News Release      
  For Immediate Release | 4-26-18      
  Media Contact | Nick Debus      
  Direct | 602-542-0728      
  E-Mail |ndebus@azcc.gov      
         
 
Commissioners Address Tucson Electric Power Company Tax Reform, Cooperatives Streamlined Rate Application Rule, and Various Securities Violations at April Open Meeting
 
 

PHOENIX — The Arizona Corporation Commission today held its monthly Open Meeting to discuss and vote on various water, electric, securities, and tax reform agenda items. Here’s a brief recap of the meeting highlights:

Federal Tax Reform Credit for Tucson Electric Power Company Ratepayers

Commissioners today voted to approve Tucson Electric Power Company’s proposal to pass savings from federal tax reform on to their ratepayers. On March 19, 2018, Tucson Electric Power Company filed its application to refund tax savings to their ratepayers. The Tax Act will result in annual savings by the company of $36.6 million, Tucson Electric Power Company proposed to refund those tax savings through a combination of per kilowatt-hour bill credits and deferments of a portion as a regulatory liability. Tucson Electric Power Company intends to refund 100% of its 2018 tax savings to its ratepayers and estimates that a residential customer with an average consumption of 800 kWh will receive a monthly bill credit of approximately $4.49 per month beginning in May.

“I appreciate that you are refunding 100% of tax savings back to the ratepayers, and I would like to thank you for bringing this proposal before us today,” said Commissioner Justin Olson.

Following Commissioner Olson’s January 31 Utility Tax Reform Workshop, Commissioners unanimously voted to approve the requirement of all public service corporations listed in the docket to address ratemaking impacts resulting from the recent federal tax reform. Commissioners are committed to ensuring that all utility customers receive tax break benefits by requiring utility companies to pass on any financial gains made from the new tax cuts to their ratepayers. Commissioners in February enacted a requirement that all public service corporations listed in the docket must file appropriate information with the Corporation Commission by April 7, 2018, to address how they will pass tax reform savings on to ratepayers.

All documents relating to Tucson Electric Power Company’s application for approval of a bill credit related to federal income tax rate reduction can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number E-01933A-18-0064.

All documents relating to the Corporation Commission’s Utility Tax Reform efforts may be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number AU-00000A-17-0379.

Streamlined Rate Application Process Rule Modification for Cooperatives

The Arizona Corporation Commissioners today voted to advance the proposed streamlined rate application process rule modification for utility cooperatives. Representatives from several Arizona cooperatives were in attendance and spoke in support of the proposed modifications.

In Decision No. 73649, dated February 6, 2013, the Arizona Corporation Commission approved revisions to the Arizona Administrative Code R14-2-103 ("Rule 103") and the addition of R14-2-107 ("Rule 107"). The purpose of the revisions and the addition of the section was to create an alternative streamlined ratemaking application and process for nonprofit cooperatives providing electric or natural gas utility service in Arizona. Over the past several years with the processing of numerous streamlined rate applications, it has become apparent that Rule 107 could be modified in specific areas to further improve the efficiency of processing these rate cases.

“This is a great step by the Commission to both reduce regulatory burdens and support rural Arizona,” said Arizona Corporation Commission Chairman Tom Forese.

Currently, the streamlined rate application process is only open to cooperatives with annual revenue of at least $1,000,000.00 that furnish electric or natural gas service. Under the proposed changes to Rule 107 the streamlined process will be open to all classes, regardless of revenue, and to affiliated water cooperatives. Additional proposed changes include cooperatives being able to ask for new surcharge mechanisms so long as the surcharge mechanism has been previously approved by the Commission, and allowing multi-jurisdictional cooperatives with less than 30% of its customer base in Arizona the ability to file to request that their Arizona rates match the other states in which they operate without having to meet all Rule 107 eligibility requirements.

