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Open Meeting Highlights - June 21, 2023

Jun 21, 2023, 16:58 by JP Martin

Phoenix, Ariz. —The Arizona Corporation Commissioners voted on 45 matters, including electric and water utilities, railroad, and securities items. Highlights from the meeting include:

 

CONSENT AGENDA

Commission Finds Peoria Man Defrauded Investors with Call Center Investment Scheme 

The Arizona Corporation Commission ordered Jad Morris of Peoria and his affiliated companies to pay $4,679,122 in restitution and a $200,000 administrative penalty for committing securities fraud in connection with various unregistered investments, including a call center and managed trading accounts. The Corporation Commission found respondents Morris and his affiliated companies—Financial Leverage LLC, IQBiz Financial LLC, and IQBiz Funding, LLC—sold unregistered investment contracts to approximately 400 investors.

The Commission found that, through an online credit platform that Morris was licensed to promote, Morris gained a list of people seeking credit and used this knowledge to reach out to clients in order to invest with him and his companies. Morris convinced some of the investors to use credit cards and take out loans in order to invest, falsely telling investors they would not be liable for any business credit card debt or loans.

The Commission found Morris failed to disclose to investors his previous securities violations in Wisconsin as well as more than $180,000 in judgments and tax liens against him. Also, the Commission found Morris and his companies sold managed trading accounts to investors, promising to earn an investment return by trading on behalf of the investor.  However, most of the investors did not get any of their money back.

The Commission found Morris used the majority of the investors’ funds for his personal use, which was not authorized by investors. Prior to entry of the consent order, the Commission obtained an order from the Maricopa County Superior Court freezing the remaining proceeds from the sale of Morris’s home, which was acquired mostly with investor funds. As part of the consent order, those proceeds ($372,000) will be paid to the Commission to distribute pro-rata among the investors. In settling this matter, the respondent neither admits nor denies the Commission’s findings and agrees to the entry of the consent order.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number S-21210A-22-0270

 

Commission Sanctions Former Investment Professional for Enriching Himself with $250,000 from an Elderly Client’s Account

The Arizona Corporation Commission ordered former investment adviser representative Bryan L. Little of Glendale to pay $56,500 in restitution and a $4,000 administrative penalty for dishonest and unethical conduct in connection with an elderly client’s investment account. The Corporation Commission found Little, while working as a licensed investment adviser representative, transferred $250,000 from his client’s account to buy securities to subsequently enrich himself and others. Also, the Commission found this client had appointed Little as the primary agent pursuant to a Power of Attorney.

The Commission found Little no longer holds an investment adviser representative license in Arizona. In settling this matter, the respondent neither admits nor denies the Commission’s findings and agrees to the entry of the consent order.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number S-21251A-23-0152

 

Commission Finds El Mirage Man Posed as Licensed Forex Trader to Defraud Investor with Unregistered Investment Program

The Arizona Corporation Commission ordered respondents Antwon B. Day of El Mirage and his affiliated company to pay $100,004 in restitution and a $20,000 administrative penalty for defrauding an investor with an unregistered foreign exchange trading investment program. The Corporation Commission found Day, as the president of FXPIPSESSION, LLC (FX), misrepresented himself as a licensed foreign currency trader. However, Day and FX are not registered to offer or sell securities in Arizona. Additionally, the Commission found the respondents failed to inform the investor of Day’s five prior civil judgments against him.

The Commission found Day and his company guaranteed the investor a triple-digit return within four months. However, the investor did not receive any money back as Day used most of the investor funds for his personal use and for non-investor related expenses. The Commission found that when Day failed to pay his investor within four months, Day and his company had the investor sign an amended agreement, extending the payout deadline. However, Day failed to disclose that FX had been dissolved about two months prior to executing the amended agreement. Furthermore, the investor has never received any money back from Day or FX.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number S-21175A-21-0409.

 

2023 Railroad Safety Array Approved

The "array" is a term used by the Arizona Corporation Commission to refer to a comprehensive list of public railroad grade crossings designated for potential installation or upgrade of automatic warning signals. The process of selecting these locations relies on careful judgement and various hazard index formulas, with no single methodology. First introduced in 1977, this list is continually updated to reflect the current safety needs and available resources such as funds, materials, and labor. For 2023, the Commission has chosen specific crossings for upgrades in Pima, Gila, Graham, Greenlee, La Paz, and Maricopa Counties. These upgrades, however, are contingent on multiple factors and their inclusion in the array doesn't necessarily indicate the existing signs or signals are inadequate. It's also possible for crossings not on the array to receive improvements if they become an increased safety hazard. In addition, the Commission has ordered status updates on each project identified in the 2023 array and each incomplete project from previous arrays, to be submitted by the responsible railroad companies within 12 months.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number RR-00000A-23-0079

 

Approval of One-Time Surcharge for Lago Del Oro Water Company

The Lago Del Oro Water Company (LDO) is authorized to recover an over-refunded tax sax savings through a small, one-time surcharge. This Class B public service corporation serves around 6,700 customers. The 2017 Tax Cuts and Jobs Act (TCJA) reduced their federal corporate income tax rates, as such LDO sought to establish a tax refund process by creating an Income Tax Adjustor Mechanism (ITAM). Through this, LDO was authorized by the Arizona Corporation Commission to refund $129,738 of annual TCJA savings as monthly bill credits to its customers. In 2022, LDO refunded its customers $136,457.59, which exceeded the authorized amount by $6,719.59. Consequently, LDO seeks to recover the over-refunded tax savings of $6,729.55 through a one-time surcharge. The proposed surcharge, would result in a residential customer with a 5/8" x 3/4" meter incurring a one-time charge of $0.82.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number W-01944A-18-0141

