News Release   
 For Immediate Release | 8-14-18   
 Media Contact | Holly Ward   
 Direct | 602-542-3847   
 E-Mail | hward@azcc.gov   
     
 

Arizona Corporation Commission August Open Meeting Highlights

 
 

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

Johnson Utilities Interim Manager Update

Commissioners acted swiftly to pursue relief for customers of a troubled utility by directing staff to determine whether Johnson Utilities, LLC should be held in contempt of a Commission order and  instructing staff to investigate the revocation of the utility’s ability to operate in San Tan Valley.

During today’s meeting, the selected Interim Manager, EPCOR, provided an update to Commissioners outlining the work that has transpired over the last two weeks since it signed a consulting agreement. EPCOR representatives presented information found during site visits to four wastewater treatment plants and 11 lift stations belonging to Johnson Utilities. Pictures from these site visits showed corroded equipment and hazardous worksites. EPCOR revealed it has not been granted access to Johnson Utilities’ financial information and stated it was unable to act as an interim manager without access to financials and all facilities.

Commissioners made today’s direction clear: Johnson Utilities is to open its books and provide immediate access to the Interim Manager so it can begin the process of restoring clean and safe water and wastewater operations for the customers.

Last month, Commissioners voted to direct staff to obtain an agreement with an Interim Manager who shall assume operation of Johnson Utilities, LLC as soon as possible on an interim basis. This action will remain in place until further order of the Corporation Commission.

Johnson Utilities, LLC provides water and wastewater utility services in portions of Maricopa and Pinal Counties. The company services more than 25,600 service connections and 35,000 sewer laterals.

All documents related to the Johnson Utilities, LLC, interim manager appointment may be found in the Corporation Commission’s online docket at http://edocket.azcc.gov by searching for docket number WS-02987A-18-0050.

Commissioners add penalty amendment to address water outage violations

In a second, related agenda item, Commissioners discussed and voted on a judge’s order addressing recent water outages in the Johnson Utilities’ service area. The vote came with an amendment from Commissioner Boyd Dunn to fine Johnson Utilities $600,000 for disconnecting irrigation and construction meters during the outage.

Judge Jane Rodda outlined the issues in a Recommended Opinion and Order stating a high volume of low water pressure customer complaints were submitted to the Arizona Department of Environmental Quality and the Corporation Commission between May 17 and June 4, 2018. During this time, the company’s Hardison Well pump motor failed taking the well offline for approximately 70-hours. The utility provider told the Corporation Commission it worked to counter the effects of a broken pump by turning off irrigation meters in common areas, stopping all construction water, and posting the motor/low water pressure advisory on its website.

The judge’s order acknowledged the “totality of evidence” did not outweigh the need for the Commission to continue with the appointment of an interim manager “until the Commission can be assured that Johnson’s management is willing and capable of operating the Company in a manner that is just, reasonable, safe, proper, adequate, and sufficient.”

Commissioners today agreed with the judge’s decision voting to approve the Recommended Opinion and Order and added the amendment to fine Johnson Utilities $600,000. The penalty comes from Commissioner Dunn’s amendment to order Johnson Utilities to pay $5,000 per offense arising from 120 separate offenses of disconnecting irrigation and construction meters.

Find all documents related to the judge’s order and Commission investigation of Johnson Utilities, LLC water outages in the Corporation Commission’s online docket at http://edocket.azcc.gov by searching for docket number WS-02987A-18-0151.

Commissioners establish path forward for energy modernization

Commissioners voted to move forward with the informal rulemaking process on the review, modernization, and expansion of the Arizona Energy Standards, along with retail electric competition, during today’s staff meeting. The plan includes having Corporation Commission staff start the process by holding stakeholder workshops to discuss nine areas for discussion including energy efficiency for electric and gas, transmission, electric vehicles, retail competition, and resource planning.

The topic of retail electric competition, or reregulation, caught the attention of Commissioners Burns, Olson, and Dunn who recently submitted letters to the docket stating their support for further discussion. Commissioner Burns wrote, “I believe that including these rules in any new Rulemaking docket is especially critical at this time of the many discussions dealing with "electrification of the grid.””

