, never brought into CCN the sewer CCN by the previous ownership. So Area 9 is simply a cleanup to bring in an area that should have
been in the CCM sometime ago would be my opinion on that. Are they currently receiving an Area 9 both water and wastewater? Yes. Currently, they're receiving both water and wastewater. Correct. And then Area 10 is a combination there. You'd have to look at the detailed land ownership maps, but there's actually a small subdivision in here, again, similar to Area 9, where there should have been a CCN extension under the previous ownership. It's 30 lots or so. It's a small subdivision.
So that portion of Area 10 is cleanup. The rest of Area 10, again, is mostly vacant land, but there's at least four properties in there that have current some Sort of development on them. They're looked to me to be older, like some kind of storage facilities or almost like junkyards or something. Not sure if they would all even have a septic system or not, depending on the nature of the development. But we feel that we brought in the entirety of Area 10 because, again, it's getting so much surrounded by our sewer service area.
We feel like to extend anything happens in there, they're going to be required to obtain sewer service from Foothills. So that's why we brought the rest of Area 10 in. And and to extend anyone has water service in there, they're getting it from Foothills. Area 11 is a completely undeveloped area. It's primarily almost all state land, although the County Of Yuma has one tiny parcel in there. I'm not sure what that parcel is, but it's undeveloped. So Area 11 is an area of future development that needs to be planned for. Area 12, as we discussed,
has the East Mesa development, which sort of circles around this area that's already developed. And in there are two churches and a condominium storage facility. So it's a storage facility where people own their own units, own they have the deeds to their own units. We're not sure if this this condominium storage unit has any septic or sewer. It doesn't look like they probably do. We don't see anything there that would require sewer service, but we're not certain of that.
These two churches, of course, do have some sort of a septic system of their own. And they all receive water service from the company. Again, our feeling was once they get wrapped by this East Mesa development to extent they ever have problems or want to change anything here, they're going to be required to request sewer service. So that's why we wanted to include them. The remainder of Area 12 is state land that we feel it's very important that the planning for this state land be done in conjunction with East Mesa.
And I think we're going to talk about more about that later. That's why it is included. So 12 okay. 13 is, is part of a lot. Half the lot, more or less, is in the CCNN. It has a gas station on it. For whatever reason, the other half of the lot was never brought into the CCNN. It's developed yes? When you say lot, do you mean parcel? A parcel of land. Yes. And so that's just simply a cleanup to get the entirety of that gas station parcel into the sewer. CCNN is already receiving both water and sewer service to our knowledge.
Area 14 is four I think it's either four or six commercial lots. They're undeveloped, but we feel that they would be likely to be required to request sewer service and would probably desire requesting sewer service as well depending on how those develop. So that's why we included those. Area 15 is a strip of residential lots in an old septic subdivision. I believe it's one or two of those have already connected. There's a sewer system or sewer line in the road out in front of their
homes, and I believe one or two of those have already requested and become customers of Foothills. I don't know if they were forced to do that or they chose to do that, but we thought, well, if two of them already have, let's just bring the rest of them in as well. And if they decide they ever want sewer service, rest of them in as well. And if they decide they ever want sewer service, the mains there, they'll be in the CCNN. That was the thinking on 15. And then, of course, 16 is a large, completely undeveloped area. The upper portions are Section one and this part in Section two are state land. About half of 12 is actually federal land.
And then the remainder of all this is private land, with the majority of the private land being part of this proposed Granite Yuma development. And again, we brought all of this area in so that it could all be planned together and allow for the economies of scale and some of the things that Mr. Fortner asked for. And our just I guess, for information, our public commenter today, his property, I think, is about 24 acres or so, and it's right in this corner here is where his property is located.
And this would reiterate what mister Fortner said. If he doesn't wanna be included, we we the company has no objection to submitting a updated legal description and and taking that 24 acres out of this request. And then, mister Jones, areas seventeen and eighteen? Oh, seventeen and eighteen are two small pieces of state land. They're completely surrounded by this large privately owned piece, which we're certain will be an expansion of this Las Barrancas residential development.
