PHOENIX – The Arizona Corporation Commission held its
monthly open meeting on April 12 and 13, 2022. The Commission discussed and
voted on several utilities, securities, and railroad items, below are the
highlights from the meeting:
Salt River Project Coolidge Generating Station Line
Siting Application Denied
The Commission voted 4-1 to adopt Sample Order #3, denying
the Certificate of Environmental Compatibility for the expansion of Salt River
Project’s Coolidge Generating Station (CGS). The applicant sought to add 16 new
simple-cycle natural gas combustion turbine generator units to its existing
facilities located near the unincorporated town of Randolph in Pinal County,
Arizona. The applicant also sought to construct a new 500 kV transmission line
and switchyard to transport the power that would have been generated by the new
units, had they been approved. CGS currently consists of 12 simple-cycle
natural gas combustion generator units.
Residents and advocacy groups opposed the project moving forward
and expressed concerns with additional pollution resulting from the added
natural gas turbines. Residents of the community also raised concerns regarding
light pollution and the increased noise level from the additional turbines.
All documents related to this agenda item can be found in
the Corporation Commission’s online docket at https://edocket.azcc.gov
and entering docket number L-00000B-21-0393-00197.
EPCOR San Tan Water and Wastewater District Rate Case
Approved
The Commission approved a rate case application from EPCOR
Water Arizona Inc. (EPCOR) for its San Tan Water and Wastewater Districts (San
Tan), formerly Johnson Utilities. This rate case was a unique situation where
the rate application was filed while EPCOR was still interim manager of the
former Johnson Utilities water and wastewater systems. EPCOR’s San Tan District
is located in Pinal County, AZ and provides water service to approximately
30,500 customers and wastewater service to approximately 44,500 customers,
current rates for these customers were set in 2010.
An amendment from Chairwoman Lea Márquez Peterson removed a
discussion of deconsolidation from the Recommended Opinion and Order, in line
with exceptions filed by the Town of Florence. The Commission also adopted an
amendment proposed by Commissioner Jim O’Connor which allowed EPCOR to recover
in this rate case 30-percent of the $45 million deferred debit that EPCOR was
previously authorized to recover in the first rate case following EPCOR’s
status as the owner of the systems. This amendment will help mitigate future
rate shock to customers of the San Tan District water and wastewater systems
while providing EPCOR with sufficient revenue to continue making the necessary
improvements to the systems.
As a result of the authorization, customers in the San Tan
Water District with a typical 5/8 X ¾-inch meter with an average monthly usage
of 5,685 gallons will see an approximate monthly bill decrease of $1.10.
Customers in the San Tan Wastewater District with a typical ¾-inch service
meter will see a monthly bill increase of $7.06.
All documents related to this agenda item can be found in
the Corporation Commission’s online docket at https://edocket.azcc.gov
and entering docket numbers WS-02987A-20-0025
and WS-01303A-20-0025.
Tucson Electric Power Company Purchased Power & Fuel
Adjustor Rate Modified
Commissioners voted to modify the impact of Tucson Electric
Power Company’s (TEP) rate adjustment resulting from the utility’s Purchased
Power and Fuel Adjustment Clause (PPFAC).
The PPFAC rate consists of two components, a forward component,
and a true-up component. The forward component consists of the forecasted fuel
and purchased power costs for the proceeding 12-months, starting April 1 and
ending March 31 of the following year, less the average base rate of $0.029053
per kWh. The true-up component is a reconciliation of any over or under-collected
amounts from the preceding year, which are to be credited to or recovered from
customers in the following year.
Following the adoption of an amendment offered by
Commissioner Jim O’Connor, the forward component will be set to zero, which
will lessen the impact to TEP customers. A second amendment from Commissioner
O’Connor requires TEP file, on a semi-annual basis, with the Commission its
cost savings resulting from its participation in the Western Energy Imbalance
Market, the first filing is due July 1, 2022. A third amendment from Chairwoman
Lea Márquez Peterson will require TEP to include supporting economic dispatch
analysis with its semi-annual filing. This will help ensure TEP’s decisions
regarding the future purchase of fuel and power are economic and in the best
interest of customers.
The current PPFAC rate, approved in 2021, is $0.003294 per
kWh. With the changes approved in Commissioner O’Connor’s amendment, TEP will
be changing the rate to $0.008137 per kWh instead of $0.018424 as TEP
originally proposed, which will be collected over the next 18 months.
Currently, TEP’s PPFAC bank account is approximately $108 million under
collected. There were two years of cost deferrals and delayed recoveries due to
the COVID-19 pandemic. TEP is seeking recovery for $17.8 million in shifted
costs along with what TEP described as $90 million in higher costs due to
volatility in the energy wholesale market, both of which have contributed to
the $108 million under-collected PPFAC bank balance.