Find all documents related to the Review, Modernization and Expansion of the Arizona Energy Standards and Tariff Rules and Associated Rules in the Corporation Commission’s online docket at http://edocket.azcc.gov by searching for docket number E-00000Q-16-0289.

Unanimous vote to promote economic development

In a move to encourage business development in Arizona, Commissioners voted to approve a special rate application for large volume energy users’ electricity rates.

On July 5, 2018, Arizona Public Service Company (APS) filed an application to amend rates for customers with what’s called an extra high load factor, or consistent high demand customers. The extra high load factor tariff is available to customers whose monthly maximum demand is 5,000 kilowatts or more and with a load factor of 92 percent or more for a minimum of nine months of in a 12-month period. In its application, APS indicated that the current tariff does not directly include a carbon free commitment and sustainability features which are important to certain large energy volume customers.

Commissioners agreed to encourage economic development in Arizona by meeting the needs of large companies that require significant energy load and have a strong corporate commitment to sustainability, carbon free activity, and renewable energy.

The proposed Economic Development and Sustainability features would be available to customers with a monthly minimum demand of 5,000 kW and a load factor of 92 percent or more for a minimum of nine months in the previous 12-month timeframe. Should a customer fail to meet the 92 percent load factor requirement, solely due to load growth within a billing cycle, it will not count against the customer for that month. Customers are also required to demonstrate that at least 50 percent of the energy they use each year in APS's service territory is carbon free.

Today’s unanimous vote by Commissioners will require APS to file, as a compliance item in this docket, a revised Rate Schedule General Service Extra High Load Factor, consistent with the Decision in this matter within 15 days of the effective date.

Find information related to this agenda item in the Corporation Commission’s online docket at http://edocket.azcc.gov by searching for docket number E-01345A-18-0248.

Commissioners Revoke License of Gilbert Investment Adviser for Fraud

The Commission revoked the Arizona investment adviser representative license of Cory R. Williams of Gilbert and the investment adviser license of his company, Williams Advisory Group, LLC, based upon violations found by the U.S. Commodities and Futures Commission (CFTC), a federal regulator.

In its May 2018 decision, the CFTC found that Williams employed a scheme to defraud his family, friends, and fellow church members making multiple material misrepresentations and omissions in connection with investing more than $13 million of his client funds in the futures market. Specifically, the CFTC found Williams attracted and retained investors by representing that he was a highly successful trader in the futures market when, in fact, he was not. The CFTC found Williams used more $3 million of the investors’ funds to repay certain investors who requested a return of their funds, which helped conceal his fraudulent scheme. Also, the CFTC found that Williams failed to register as a commodity pool operator, diverted more than $800,000 of investor funds to his own personal use, and continued to report fabricated weekly profits after losing all his investors’ money.

For more details about this case, view the full text of the Corporation Commission’s order S-21048A-18-0159.

Commissioners Vote to Approve Multiple Tax Act Savings for Ratepayers

Quail Creek Water Company, Inc. – Staff estimates that the total tax savings resulting from Federal tax reform for Quail Creek Water Company, Inc. to be approximately $88,416. This will be refunded to ratepayers of the utility in two ways: a monthly bill credit of $2.48 and a one-time bill credit of $19.87.

Find information related to this agenda item in the Corporation Commission’s online docket at http://edocket.azcc.gov by searching for docket number W-02514A-18-0267.

Bermuda Water Company, Inc. – Staff estimates that the total tax savings resulting from Federal tax reform for Bermuda Water Company, Inc. to be approximately $274,230. This will be refunded to ratepayers in two ways: a monthly bill credit of $0.26 per thousand gallons of consumption and a one-time bill credit of $10.67.

Find information related to this agenda item in the Corporation Commission’s online docket at http://edocket.azcc.gov by searching for docket number W-01812A-18-0231.

With the approval of today’s tax savings, the Commission to date has passed a total of $189,088,437 in savings back to ratepayers.

A complete list of agenda items and a broadcast of the Commissioner’s August Open Meeting is available on the Corporation Commission’s website: 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 azcc.gov.