We think it's quite likely that when that happens, these two pieces of state land would be acquired and integrated into that development. So that's why we thought it was important to include those. The sorry. I I never do this, but for some reason, this case, I just if I don't ask it now, I'll never I'll never remember. The portions that you have identified as state land, is it state trust land that could be sold to developers or something, or are we talking, like, state parks, state? Whenever I refer to state land, it's all state trust land. Okay. Thank you. You. Sorry. I'm done. Got it. Mister Jones, I think we're done with the map at the moment. So I appreciate,
you walking us through, and I appreciate your memory being able to keep track of 18 different, areas of land. So, thank you for that. In full disclosure, while mister Fortner was testifying, I went through all the land ownership maps and refreshed my memory. Mister Jones, did you also in addition to preparing the maps, did you prepare attachments k one, k two, l one, and l two to the application? Yes. I did prepare those. And, then turning to, legal descriptions, did you discuss a clarification to the legal description for the wastewater portion of the
primary extension area, with the commission staff? Yes. And and when I when we first filed the application, I had multiple conversations with staff regarding the legal descriptions and their efforts to map those. And in that process, we found a piece of language that doesn't make any sense essentially. It doesn't really affect the underlying legal description, but the way it was written just didn't make any sense. And staff has suggested that that be clarified, and it does make sense to clarify that.
So that's what we've tried to do. And is the specific clarification, shown in highlighting on exhibit 86? Yes. It is. So we've replaced the word south of the with the word southerly. And then, does exhibit a five then include that correction to the, and provide the, corrected wastewater legal description for the primary extension area? Yes. It does. Yeah. And then, sticking to the legals, if the if the public commenter,
I apologize. I've forgotten his name already. But if, he desires to be excluded, and submits a legal for that little square you were pointing to, is the company willing to submit a, late filed exhibit, N legal description? Yes. That's my understanding. And I guess sort of, in terms of putting together all these legals, you know, some are nice easy squares, but some of them took some brain damage to put together. Is that fair to say? Yes. It took quite a lot of research to pull those all together. And then once you had the, legals and you had the maps,
can you tell us what you then did to compile the, list of landowners, to send the, mail notice to? Yes. The list of land owners was compiled using the Yuma County GIS system that's publicly available on the Yuma County website. There is a functionality in that GIS system where you as a user can outline an area of of the map and request a report of the underlying parcels.
And that report gives you appears to give you all the information the county has on each parcel, which includes the current owner, the current owner's mailing address. So we would we I outputted all those reports for all of the areas and then extracted the ownership name and address information from those reports, provided that extracted data off to mister Fortner and his team, and they they prepared and mailed the notices. Thank you. Do you adopt exhibits a five and a six as part of your testimony today?
Yes. I do. Your I would move a five and a six. Any objection? No objection. For exhibit a five, does it replace the revised legal or the legal description for the wastewater primary primary extension area that was submitted with the application in its entirety, or is it just part of it? No. The, exhibit a five is a complete replacement legal description with as testified earlier, the only change is that one small change, but the intent was to give,
your honor and the commission a complete new legal description. Okay. Exhibit a five and a six is admitted are admitted. And then, thank you, your honor. Mister Jones, are you, familiar with the wastewater portion of Yuma County's area wide water quality management plan issued under section two zero eight of the Clean Water Act of 1972. Yes. I am familiar with that plan. And, is it your opinion that the primary wastewater extension area is consistent with Yuma County
section two zero eight management plan? Yes. It is. Foothills Water and Sewer LLC is a designated provider under the plan. And under the Yuma County plan, designated providers are allowed, to expand their service territories without the need to amend the plan. So I believe it is consistent with the plan. And by designated, do you mean a designated management area or DMA, under the, act? I I don't think they're a DMA. I think they're a designated sewer provider. I think Yuma County is the DMA,
but they are one of the several designated sewer providers under the plan. And the Yuma County plan, again, it's it's what I call a self implementing plan in that which is much different than what your honors maybe heard here in Maricopa County where they're continually doing amendments to them. Designated providers in Yuma County can expand their territories and those expansions are consistent with the plan and that it assumes and approves of expansions to those designated providers areas.
Okay. And I guess sticking with this sort of idea of planning, can you talk a little bit about the benefits of regional planning, especially in the water and wastewater utility world? Well, there's a lot of benefits to regional planning. I guess, probably first and foremost, it will, in the end, in the long run, result in better service to customers at a better cost to the customers. That's probably one of the most important aspects of what regional planning can provide. And it does that by
assuring that facilities are constructed in an orderly and cost effective manner that you don't end up with duplicative facilities or as is the case of Foothills prior owner, more facilities than you should have that ultimately then have to be abandoned and tied into other facilities, again, usually at higher costs than if you just would have properly planned them to begin with. You also are able to gain economies of scale through good planning, which is a very important concept in the utility business.