For the average residential customer, the PPFAC rate will
appear as an approximate $6.49 surcharge per month (797 kWh x $0.008137 per
kWh). The approved PPFAC defers a portion of the recovery of the under-collection
from customers who are challenged by the continuing impacts of the COVID-19
pandemic and other economic pressures.
All documents related to this agenda item can be found in
the Corporation Commission’s online docket at https://edocket.azcc.gov and entering
docket number E-01933A-19-0028.
Commission Approves Railroad Crossing Projects in Pinal
and Pima Counties
The Commission voted to approve two railroad applications at
its April Open Meeting, the details are below:
The first project the Commission voted to approve was an application
from the Pinal County Public Works Department for the approval of improvements
made to the Hanna Road railroad crossing over the tracks of the Union Pacific
Railroad Company (UP). The project will include the installation of new active
warning devices with flashing lights and gates in both directions that will
alert the public to the presence of a train. The project will also include the
paving and widening of Hanna Road to accommodate the increased traffic expected
surrounding the Inland Port of Arizona, where Nikola Motors production facility
is currently located. This will enhance economic development in the area while
also increasing public safety.
The second was an application from Pima County Public Works
Department requesting approval to construct a grade-separated crossing for
Sunset Road over the tracks of the Union Pacific Railroad (UP) near Interstate
10 near Tucson, Arizona. Sunset Road is currently a two-lane road that ends at
the I-10 northbound frontage road east of I-10. No railroad crossing currently
exists at this intersection. The project will establish a new grade-separated
crossing for Sunset Road above the UP tracks. The project will also realign
Sunset Road and widen it to increase capacity. The overall project will cost
approximately $39 million dollars. Completion of the grade-separated crossing
will improve public safety and is in-line with similar safety projects
throughout the state.
All documents related to this agenda item can be found in
the Corporation Commission’s online docket at https://edocket.azcc.gov
and entering docket numbers RR-03639A-22-0075
and RR-04188A-21-0367.
Arizona Public Service Company Customer Outreach &
Education Plan Approved
Commissioners voted unanimously to approve a customer
education and outreach plan from Arizona Public Service Company (APS). The plan
was a requirement placed on APS by the Commission to ensure customers are
properly notified and educated on changes to their rates and plans as a result
of the utility’s recent rate case. APS will utilize bill inserts, email, and
text messaging to communicate directly with customers regarding forthcoming
changes to rate plans and time of use periods among other changes. The customer
education and outreach plan focuses on six key areas: new Time-Of-Use hours and
education, plan change education and confirmation process, bill redesign, plan
comparison education and most economical plan communications, general rate plan
education, and adjustors. The first three education areas result directly from
the recent rate case, while the remaining focus areas are devoted to ongoing
rate education. APS will still be required to submit quarterly reports updating
the Commission on its progress in this outreach and education effort.
All documents related to this agenda item can be found in
the Corporation Commission’s online docket at https://edocket.azcc.gov
and entering docket number E-01345A-19-0236.
Arizona Public Service Company Solar Plus Storage
Third-Party Contract Approved
Commissioners voted to allow a third-party storage contract
for Arizona Public Service Company (APS) to be included in its Power Supply
Adjustor (PSA). APS sought expedited approval of inclusion of a new solar plus
battery storage project be included in a future PSA. APS has entered into an
agreement with Sun Streams PVS, LLC for a project that will provide 215 MW of
solar, plus 215 MW of lithium-ion battery storage power capacity of 860 MWh
that will be located in Arlington, Arizona. Under the contract, the delivery
point is the Hassayampa 500 kV Switchyard. Sun Streams will own and operate the
facility, APS has the exclusive right to receive and use the capacity
discharged from the facility. APS states that the approval of this agreement
will provide APS with peaking capacity to maintain a reliable power supply
during peak demand periods.
All documents related to this agenda item can be found in
the Corporation Commission’s online docket at https://edocket.azcc.gov
and entering docket number E-01345A-21-0348.
Commission Sanctions Arizona Insurance Producer and His Company
for Multimillion Dollar Investment Scheme Involving Elderly Investors, Revokes
Adviser Licenses
The Corporation Commission ordered respondents Ronald Stevenson, the estate of Barbara Stevenson, and American Financial Security, LLC to pay, jointly and severally, $19,459,875 in restitution and $275,000 in administrative penalties for defrauding investors in a debenture scheme. The Commission also revoked the investment adviser representative license of Ronald Stevenson and investment adviser license of American Financial Security, LLC (AFS) for unethical and dishonest conduct.
The Corporation Commission found Mr.
Stevenson has been a licensed Arizona insurance producer since 2002. The
Commission found Mr. Stevenson met with investors in his Prescott,
AZ office and proposed that they invest in debentures issued by EquiAlt, LLC,
claiming they were safe and suitable investments. Investors were told their investment
money in EquiAlt Debentures would be used to flip, lease, or purchase
distressed or foreclosed real estate or land and the investors would receive a
6 to 9 percent return on their principal.