Public comment sessions regarding the proposed changes to Rule 107 will take place at 10 a.m. July 9, 2018, in Tucson and at 10 a.m. July 12, 2018, in Phoenix. Those wishing to make public comment have up until July 9, 2018 to file written comments in the Commission’s online docket, and are welcome to provide their comments in person at either public comment session. Commission staff has until August 10, 2018 to file to the Commission’s online docket its summary of the public comments and any additional staff responses. The matter will then be placed on a future Corporation Commission Open Meeting agenda, likely sometime in the Fall.

All documents related to proposed Rule 107 modifications for Cooperatives can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number RU-00000A-17-0314.

Cordes Lakes Water Company Application for Approval of Emergency Rate Increase

Today’s vote by Commissioners represents the final step in acquiring the funds necessary to resolve the water issues facing Cordes Lakes Water Company and its customers. This will allow the Company to drill an additional well, which will better position the Company to meet future peak demand.

On July 5, 2017 Cordes Lakes Water Company filed an emergency rate case application, emergency financing surcharge request and emergency financing request to cover the costs of hauling water during a time of low production and high demand and to address the need to construct a new well and storage improvements. The Arizona Corporation Commission issued Decision No. 76334 on August 23, 2017, which authorized a loan in the amount of $501,848.00. On March 20, 2018 Cordes Lakes Water Company filed a notice confirming execution of financial documents from the Water Infrastructure Finance Authority of Arizona in the amount of $501,848.00 with a forgivable principal of $250,924.00.

“I want to recognize Yavapai County leadership and the Company for their due diligence in seeking a meaningful solution for their residents,” said Commissioner Andy Tobin. “This outcome was the result of persistence and collaboration with Supervisor Tom Thurman, whose ultimate goal was to prevent water outages and improve infrastructure for residents.”

All documents related to Cordes Lakes Water Company’s application for an emergency rate increase can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number W-02060A-17-0228.

DrHorsepower, Inc., Steven Scholl, Sandra Jones, and Bruce Guercio

The Commission ordered restitution and penalties as a result of the fraudulent offer and sale of unregistered shares of DrHorsepower, Inc. The Commission ordered Steven Scholl, his spouse Sandra Jones, and DrHorsepower, Inc. to pay $141,149 in restitution and a $25,000 administrative penalty. The Commission ordered Bruce Guercio to pay a $5,000 administrative penalty for offering the unregistered shares to seven Arizona investors. DrHorsepower, Inc. was held out to potential investors as an intellectual property company selling energy drinks, health supplements, apparel, cosmetics, auto supplies, and other merchandise. Respondents Scholl, Jones, and Guercio have never been registered to offer or sell securities in Arizona. In settling this matter, respondents agreed to the entry of the consent order and admitted to the Commission’s findings only for purposes of the administrative proceeding.

All documents related to DrHorsepower, Inc. can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number S-21015A-17-0200.

Robert Warren Lawson and Lawson Financial Corporation
The Commission revoked the securities salesman registration of Robert Warren Lawson and the securities dealer registration of his company, Lawson Financial Corporation, based upon 2017 orders by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The SEC and FINRA orders provide that Lawson and his company violated federal securities laws and FINRA rules in connection with the fraudulent sale of municipal revenue bonds to Lawson’s clients. In settling this matter, respondents admitted to the Commission’s findings and agreed to the entry of the consent order. All documents related to Lawson Financial Corporation can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number S-21032A-17-0355.

Timothy John Wales and Stacey Wales, Visionary Business Works, Inc.

The Commission ordered Timothy John Wales and Stacey Wales to pay $526,500 in restitution and a $15,000 administrative penalty for their unregistered investment sales of Visionary Business Works, Inc. stock to three investors. The Commission found that Mr. and Mrs. Wales were in the business of developing fleet management software, but were not registered to offer or sell securities in Arizona.

All documents related to Visionary Business Works, Inc. can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number S-20976A-16-0210.

A complete list of agenda items and a broadcast of the Commissioner’s April Open Meeting can be found on the Corporation Commission’s website: http://azcc.gov/live

 

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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.