So those are, I guess, some of the benefits of regional planning. There's probably more as well. And in your opinion, would approving the primary extension area be consistent with regional planning? Yes. Yes. I think it'd be good public policy, be consistent with good regional planning. Yes. And then you mentioned economies of scale. I think you have a MBA. Is that right? I do. Can you describe what economies of scale are? Love to. In the water and wastewater utility industry, it can be a couple different things.
You can have economies of scale in your facilities themselves. For example, if you're building a tank, it would cost a certain amount of money to build a 1,000,000 gallon tank. You could make that tank a 2,000,000 gallon tank at an incremental cost that's much less than the cost of the underlying 1,000,000 gallon tank. And so your new 2,000,000 gallon tank would have a on on a per gallon basis, a lower cost than the 1,000,000 gallon tank. That same philosophy applies essentially to all facilities.
Everything at your wastewater treatment plant, A pump that caught that it can move twice as much fluid as another pump on a per gallon basis is gonna be cheaper. A pipe that carries twice as much fluid on a per gallon basis is cheaper. So the facilities itself on a treatable gallon basis will be cheaper, but also operations and maintenance will be cheaper as well. It takes, it doesn't take twice as many people to manage a treatment plant with twice the capacity. It takes more people,
but not twice as many people. Same efficiencies would go to the management administration as well. It is cheaper to oversee a well designed and well maintained plant that has economies of scale. And so this economies of scale percolate from the facilities to the operations to maintenance to the management administration all throughout the utility. And that's that's what economy of scale does. It ultimately gives better value to the service that you're providing. And in your view, mister Jones, would approving the primary extension area be consistent with,
achieving economies of scale? Yes. It would. There's, although these these areas are are, you know, relatively small, all of them. This isn't a huge expansion area, but there there will be substantial benefits from having it all planned as a whole and not letting these pieces come in piecemeal. Absolutely. Would it be fair to say that that would represent a change from how the power ownership, looked at things to what Foothills is now doing? Yes.
I think the system is self evident. The prior ownership tended to look at things on a what's here today. We'll build a plant, we'll build a pipe, we'll build a lift station to serve that. We won't think about what's coming down the pike later. And that's how you end up with the vast number of lift stations that they had, the vast well, maybe not vast, but the large number of treatment plants that they had relative to their customer base. And fortunately, Foothills and Mr. Fortner have eliminated already many, many lift stations and they're beginning a process of eliminating some of the treatment plants
as well. And, mister Jones, could you explain some of the benefits of having a integrated water and wastewater service provided by that the same utility? Yes. Again, there's there's economies that come with that. You only have still only have one customer service department, one set of managers where if they were these services were provided by two separate companies, they would each have customer service people, they would each have management. And even on the operations side, even though there are different services, there's the ability to use certain personnel,
water, sewer as workloads demand. So there's a lot of economies there. It's also much more I think convenient for the customers. Water management and, being able to efficiently, manage water across the the water cycle from, groundwater or surface water to, waste water to treated effluent and being able to use that effluent? Yes. Water is water. And being able to manage that whole cycle helps you minimize environmental consequences of pumping wells, for example,
of depleting aquifers. And Foothills has I think has been able to put in place a one hundred year adequate water supply. They're not in an AMA, so it's not an assured water supply. They call it outside an AMA an adequate water supply. And that is easier to do and it'll be done with less environmental impact as a integrated utility than it would be as a stand alone water utility. And, by extending, the, by approving the primary extension area,
would that be consistent with providing integrated water and wastewater service? Yes. So to make sure that these areas are serve both services, water and wastewater, by Foothills Utilities. Mister Jones, in in the decades that you've been, following the commission, have you seen the commission go back and forth, between a regional approach on CCNMs and a more parcel by parcel approach? Yeah. I think that's that's true. When I started out in this business business, it was common to have large CCNNs, thousands of acres,
sometimes tens of thousands of acres granted to utilities without, you know, that might be expected to take ten, fifteen, twenty, twenty five years or more even to develop some of those old service areas. More recently and particularly after there were some conflicts, you know, mostly in Pima County, probably somewhat in Maricopa County, we had different providers trying to compete for CCNs, I think is the way I would put it. That raised some concerns with the commission,
with some of the landowners that were, I guess, caught in these large expansions that were being proposed at the time. And I think one of the fallouts of that were the current CCN rules, which seem to presume that you need a current request for service in order to extend the CCN to a parcel. And of course, that's all based on this idea of need and necessity in a CCNN. I would argue that that approach is too restrictive. I think good public policy,
