For Immediate Release | 9-12-18      
  Media Contact | Nick Debus      
  Direct | 602-542-0728      
  E-Mail | ndebus@azcc.gov      
         
 

Arizona Corporation Commission September Open Meeting Highlights

 
 

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

Johnson Utilities, LLC Update on Interim Manager Activity

Commissioners discussed six agenda items covering Johnson Utilities, LLC’s service, billing, and monopoly authority to operate. The company provides water and wastewater services to customers in Pinal County. 

In July, the Commission appointed an interim manager to run the company following an investigation into the company’s operations. EPCOR was granted access to company financials and facilities on August 30 after initial legal challenges were made by Johnson Utilities. The selected Interim Manager, EPCOR, provided an update to Commissioners Tuesday outlining what it found in the 12 days EPCOR has been acting as interim manager. EPCOR representatives told Commissioners they have completed site visits to more than 45 Johnson Utilities sites and are now developing budgets, schedules, and capital project lists. 

EPCOR Vice President Troy Day stated, “Every day we find new issues.” When asked about available resources Day reported he felt EPCOR had sufficient resources and access available to be able to do its job in the interim manager role. Day said his company would provide a full assessment report to the Commission, as required by the interim manager agreement, by the end of September. 

Commissioners discussed several additional items relating to company service concluding it would be best to let the interim manager complete its initial assessment before voting on additional financial and operational agenda items. 

Certificate of Convenience and Necessity Moves to Hearing Status

During last month’s Open Meeting, Commissioners asked staff to evaluate the revocation of Johnson Utilities’ Certificate of Convenience and Necessity (CC&N), which provides Johnson the exclusive right to provide water and wastewater service within a designated territory. Commissioners voted Tuesday to direct staff to refer this issue to a hearing to fully investigate and provide due process for parties to be heard. During the process, Corporation Commission staff will make recommendations concerning, and ultimately an Administrative Law Judge will be required to determine whether any of the following options is appropriate:

  • completely revoke the utility’s entire existing CC&N;
  • alter the utility’s CC&N by deleting areas that have no customers, no existing infrastructure, and where there have been no updated requests for service filed by September 28, 2018; and,
  • alter the utility’s CC&N by deleting areas in the CC&N that have no customers, but where there have been updated requests for service filed by September 28, 2018, and where there is no existing infrastructure; and,
  • alter the utility’s CC&N by deleting any other portion for which a party believes deletion is in the public interest.
     
The Commissioners’ decision also directs staff to evaluate whether it is in the public interest for Southwest Environmental Utilities LLC to continue to hold its CC&N. The AZCC will open a new docket to investigate this matter. 
 
All  documents related to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering  docket number WS-02987A-18-0050 and WS-02987A-06-0077
 
Tax Revenue to Return to Ratepayers
 

Commissioners also ordered Johnson Utilities to prospectively cease collecting federal and state income taxes from ratepayers, and the company was directed to refund all such tax revenues recovered after March 31, 2018 as a one-time bill credit. 

Staff reviewed the amount of income taxes being recovered in the company’s currently authorized revenue requirement. For the water division, the company is currently collecting $125,072 in income taxes from ratepayers. For the wastewater division, the company is currently collecting $457,557 in income taxes from ratepayers.

Based on staff’s recommendations, a residential customer on a 3/4-inch meter will receive a one-time bill credit of $2.78 for the water division and $8.71 for the wastewater division.

Commissioners also ordered that Johnson Utilities is not allowed to recover an income tax gross-up on funds received under existing or new Advances in Aid of Construction agreements and is prohibited from requesting an administrative fee from developers who are parties to AIAC, or Line-Extension Agreements.

All documents relating to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number WS-02987A-17-0392.

UNS Electric, Inc. and Tucson Electric Power Company Decision for Solar Customers

Commissioners approved Tucson Electric Power Company (TEP) and UNS Electric, Inc.’s (UNS Electric) application for Phase 2 rates relating to solar net-metering customers in Arizona. TEP serves 415,000 customers in Pima County and UNS Electric services 95,000 customers in Santa Cruz and Mohave Counties. 

TEP and UNS Electric filed applications with the Corporation Commission for rate increases in 2015.  Both companies’ rate applications were considered in two Phases:  Phase I approved rates for all customers except residential and small commercial distributed generation customers while Phase II addressed rates and rate design and the effective export rate for excess solar production for distributed generation customers who connect their rooftop systems after the effective date of the decision. The Phase 1 Decision for UNS Electric was effective August 18, 2016 while the Phase I Decision for TEP was effective February 24, 2017.

The Phase 2 proceedings were necessary to allow for the Commission to comply with the decision in the Value and Cost of Distributed Generation docket.  Decision No. 75859, effective January 3, 2017, established a process for developing an export rate to replace net metering for distributed generation customers going forward.  The rate that is paid to solar customers for their excess energy is determined by a Resource Comparison Proxy with a five-year rolling average of a utility’s solar PPAs and utility-owned solar generating facilities.  

