News Release      
  For Immediate Release: 12-18-17      
  Media Contact | Angie Holdsworth      
  Direct | 602-542-0844      
  E-Mail | AHoldsworth@azcc.gov      
         
 
December Open Meeting News Briefs
 
 

PHOENIX — The Arizona Corporation Commission wrapped up its last Open Meeting of 2017, taking action on several securities matters and resolving long time small water company disputes. Below is a recap of the Commissioners’ decisions.

Commission Approves New Water Company Owner in Response to Customer Concerns
The Arizona Commission approved a new owner for Beaver Valley Water Company, ending years of water disputes between the customers and the company.

Beaver Valley Water Company, a sole proprietorship owned by Michael Davoren, is being transferred to Beaver Valley Water Company Inc., a corporation owned by Michael Armstead. The Commission held a Public Comment Hearing in May to hear the customers’ concerns. The Commission appointed Armstead as an interim manager because of ongoing issues related to water leaks, outages, water quality, and customer service.

Armstead is the owner of Management Systems, which operates two other regulated utilities, and is in good standing. Armstead has already completed various repairs and remedial actions to correct some of the problems.

Commission Orders Refunds to Circle City Water Company LLC Customers after Years of Overcharges, Questions Owner on Plans to Sell Company
The Arizona Corporation Commission ordered Robert Hardcastle, owner of Circle City Water Company, LLC, to reimburse its customers for $70,756 in overcharges that occurred between 2008 and June 2017. The Commissioners also posed serious questions about a recently discovered plan to sell the company to the City of Surprise.

Circle City Water, near Wittmann, has 187 customers. In October, the Commission, voted down a rate application that would have increased Circle City’s rates by 200 percent. Commissioners expressed serious concerns about the drastic increase and the seemingly lack of comment from the customers who would have been significantly impacted. The Commission held a Public Comment Hearing earlier this month to investigate. It was only at that time Commissioner Andy Tobin was notified about the negotiation of a potential sale.

“I’m irritated to say the least,” said Commissioner Tobin. “We were not informed of a negotiation, yet it was noticed on the City of Surprise’s council agenda on November 7. Neither party notified the Commission. We think the company has an ethical obligation to do so regardless of what legal requirements may be in place.”

“To think that we could have approved a rate case in October, without this knowledge, that would have increased the value of the company. That would have financially benefited the owner in his negotiation,” said Commissioner Boyd Dunn. “That is fraud.”

The City of Surprise will hold a special election on May 15, 2018, to approve or disapprove the potential sale. The Commission instructed the company and the City of Surprise to keep the Commission updated on the terms of the potential sale. Today, the Commission voted to maintain the company’s current rates. The Commission ordered the company to file a plan in the next 30 days, outlining how they plan to reimburse customers for the overcharges.

Commission Finds Fraud in Investment Programs Totaling More Than $16 Million Paul Ramirez and Clear Energy Group, LLC
Paul Ramirez of Scottsdale and Clear Energy Group, LLC were ordered by the Commission to pay $815,600 in restitution and a $50,000 administrative penalty for defrauding investors with an oil and gas fracking investment. This is one of several securities items that the Commission took action on today. The Commission found that, while not registered to offer or sell securities in Arizona, Ramirez and his company granted investors a security interest in oil wells, but failed to disclose that there were previously granted security interests in the wells to other investors. The Commission found Ramirez and his company failed to disclose to investors the risks of the oil investment and that the state of New York had placed a moratorium on all fracking. Also, the Commission found Ramirez did not quickly pay investors their investment returns as promised.

More caution for investors:
Even when investing with someone they know, investors should verify the registration of sellers and investment opportunities and investigate disciplinary histories by contacting the Arizona Corporation Commission’s Securities Division at 602-542-0662 or toll free in Arizona, 1-866-VERIFY-9. The Division’s investor education website also has helpful information at http://azinvestor.gov.

To watch the entire proceeding, go to http://azcc.gov/livebroadcast.

 

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About us:
The Arizona Corporation Commission was established by the state’s constitution to regulate public utilities and business incorporation. The five Commissioners elected to the Corporation Commission oversee executive, legislative, and judicial proceedings on behalf of Arizonans when it comes to their water, electricity, telephone, and natural gas resources as well as the regulation of securities, pipeline, and railroad safety. To learn more about the Arizona Corporation Commission and its Commissioners, visit http://azcc.gov.