The Corporation Commission found that some investors were in their
70s and 80s at the time of their investment. One investor was 97 years old when
Mr. Stevenson sold her a three-year EquiAlt Debenture.
The Corporation Commission found the respondents failed to
disclose to investors that they were getting paid commissions, derived from a
percentage of the principal investment amount; furthermore, subscription
agreements given to investors by the respondents stated they did not receive
commissions. Also, the Commission found Mr. and Mrs. Stevenson and AFS failed
to disclose to investors two civil lawsuits naming Ronald Stevenson and AFS as
defendants.
The Corporation Commission found that, despite Respondent Mr.
Stevenson's characterization that the EquiAlt Debentures were appropriate for
low-risk investors, the investment was highly speculative and not suitable for
some investors who did not want to invest in high-risk investments. Further,
the Commission found that Mr. Stevenson and AFS misrepresented the liquidity of
the EquiAlt Debentures to investors.
In February of 2020, the U.S. Securities and Exchange Commission
(SEC) filed a complaint against EquiAlt, LLC and its principals. In its
complaint, the SEC alleged that EquiAlt had been conducted as Ponzi scheme
since 2011 and raised over $170 million from the sales of EquiAlt Debentures to
over 1,100 investors nationwide.
All documents
relating to this agenda item can be found in the Corporation Commission's
online docket at https://edocket.azcc.gov and
entering docket number S-1110A-20-0190.
Commission Finds Former Phoenix Man Defrauded Investors with
Crypto Currency Investment
The Corporation Commission ordered Carlos Parra formerly of Phoenix
to pay $73,500 in restitution and pay a $20,000 administrative penalty for
defrauding investors with a crypto currency investment program.
The Corporation Commission found that Parra offered and sold
unregistered securities in 14 transactions for a total of $219,500. The
investors bought interests in a company that was supposed to purchase and trade
crypto currencies and pay investors from the trading profits.
The Corporation Commission found Parra mostly promoted the
investment program in presentations to groups at hotels, a church, a business
office, a radio station with broadcasts primarily in Spanish and directed at
the Latino, Christian community.
However, the Corporation Commission found Parra made material
misrepresentations and omissions when selling these investments, including
promising returns of over 300 percent in a year's time while failing to
disclose the risk of investing in a multilevel marketing business. The
Commission found Parra failed to disclose the risks associated with crypto currency
investments and to disclose that earlier investors had not been able to
withdraw principal and interest as promised.
All documents
relating to this agenda item can be found in the Corporation Commission's
online docket at https://edocket.azcc.gov and
entering docket number S-21108A-20-0181.
Commission Sanctions Florida Man and His Companies for Securities
Fraud Involving Crypto Currency
The Corporation Commission issued a default order against
respondents Richard K. Hainsworth III of Florida and his two limited liability
companies, ordering them to pay $69,425 in restitution and a $20,000
administrative penalty for committing securities fraud.
The Corporation Commission found 21 investors learned about
Hainsworth III’s and TreyTrades, LLC of Arizona’s and TreyTrades, LLC of
Florida’s alleged trading business primarily through the respondents' social
media posts and referrals from mutual acquaintances.
The Commission found investors bought into the investment program
with the expectation that their funds would be used for trading currencies,
stock and crypto currencies. However, the Corporation Commission found the
respondents made material misrepresentations and omissions to investors when
selling these investments while not registered with the Commission’s Securities
Division as a securities salesman or dealer.
The Commission found that Hainsworth and his companies represented
to investors that they had a large clientele with dozens of investors who each
invested between $5,000 and $200,000. The Commission found the respondents
represented that they had generated $1.3 million of profit in several months
when, in fact, no investor invested more than $17,000, there was no evidence of
any profits, and no clients were ever paid a return. Additionally, the
respondents failed to inform later investors that several previous investors
had received no return.
All documents
relating to this agenda item can be found in the Corporation Commission's
online docket at https://edocket.azcc.gov and
entering docket number S-21169A-21-0380.
Commission Orders $1.16 Million in Restitution for Investors
Defrauded by Crypto Currency Investment Scheme
The Corporation Commission ordered My Trader Coin to pay
$1,162,747 in restitution to investors and a $75,000 administrative penalty for
operating a multilevel-marketing scheme for investments in worthless crypto currency
companies.
The Corporation Commission found My Trader Coin, also known as
MTCoin, told investors their funds would be used to purchase and trade
cryptocurrencies, paying investors from anticipated trading profits.
However, the Commission found My Trader Coin was not a registered
Arizona securities dealer, and that the company made material
misrepresentations and omissions when selling these investments, including
promising returns of over 300 percent in a year's time, failing to disclose the
risk of investing in a multilevel marketing business, failing to disclose the
risks associated with crypto currency investments, and failing to disclose that
earlier investors had not been able to withdraw principal and interest as
promised.
All documents
relating to this agenda item can be found in the Corporation Commission's
online docket at https://edocket.azcc.gov and
entering docket number S--21169A-21-0380.