Commissioners voted today to implement export rates for TEP and UNS Electric of $0.0964 for TEP and $0.115 for UNS Electric. The Phase 2 proceedings determined the rates applicable to new distributed generation customers who will have the option of selecting from existing Time-of-Use rate schedules.

All documents relating to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket numbers E-04204A-15-0142, E-01933A-15-0239, and E-01933A-15-0322.

Arizona Public Service Company Rate Rider Resource Comparison Proxy Approved

On Tuesday Commissioners approved Arizona Public Service Company’s (APS) application for approval of its Rate Rider Resource Comparison Proxy (RCP). 

The RCP determines the price at which APS will purchase energy exported back to the grid from qualified residential customers with on-site distribution facilities that are not grandfathered under the Corporation Commission’s net-metering rules. The RCP is calculated using a rolling historical five-year weighted average cost of grid-scale solar photovoltaic purchased power agreements, applicable avoided transmission capacity cost, avoided distribution capacity cost, and line losses.

APS’s proposed to reduce the RCP rate, originally approved in 2017, from $0.12900/kWh to $0.11610/kWh. The new rate would apply to residential customers who apply for interconnection of a rooftop solar system between October 1, 2018 and August 31, 2019. These new customers would be able to retain this rate for ten years. APS will set avoided transmission capacity cost and avoided distribution capacity cost at zero. Avoided line losses costs will be set at a rate of $0.002/kWh, a rate that was agreed to under the terms of a settlement agreement between APS and multiple solar industry representatives.

All documents relating to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number E-01345A-18-0111.

Tucson Electric Power Company Extension of Time on Certificate of Environmental Compatibility

Tucson Electric Power Company on Tuesday was granted a time extension for its Certificate of Environmental Compatibility giving the company additional time to complete construction of a 138kV transmission line to serve the Rosemont mine in Southern Arizona. The original Certificate of Environmental Compatibility was granted by the Corporation Commission in 2012 in Decision No. 73232 and gave Tucson Electric Power Company until June 12, 2019 to complete the transmission line. The extension will give the company until June 12, 2022 to complete the project.

The Rosemont Copper Company has secured all but one permit required by the CEC in order for construction on the transmission line to begin. The extension is to ensure that the project can be completed within the timeframe allowed by the Commission, as projects must be done prior to the deadline. 

All documents related to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number L-00000C-11-0400-00164.

Liberty Utilities Granted Order Preliminary for CC&N Extension Request

Commissioners on Tuesday approved an Order Preliminary for Liberty Utilities (Litchfield Park Water and Sewer) in response to its request for an extension of its existing water and wastewater Certificate of Convenience and Necessity to serve two adjacent parcels: Luke Landing, comprising 36 acres, and Luke Land 58, comprising 19 acres. The parcels immediately west of Marbella Ranch, which is currently within Liberty Utilities existing CC&N, are under development. The utility does not own any sewer lines immediately adjacent to the properties and plans to connect the new developments to a sewer main that will be constructed to serve Marbella Ranch, which will then allow the utility to serve customers at the two new developments. Liberty Utilities currently provides water service to approximately 19,000 customers, and wastewater service to approximately 18,000 customers. 

Commissioner Bob Burns offered an amendment which was unanimously approved that granted an Order Preliminary for the Certificate of Convenience and Necessity. The Order Preliminary for this CC&N extension gives Liberty Utilities five years to obtain the required approvals from the Arizona Department of Environmental Quality, the Arizona Department of Water Resources, and the County franchise. The CC&N extension will be granted once all required approvals are obtained. 

All documents related to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket numbers SW-01428A-18-0077 and W-01427A-18-0078.

Beaver Valley Water Company, Inc. Granted Emergency Rate Increase

Commissioners granted the emergency rate increase requested by Beaver Valley Water Company, Inc., a public service corporation serving approximately 213 customers in an area north of Payson and south of the Mogollon Rim. On August 9, 2018 the company filed its emergency rate increase application with the Commission, requesting the emergency increase to cover unexpected costs that occurred following a geological event that collapsed part of its well.

In October 2017 Beaver Valley Water Company, Inc. informed the Commission of a geological event that caused a partial collapse of its main well in the Payson area. This caused well production to decrease from 34 gallons per minute to three gallons per minute, requiring the company to haul water to meet customer demand. The emergency rate increase will allow the company to collect $32,298 in water hauling costs over a twelve-month period as they work to construct a new well to service the area. Customers of the utility will be assessed a surcharge on their monthly bills to cover the water hauling costs associated with the well collapse. Customers will be charged on a sliding scale based on the diameter of their meter, ranging from $9.09 for a 5/8” x 3/4” meter to $454.64 for a 6” meter. 

All documents relating to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number W-02015A-18-0268.