good planning. I think the real need for a utility provider occurs before the developers knocking on the door and saying, hey, I have my zoning, I'm ready to go. And that's so that this regional planning can be done by utility that a utility can get its capital together to make these things happen. So that in the end of the day, you have a good coherent master plan and that service is provided on an economic basis and a timely basis. It can be doing parcel by parcel can delay development while you wait to get
through these regulatory processes. So I think that it has gone back and forth and I'm glad to see we're here with a staff recommendation looking at a more regional CCN. But I would point out though that what Foothills has requested here is nothing like what was going on in Pinal County that kind of led to this current track towards this parcel by parcel approach. These are compared to those, these are all even the primary areas relatively small and relatively compact and
just different and clearly I believe it's appropriate in this case to issue the primary area of CCNN. And, I guess to be fair to the parcel by parcel theory, were there some CCNNs were issued to entities that maybe the commission ended up regretting, handing those out? There was at least one major case where that was the case that I, you know, I think we all know about. But that's not the case here. We've got a provider that has kind of just the opposite. They've come in, they've taken a problem away from the commission,
from the State of Arizona, from Yuma County. They're making improvements and they have what I hear today, improvements, and they have, what I hear today, a hundred and sixty year check track record of providing utility service. So that that's certainly not the case here. Alright. I think that's it. Thank you, your honor. Thank you, mister Jones. Miss Humphrey? Thank you, your honor. With regard to the, to the maps that you've been discussing this morning, did you create those maps? I did. And did did you start with, where did you start with as as far as the base map? The base map is an aerial photograph that came from the Yuma County GIS system.
Okay. And do you know when that photograph was taken approximately? I do not. It's relatively recent, but I think it's was probably on the order of a couple of years old at the time, of the application. It's not they don't fly and update that map that often in Yuma County. So, I know, for instance, one of the small developments, it would have been an area 10. I don't believe it appears on the map, but it certainly is out there in the real world. And as far as your research and your,
indicating the various areas on these maps, was that done around the time the application, was filed in this case? Yes. All that research was done immediately prior to filing the application. And thank you. That's all the questions I have. Okay. Just a few, really. So the change to the legal description doesn't impact the maps in any way. Correct? That's correct. Are there any other logical water or wastewater providers in this area? I don't believe that there is any other practical alternative to,
Foothill serving these areas. I don't believe the city of Yuma is is either positioned or desirable to serve these areas. And I do not believe that Yuma County would approve, small stand alone, sewer treatment systems today either. So I don't I don't think there's any other practical solution. Okay. And sort of the bigger picture question, question. So you talked about some of the areas that are state land, and you talked a little bit about economies of scale and planning for regional development.
So how do we and and why do we need to plan for development of the state trust land that is really so unknown and potentially theoretical at this point. Right? Like, it could be sold to a developer. That could happen next year. It could happen ten years from now. It could happen twenty years from now. How how does including that state land help Foothills plan for the future? I I think in a couple different ways. And,
you know, I would say that when you're doing planning, you're probably going to treat a piece of state trust land a little differently from a privately owned parcel because of those uncertainties. But when you're because you have to have at a water at a wastewater treatment plant, you gotta make sure your footprint that you have there available is big enough for the full build out of your service area. If, you know, I don't think that'd be the case here, but if someday you're going to need a second wastewater treatment plant,
you're going to need to know that many, many years in advance so you can plan on acquiring that piece of land or something like that. So there is a need for long term planning. And although you wouldn't probably spend a lot of money putting facilities in place to serve a piece of state land, there are certain parts of your system that are so expensive that you can make small incremental improvements, make a wet well slightly bigger to accommodate those ultimate flows,
for example, doesn't cost very much. And there are certain parts of that you may want to do. And I think it's important that utility not only knows it's near and medium term, but it's ultimate build out as well. State land is certainly part of that build out and I believe it makes sense to plan for that. I've got experience doing that. We back earlier in my career, we did a CCN north of Sun City West that included parcels of state land,
parcels of private land. And in that example, we had to build a very large lift station. We planned that so that it could be incrementally expanded when that state land did develop. But the biggest single thing we did and this is a really good example, we had to cross the Agua Fria River with force mains to get from that lift station over to the Sunsea West water reclamation plant. As you might imagine crossing the Agua Fria River is a big deal. We have to cross at about 26 feet below grade because of the risk of
scouring out the pipe in a flood. Though the pipe that you bury underneath the river has to be encased in concrete, it's it's a very expensive proposition. Well, all the private land could be served with a single 16 inches force main. We chose in that case, we installed two sixteen inches force mains. And the incremental cost of putting that second pipe in, while we had this giant construction project going under the river was very small compared to the hole. And so that area sits there today, EPCOR Arizona owns it now.