 

Commissioners Approve UNS Electric’s New Plan for Buying Extra Customer-Generated Power

The Commissioners approved rules for how much UNS Electric can pay for extra power from customers who generate their own electricity. The rate used to be about 4 cents per kilowatt-hour, but UNS Electric wants to raise it to about 4.5 cents per kilowatt-hour, set to be enacted September 1, 2023.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number E-04204A-23-0074

 

Commissioners Approve UNS Gas Yearly Cost Recovery Adjustment Due to Energy Savings

The Arizona Corporation Commissioners approved UNS Gas’ yearly Lost Fixed Cost Recovery Tariff (LFCR) adjustment. The LFCR is a mechanism that allows the company to recover some of the fixed costs that it does not recover because of energy efficiency savings. The approved LFCR rate is 0.1151%, starting on July 1, 2023. Each year, the company calculates this adjustment based on the previous year's energy savings. Some customers, such as those using gas lighting, irrigation, and larger customer classes under certain service codes, are exempt from this mechanism due to other pricing structures in place. UNS Gas states this new rate will decrease the average residential bill by about 2 cents for a household using 70 therms in the winter.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number G-04204A-11-0158

 

REGULAR AGENDA

Concerns Settled Over Authority Limitations in Grand Canyon Caverns Asset Transfer

The Commissioners approved the closure of the Tathil Oyaa' Corporation docket. Because the transfer of utility assets had already occurred, and they will not be regulated as a public service corporation, the Commission voted to administratively close the docket.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number W-04120A-22-0070

 

Commission Adopts Arizona Water's Request to Modify Certificate of Assured Water Supply

Given that the Department of Water Resources issues CAWS only to developers and not the utility, the Commissioners eliminated the conditions for Arizona Water to secure an certificate of assured water supply.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number W-01445A-06-0059


Asset Transfer to Blue Ridge Domestic Water Improvement District Approved

The request by Starlight Water Company, Inc. for the sale and transfer of its assets to the Blue Ridge Domestic Water Improvement District, and the cancellation of its Certificate of Convenience and Necessity (CC&N), has been approved. Starlight Water Company, Inc. is required to file all relevant documents confirming the completion of this transaction within 30 days. Following the successful transfer, the Blue Ridge Domestic Water Improvement District will take over service responsibilities for all current Starlight Water Company, Inc. customers.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number W-02848A-21-0363

 

Southwest Gas Corporation Yard Line Surcharge Approved

A Customer-Owned Yard Line (COYL) Cost Recovery Mechanism (CCRM) surcharge was approved in order to recover outstanding costs related to the COYL program. COYLs are customer-owned exterior gas pipes that link the meter to the customer's property. The proposed increase in the CCRM surcharge from $0.000504 to $0.000603 per therm is to recover a total revenue requirement of $4,253,849. This adjustment, effective from June 2023 to June 2024, is below the annual cap set by the Commission, and would result in an average monthly bill increase of $0.14 for single-family residential customers.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number G-01551A-21-0368

 

Joint Settlement Regarding APS Rate Schedule

The Arizona Public Service Corporation (APS) and the Arizona Corporation Commission Legal Division Staff submitted a joint resolution on June 14, 2023, that settles ongoing cases. The settlement includes adding a fee of $0.00175 per kilowatt-hour to all APS customer bills starting from July 1, 2023. This surcharge will remain until a new general rate case is filed after the resolution of the current rate case in Docket No. E-01345A-22-0144.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number E-01345A-19-0236

 

Salt River Project CEC Revised

The Commission issued a revised Certificate Environmental Compatibility for the addition of twelve new units at SRP's Coolidge Generating Station in Pinal County.

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket number L-00000B-21-0393-00197

 

Remedy Requirements for Frontier Companies to Address Emergency Service and Network Concerns

Commissioners ordered remedy requirements to Frontier Companies to address issues raised by affected 9-1-1 entities and consumers. These requirements will improve transparency and service reliability, including reporting 9-1-1 related outages to the FCC. The order directs Frontier to address eight issues:

  • Establish timely interconnection with the Department of Administration and Comtech system
  • File an Emergency Response Plan with the ACC
  • Seek state and federal funding to enhance their network, focusing on redundancy and diversity
  • Provide a monthly progress report on their application/receipt of state and federal funds
  • Ensure high-level executives attend the St. Johns' Town Hall
  • Identify areas within its network that lack redundancy and diversity
  • Define a hierarchy of priorities for vulnerable areas that Frontier serves
  • Comply with Enforcement Provisions if there's a failure to comply with the ACC's order or attached requirements

All documents related to this agenda item can be found in the Corporation Commission's eDocket edocket.azcc.gov and entering docket numbers T-20680A-21-0198, T-03214A-21-0198, T-02115A-21-0198, T-01954B-21-0198