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Phoenix, Ariz. — The Arizona Corporation Commission voted on 24 matters, including water, telecommunications, electric and railroad items. Highlights from the meeting include:
Securities
Utilities
Densco Investment Corporation, Kevin Ray Goodwin et al. - The Commission approved a request to terminate the Maricopa County Superior Court case of Arizona Corporation Commission v. Densco Investment Corporation (“Densco”) after recovering almost $19.7 million for defrauded investors. In 2016, the Commission filed a complaint against Densco for multiple violations of the Arizona Securities Act, seeking appointment of a receiver to manage Densco following the sudden death of Densco’s owner and sole operator. Densco had raised over $40,000,000 from investors, all of which was loaned to real estate ventures. The investors were told that the maximum loan-to-value ratio was 70% and the loans were protected by first deeds of trust. This information turned out to be false. Some loans were at or exceeding 100% loan-to-value and some of the properties were not even secured with a deed of trust.
Ryan Morgan, et.al. (S-21266A-23-0238)- The Commission ordered Ryan Morgan and All Done Consulting, LLC to pay more than $4 million in restitution and $510,000 in administrative penalties for violating the Arizona Securities Act. Morgan and All Done were found be unregistered dealers or salesmen that offered unregistered securities in the form of investment contracts. The violations arise from the sale of service agreements to at least 109 investors. The service agreements promised passive income to investors, usually through the creation of an automated business.
MCM AF Assets LLC, et al. (S-21371A-25-0231)- The Commission ordered Dean Douglas Odle and MCM AF Assets LLC, doing business as “Milan Capital” to pay $10,000 in administrative penalties for violations of the Arizona Securities Act. Odle posted advertisements on Craigslist seeking investors to invest in “After Foreclosure Assets.” After foreclosure assets are surplus funds created when property is purchased at a foreclosure auction and the purchase price exceeds the amount owed to the mortgage lender. The Commission found that Odle and Milan Capital violated sold securities within or from Arizona while not registered as dealers or salesmen.
Tucson Electric Power Company (L-00000C-77-0031-00030 (L-00000C-01-0030) & L-00000C-86-0000-00074 (L-00000C-01-0074)- The Commission voted unanimously to approve the conversion of two units at the Springerville coal generating plant to natural gas. TEP expects the natural gas pipeline required to serve the Springerville plant expected to be completed by the end of 2029, with the conversion of Units 1 and 2 to expected to be completed by the first quarter of 2030.
Salt River Project Agricultural Improvement and Power District (L-00000B-75-0000-00016)- The Commission voted unanimously to approve the conversion of the Coronado coal generating plant to natural gas. SRP noted the cost of the conversion is estimated to be $1.1 billion through 2045. In comparison, SRP estimates replacing Coronado with a brand-new natural gas facility would cost $300 million more. SRP also considered long-duration lithium-ion batteries, which would cost approximately $1.2 billion more than the Coronado conversion and would limit the firm capacity that would otherwise be available all hours of the day with the conversion.
EPCOR Water Arizona, Inc. (WS-01303A-25-0201)- EPCOR provides wastewater services to approximately 281,000 customers. The Commission approved the Company’s request to extend its wastewater Certificate of Convenience and Necessity to include 535.85 acres located near Loop 303, including Parkway 303 West, Parkway 303 East, and Evergreen. The extension areas are planned for commercial warehouses and a retail center. The effluent from the extension areas will be recharged via a recharge basin, which will be expanded to accommodate the full Luke 303 Wastewater Reclamation Facilities plant expansion.
Picacho Water and Picacho Sewer Companies (W-03528A-25-0056, SW-03709A-25-0057, W-03528A-25-0096, SW-03709A-25-0097)- Both Picacho Water and Picacho Sewer were owned by Robson entities and created to serve a development known as Robson Ranch, a 3,000-acre community south of Casa Grande in Pinal County. Picacho Water serves approximately 1,900 customers, Picacho Sewer serves approximately 1,800 customers. During the Robson entities’ ownership, Picacho Water and Picacho Sewer never filed rate applications. The Robson entities funded all utility plant with equity. Residential customers had paid an average monthly rate of $30.01 a month for water services, and $42.00 a month for sewer services. For a residential customer with average usage, the rates would result in an increase of $6.85 for water and an increase of $64.73 for sewer, for a combined increase of $71.58. “In this case, the Commission took significant steps to reduce ratepayer impact. It set the return on equity at 9.65%, rather than the company’s requested 10.8%,” said Chairman Nick Myers. “It also considerably reduced the rate expense request. Though I personally would prefer not to approve rates increase, we have a constitutional duty as Commissioners to set just and reasonable rates.” The item passed 3-2 with Commissioners Thompson and Marquez Petersen voting "no." Commissioner Thompson offered a verbal amendment during the hearing that would have implemented a five-year phased in rate increase; however, Picacho did not agree to forgo revenues that otherwise would have been not recovered in a phased in approach.
Arizona Corporation Commission – Electric Rules (RE-00000A-24-0026)- The Commission voted unanimously to approve the repeal of the Renewable Energy Standard and Tariff (REST) Rules, which were adopted by the Commission in 2006. Since then, the REST Rules have served the purpose of expanding renewable energy production in Arizona. The mandates are no longer needed and the costs are no longer justified. Twenty years have passed since the ACC adopted the REST rules. During that time, APS, TEP, and UNSE have collected more than $2.3 Billion in REST surcharges from all customer classes to meet these mandates. The renewable energy landscape has changed dramatically in the last two decades. “There is no disputing that Arizona’s current renewable portfolio is one of the most robust in the country and has the potential to thrive for the foreseeable future,” said Commissioner Kevin Thompson. “While some point to the REST rules as a major impetus for that success, the time has come for the renewable mandate and the customer surcharges that have cost ratepayers billions of dollars to end. Industry must find a way to capitalize on the economics of renewables and demonstrate their reliability without relying upon subsidies or forcing ratepayers to pay for mandates that have outlived their useful life.”