And when that area fully develops, the force main capacity is there, it was put in at a very economical cost. And there's similar things here. There's Fortuna Wash has to be crossed with some of these facilities and there could be instances where Foothills chooses to make a pipe slightly larger, put in a second pipe in the same trench or something like that based on this ultimate service area. So that's why I think it's important that you look long term and when it
makes sense, when there's no other, you know, providers that are likely to be able to serve this area, I think it makes perfect sense to let Foothills know what their service area is gonna be so they can plan accordingly with some certainty. Are there financial risks or costs to current customers from that type of long term planning? There there can be. That is something that is determined in a rate case. We've all seen cases where certain aspects of a utilities facilities are considered excess capacity
and reserved for future development. Those are things that the company has to weigh in its planning and things that would ultimately be determined, in the context of rate proceedings. Okay. Redirect? Thank you, your honor. Mister Jones, I guess just sticking with that final point, on the flip side of that, have you seen impacts in in a rate case, where the company did not do the regional planning and did the more piecemeal approach? And did that have a, impact on the cost in a rate case?
Yeah. I think probably the best example in in recent times is the Johnson Utility Service Area that was acquired by EPCOR Arizona. I think they just completed a $75,000,000 wastewater treatment plant out there that is replacing several, you know, not properly planned facilities. And I think we've seen the rates go up out there as EPCOR Arizona has come in and fix the problems created by the old Johnson Utilities management.
So absolutely, it cuts both ways. Thank you. Miss Humphrey, anything? No questions. Okay. Thank you, mister Jones, for your testimony today and for your very helpful description of the map. I appreciate it. You bet. Thank you. Okay. Anything further from the company? No, your honor. We will rest our case. Okay. Staff can go ahead and call its first witness. Thank you. Staff calls Cam Aiten. Alright. Please come forward. Raise your right hand. Wait to be sworn by the court reporter. I do. Good afternoon. Would you state your name and, business address for the record, please? My my name is Cameron Eaton,
and my business address is 1200 West Washington Street, Phoenix, Arizona. By whom are you employed and in what position? I work for the Arizona Corporation Commission as utilities engineer too. As part of your duties at the commission, were you assigned to evaluate the application that was filed in this case? Yes. And what did your review consist of? I performed a general engineering analysis of the Foothills water system and their several wastewater systems. I checked the compliance of the water system and the wastewater systems with the relevant
regulatory bodies, and I evaluated the company's extension requests and, their system's ability to serve the proposed extensions. You should have in front of you there on the witness stand a copy of staff's exhibit s one. Do you see that? Yes. And, it does the exhibit contain your engineering analysis as well as the staff report? Yes. It does. And was that prepared by you or at your direction? Yes. Do you have any modifications or other changes to make to that to your engineering
report? No. Are you adopting that engineering report as part of your testimony here today? Yes. Did you evaluate whether the, whether Foothills water has sufficient production and storage capacity to serve both its current customers and the customers that would, appear in the proposed expansion areas, both primary and alternative expansion areas? Yes. I did. The, company did not have projections for a lot of the areas in the primary extension area, so my analysis was confined to, the developments that are more concrete and have projected demands.