Multiple Companies Pass Tax Act Savings Back to Ratepayers

  • Sahuarita Water Company, LLC – Commission Staff calculates that the approximate savings resulting from the Tax Act for Sahuarita Water Company, LLC, to be approximately $163,973. The company will pass these savings back to ratepayers in the form of a one-time bill credit. Customers will receive a one-time bill credit on a sliding scale based upon meter size. Credits will range between $2.04 for the smallest meter size up to $331.53 for the largest.
  • Global Water Company, LLC       
    • Santa Cruz Water – Commission Staff estimates that Santa Cruz Water to have savings of approximately $732,258 as a result of the Tax Act which will be passed back to ratepayers by the company. An average residential customer will receive a one-time bill credit in the amount of $12.39.
    • Palo Verde Utilities –– Commission Staff estimates that Palo Verde Utilities to have savings of approximately $1,054,162 as a result of the Tax Act which will be passed back to ratepayers by the company. An average residential customer will receive a one-time bill credit in the amount of $18.49.
    • Water Utility of Northern Scottsdale, LLC – Commission Staff estimates that Water Utility of Northern Scottsdale, LLC, to have savings of approximately $4,840 as a result of the Tax Act which will be passed back to ratepayers by the company. An average residential customer will receive a one-time bill credit in the amount of $32.56.
    • Greater Tonopah, LLC – – Commission Staff estimates that Greater Tonopah, LLC, to have savings in the amount of approximately $15,985 as a result of the Tax Act which will be passed back to ratepayers by the company. An average residential customer will receive a one-time bill credit in the amount of $32.32.

All documents relating to these agenda items can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket numbers:
Sahuarita Water Company W-03718A-18-0275
Santa Cruz Water W-20446A-18-0202
Palo Verde Utilities Company SW-20445A-18-0200
Water Utility of Northern Scottsdale, LLC W-03720A-18-0203
Water Utility of Greater Tonopah, LLC W-02450A-18-0201

Thomas J. Crisman and Advanced Planning Concepts, LLC

The Commission revoked the investment adviser representative license of Thomas J. Crisman and the investment adviser license of his affiliated company, Advanced Planning Concepts, LLC (APC). For their multiple violations, Crisman and his company were ordered by the Commission to pay $27,435 in restitution and a $10,000 administrative penalty. The Commission found that Crisman and APC were not registered to sell securities when they offered and sold promissory notes to at least 15 advisory clients. The Commission found Crisman and his company lent money to one advisory client, which constitutes dishonest and unethical conduct. Additionally, the Commission found Crisman received a commission from the promissory note issuer after previously stating in writing that he did not accept compensation for selling securities to clients. To date, except for a handful of interest payments, investors have not received returns on their investments.

All documents relating to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number S-21046A-18-0115.

Wesleyan Investment Foundation, Inc.

The Commission ordered Wesleyan Investment Foundation, Inc. of Indiana to pay a $25,000 administrative penalty to the state of Arizona for selling unregistered securities without being registered as an issuer dealer. The Commission found Wesleyan Investment Foundation, Inc. sold deposit investments to 68 members of Wesleyan Church to fund land and building purchases.

The Commission found Wesleyan Investment Foundation, Inc. has paid all investors their earned interest from the investment within the promised timeframe. In settling this matter, Wesleyan Investment Foundation, Inc. agrees to stop all sales of its securities in Arizona until the securities and the foundation have been properly registered with the Commission. Wesleyan Investment Foundation, Inc. admits to the Commission’s findings and consents to the entry of the Commission’s order.

All documents related to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number S-21050A-18-0247.    

Stephen M. Thompson, Joseph E. Finateri, et al.

The Commission ordered two individuals and six affiliated companies to pay a total of $3.17 million in restitution and individual administrative penalties ranging from $5,000 to $100,000 for defrauding investors with multiple oil and gas programs. Respondents named in the Commission’s order include:

Stephen M. Thompson                         
Joseph E. Finateri
Leland Energy, Inc.
Leland Kentucky Holding, Inc.
Leland Colorado Holding, Inc.
The Appalachian Drilling Fund II, LLP
Knox Drilling Fund II, LLP
Green County Energy Fund, LLP

All the respondents listed above failed to file an answer to the allegations or request a hearing. The Commission found that Thompson and his affiliated companies sold interests in oil and gas limited partnerships and/or interests in a pooled oil and gas program to approximately 36 Arizona investors. These interests have not been registered by the Commission, and Thompson, Finateri, and their affiliated companies have not been registered in Arizona as securities salesmen or dealers. Further, the Commission found some investors were not informed about prior misrepresentations Thompson made about oil and gas investment opportunities and prior securities legal actions against him and Leland Energy, Inc. Additionally, some investors were not informed about Finateri’s prior criminal conviction for fraud.
 
All documents related to this agenda item can be found in the Corporation Commission’s online docket at http://edocket.azcc.gov and entering docket number S-21014A-17-1074.

A complete list of agenda items and a broadcast of the Commissioner’s September Open Meeting is available 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 .