And what conclusions did you reach with regard to the water? I, concluded that, the Foothills water system has sufficient production and storage capacity to serve, the proposed alternative extension. And I should note, as it was discussed earlier, only, part a couple of the new developments are actually within the alternative extension request. The other proposed developments are currently within the water CCNN. I included all of the developments in my calculation,
including those already within the water CCNN because those are connections that have not come online yet. And my calculations show that they have the capacity to serve all of the proposed developments at full build out. And as as far as the primary, you really are not primary expansionary, are you not able to to determine whether there is full capacity because of of of the, unknown nature of what development will occur? That's correct. We just don't have the information at this time. Right. Did you make the same evaluation with regard to the wastewater as to whether they,
the wastewater side had current, excuse me, had sufficient capacity to serve both current and future customers. Yes. And what conclusion did you reach there? I concluded that all of the treatment plants have sufficient capacity to serve their current customers. I concluded that the Section 14 Treatment Plant has enough capacity to serve the East Mesa development at full build out, and that the Section 14 Plant has enough potential treatment capacity, to serve all of the developments at full build out.
What do you mean by potential capacity? The company discussed a little bit earlier today, and I've had a couple of discussions with the company that they have active plans to expand the Section 14 Treatment Plant. And I believe that their design plans are with ADEQ and being reviewed now. Did you actually, have a chance to look at any of the plans? I did not. Did you, did the company submit any cost estimates to you? Yes. They did. And did you evaluate those? Yes. Did you determine whether they were you believe them to be reasonable?
Yes. I believe the extension costs are are reasonable, although no used in usefulness determination is is being made for rate making purposes. Did you and I think you said you also indicate you also evaluated the commission, correct? Yes, that's correct. And you heard mister I believe it was mister, Fortner who testified earlier, about the status of those of the compliance problems that had previously existed. Is that correct? Yes. And you did find some compliance problems in the past? Yes. I did. So on
the wastewater side, the only treatment plant that came back as noncompliant was section 14. And I've discussed this with the company. I believe that they have resolved that issue, and they are actively in communication with ADEQ due to their current consent agreement. On the water side, there were minor violations, for ADEQ. And in discussing with the company, they informed me that they have addressed those violations, and I checked on the Arizona safe drinking water information database and confirmed that the
violations have been addressed and closed. And I'm not familiar with that database. Is that something that's that's managed by ADEQ? Yes. It is. And they update it as they perform site visits and, send out notices of violations to the company. And so that's really the most up to date up to date way to check on the compliance of a company. As part of your engineering evaluation, did you take into consideration the issues regarding regional planning versus parcel by parcel planning, or was that something that was left to staff witness Wallace?
In general, I would say miss Wallace focused more on that. I would agree from an engineering perspective that it is smart to take a regional planning approach and, to try to expand the facilities as, efficiently as possible. And from an engineering perspective, do you believe that the proposed c CCNN expansion into the primary area, is in the public interest. From an engineering perspective, I I can't say much because we don't have a lot of information about the
the empty lots. I don't there isn't an argument against it from the engineering perspective. I there's nothing that gives me concerns about doing it. I think the I'll I'll have to defer to miss Wallace on the on the reasoning for the primary, which is the alternate. And with regard to the alternative, expansion area, did could you would you reach the same conclusion, or would you would you be able to determine if if, if from an engineering perspective, the CCNN expansion to the alternative area would be in the public interest.
For the alternative area, my opinion is that it would be in the public interest, to to expand that area because we do have the defined upcoming developments and verified that there's the necessary capacity to serve them. Thank you. Your honor, though, I don't have any other questions. Mister mister agent is available for Cross. Okay. Cross? No questions, your honor. Okay. Half of mine were answered, but no additional tariffs that the company needs to file? What they have on file is up to date? Yes. We I talked to the company briefly about a hookup fee tariff,
and they do currently have a hookup fee tariff on file, for off-site facilities, but they did mention that they were planning on updating that in the new rate case that they file. And I think that's a very good idea, and that, will be a very helpful tool for the company to finance the growth as it comes in. Okay. And staff did in this case, didn't have any, like, conditions or compliance requirements. Is staff looking to see any sort of compliance related to the section 14 expansion?
Does staff want any sort of updates to make sure that the company's on track with expanding that wastewater treatment plan in the way that, matches the growth that they're gonna see? Any concerns about that? No concerns at this time. My my opinion is that Foothills has done a very good job of staying in contact with staff and with the other regulatory agencies about, the capacity of its facilities and its need and progress on expanding. And so I I felt that what the company provided for this case was sufficient
to to demonstrate that they are doing the necessary active planning and that they are staying on top of it. Okay. I don't have any further questions. Redirection, miss Humphrey? No further questions. Anything final from the company? I'm gonna go with no. No, your honor. Thank you, for your testimony today. You can go ahead and, step down. And, miss Humphrey, you can go ahead and call your next witness. Thank you. And staff's next witness is Vicky Wallace. Alright. Miss Wallace, please come forward, raise your right hand, and wait to be sworn by the court reporter. I do. Everybody else is taller than that. I always hated those chairs.
It's it's like for a short person. You're hauling around this giant back chair that's useless. Miss Wallace, would you state your name and your business address for the record? I'm Vicky Wallace, and I work at 1200 West Washington Street, Phoenix, Arizona 85007. By whom are you employed and in what capacity? I'm employed by the Arizona Corporation Commission and the utilities division as an executive consultant for you. And since we're having a minor competition this morning on who has the most years of experience,
how long have you been with the commission? I like to make you ask that answer that question. I'm asking, but it was a commission. Altogether? Yeah. Well, I have twenty three years here and and at the Oklahoma jurisdiction around thirty. Old we're all doing the math now. Sorry. Thank you. What did you were you were you assigned to evaluate the CCNN application filed in this case as part of your job duties? I was. And what is your job title here? Did I ask you that already? But that's okay. I got you a consultant three.
What did your review consist of? Primarily, I I looked at the rationale for filing the application and, you know, and that goes into looking at the merits and what's good from a regional planning aspect. I look at at the whole the whole picture and how this particular piece fits in to that whole picture. And you should have in front of you what's been marked as exhibit s one. Do you have that document?
That's the staff report. And is is that the staff report that was prepared by you in this case? Yes. Do you have any changes or corrections to make to that staff report? Not at this time. Are you adopting the contents of that staff report as part of your testimony here today? I am. Your honor, we would move for the admission of exhibit s one. Objection from the company? Objection. Exhibit s one is admitted. Let let's talk about the two the two potential expansion areas, the primary and the, and the alternate. You heard the testimony here today and the explanations of what those areas consist of.
Correct? Yes. And what is staff recommending as an appropriate expansion area for for this particular case? The staff is recommending that, the entire area encompassing what they're calling the primary, extension area be considered and approved, because staff believes that, Foothills would be the only logical provider in that area at this time, and taking into consideration that individual parcel owners are always,
available to serve themselves, except for the 300 feet, issue brought up by the company. But, in all my years of regulation, an individual property owner is is able to, serve himself as long as that's all he's doing. And in this particular case, particularly with regard to the wastewater treatment, can you confirm that that none of the existing customers who have septic systems, except for those who would be impacted by the 30 foot 300 foot,
rule, would be required to transition from septic to wastewater treatment? No. They would not be required to. Okay. Thank you. I guess I would confirm that, I guess. And did you evaluate the management and financial experience of, the employees of Foothills, in terms of their ability to continue to provide service at a reasonable cost to its customers. Yes. I did. I've been involved with Foothills since they, took over in 2022. And since that time, they have,
done done a good job as far as I'm concerned in my dealings with them. And, I put in my report what the consumer services department, reported as well. So, I think it's a good fit. There has been some discussion this morning about this about the primary area being somewhat complex, the primary expansion area and the entire system actually is being somewhat complex. Do staff believe that, a regional approach and an expansion to the primary expansion area would help to alleviate
some some of that complexity? Yes. Did you evaluate the, strike that. With regard to the the, the primary expansion area, and the cost and the potential customers, who have not made requests for service. Would that be something that that the staff the staff normally, is would be concerned about in this case, such as in this case? Can you repeat that? I'll try and rephrase that because it didn't come out very clear. What I'm what I'm what I'm asking you is, generally, staff requires a specific request for for service.
Correct? Yes. And in this case, in certain instances, staff is not requiring a a request for service from potential septic, customers to a transition. Correct? Correct. And, was there anything done in this case to alleviate any concerns that staff might have with regards to those potential customers being included in the CCNN area without, having requested service? Actually, no. Because we requested that we initially requested and took to the commission, a concern that in the primary area,
there was not individual notice, given it was going to be, notice in a public pub in the local publication. Staff had a problem with that and went to the commission and requested that the company provide no individual notice to all landowners. And so in the midst or in the middle of the case, the company did provide notice to all landowners just so that everybody would know that
Foothills would be the potential provider if, they wanted service in this area. So I think everything was covered there. Thank thank you for clarifying my bad question. And and, other than the the public comment that was received this morning, was staff aware of any any complaints or objections or comments of any kind, from these potential septic customers? No, not resulting from this application. All right. Thank you. Does the staff make an evaluation as to whether the granting of the CCNN to
the expanded the primary area of expansion would be in the public interest in this case. Yes. We do believe that this in this particular application and for the reasons given and looked at by staff that it makes sense. And do staff continue to support the recommendations that are contained in your staff report? Yes. We do. Thank you. I have no further questions. Miss Wallace is available for Cross. Cross. Good afternoon, miss Wallace. Good afternoon. How are you doing up there? I'm I'm just peachy.
Great. Those are my only questions. Alright. I have a few more than that. Are there any other water wastewater companies you're aware of near these extension areas that could theoretically provide service? Not to my knowledge. Okay. It would just be private owners. Wanting to. And the revised legal description that's been provided by the company is accurate, correct, to the best of staff's knowledge? To the best of our knowledge. Yes. Okay. So it sounds like staff supports the regional planning approach that the company is advocating
for. Is there any potential harm that you can see to that type of planning approach, harm to, current customers? No. I can't see any at this time. Okay. And to the extent that the company may over plan, over construct, over build, because of that regional planning process, is that something that you're confident staff can address appropriately in a rate case? Oh, definitely. Yes. Okay. The staff report says that as of the 2025, there were an average of 25 complaints per year.
Do you know how far back they were looking when that average figure was Three year. Well, it would be three and a half years. Okay. And has staff seen any sort of of trend in in the number nature of the complaints since Foothills acquired the system? Primarily in the they have complaints like other utility companies in the billing issue the billing portions of the bill. Other than that, no. Okay. And SAAFP believes that Foothills is a fit and proper entity to provide service in
the primary extension area? Yes. We do. And that the company has the technical, managerial, and financial abilities to do so? Yes. We do. And you aware of any recent prior cases where the commission has granted a CCNN in areas where there was no request for service? Not usually. This is this is, an individual case where we thought, in looking at all the evidence, that it made sense, for a regional planning, idea that we go ahead and improve the entire area because there was no other
logical excuse me. Logical provider, that would come forth in this area. And and the entity like I said before, the individual parcel owners can serve themselves if they, so desire to do so. So the staff report at the very first page where it always says what the recommendation is, it I think it has staff standard language that staff recommends approval of the application with conditions. Yes. But once you get through that staff report, you find that there aren't really any conditions listed.
Would you agree that one condition is that the company, charges its existing rates in time in at the time of initiation of service? Yes. And usually, we put that recommendation in there. But in that, they are required by our rules to charge the rates that they are currently tariffed, to charge that it was not necessary, because they're required to do it anyway. Okay. And there's one CCNN case that I had recently where there was also some,
maybe, I'd say, ambiguity as to the timeline of certain development. And in that case, staff had recommended that the company provide some status reports on the status of development activity in the in the extension area. Is that something staff was interested in in this case? Not in this case with the with the area involved that mister Jones described because of the, the lack of development, thus far in the area and that they were the logical provider.
Okay. Alright. That's all I have, redirect. Nothing further, your honor. Anything final from the company? No. Okay. Miss Wells, you can sit down. Thank you for your testimony today. Alright. And that does conclude staff's portion of the case. Okay. Thank you, miss Humphrey. Sorry. I'm flubbing. I must must be time for lunch. Alright. Mister Sabo, has the company had a full and fair opportunity to present its case today? Yes, your honor. And miss Humphrey has staff? Yes. Staff has. Okay. Would the parties like to make any closing statements, company? We'll waive, your honor. Okay.
Miss Humphrey? We will waive as well. Okay. The only thing that I would add before we leave today is that in the event the company is going to come to some sort of agreement with, our public commenter from today, and if anything becomes of that, my it And it the process would go faster if such filing indicates whether staff objects or not to such filing so that I don't have to wait seven days or whatever to find out if they do. Okay. Anything we need to address before we adjourn, mister Sabo? No, your honor. Thank you. Okay. Anything further from you, miss Humphrey?
No, your honor. Thank you. Okay. Thank you everyone for your participation and your time today and for going into the lunch hour. I do appreciate it. This matter is now concluded and taken under advisement pending the issuance of a recommended opinion in order for the commission's consideration. This hearing is adjourned, and we can go off the record.