For Immediate Release | 1-16-19      
  Media Contact | Holly Ward      
  Direct | 602-542-3847      
  E-Mail | hward@azcc.gov      
         
 

Arizona Corporation Commission January Open Meeting Highlights

 
 
PHOENIX — The Arizona Corporation Commission held its first monthly Open Meeting of the New Year Tuesday and Wednesday this week to discuss and vote on various water, electric, railroad, and tax reform agenda items.
Chairman Bob Burns established a new format for the monthly Commissioner meetings calling for a 2-day meeting each month. The first day of Open Meeting will begin with the Chairman's proposed consent agenda followed by discussion of regular agenda items, with any amendments, among Commissioners, staff, and members of the public. Day two of the Open Meeting is expected to consist of Commissioner votes on the designated regular agenda items.
During Tuesday's Open Meeting, Commissioners voted to pass all consent agenda items which included approval of a Glendale railroad crossing upgrade, designation of an eligible telecommunications carrier, utility company surcharges, and a cease and desist order related to investment fraud. Here are Tuesday's meeting highlights:
Former Scottsdale Man Defrauds Investors with "Fix-and-flip" Real Estate Investments
The Corporation Commission issued a default order against former Scottsdale resident Darrell G. Knoch and Imagine Enterprises, LLC for committing securities fraud in connection with unregistered "fix-and-flip" real estate investments. Respondents were ordered to pay $906,641 in restitution and $50,000 in administrative penalties for their violations. The Corporation Commission found that, while not registered to sell securities in Arizona, Knoch and his company failed to disclose to at least six investors that he had suspended promised interest payments to a prior investor and failed to return that investor's principal investment. Also, the Corporation Commission found that Knoch failed to disclose to investors that he filed for bankruptcy in 2014. For more details on this case, view the full text of the Corporation Commission's order under docket S-21058A-18-0341.
Commissioners Approve Acquisition of Rio Verde Utilities, Inc. by EPCOR USA, Inc.
EPCOR Water Arizona, Inc., its affiliated holding company EPCOR Water USA, and Rio Verde Utilities, filed applications to acquire all the issued and outstanding shares of Rio Verde Utilities common stock last September. As part of the approved transaction, EPCOR will acquire the stock of Rio Verde Utilities rather than its assets and Certification of Convenience and Necessity (CC&N).
Commissioners, staff, and interested parties discussed reported hydrogen sulfide gas odor issues within the Rio Verde Utilities wastewater treatment plant and collection system. Corporation Commission staff committed to inspecting the system and EPCOR committed to presenting a plan to Commissioners detailing how it would address reported odor issues.
Rio Verde is a Class C public service corporation providing water and wastewater services to approximately 2,150 water customers and 2,050 wastewater customers in the Rio Verde area within Maricopa County. Following today's Commissioner vote, the current utility rates will not change because of the approved transaction. The agreement calls for EPCOR to retain all current Rio Verde Utility employees who have expressed a willingness to remain with Rio Verde.
All documents relating to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number WS-01303A-18-0304.
Regular Agenda Item Discussion and Voting
Commissioners pulled three items from the Regular Agenda on Tuesday. Item 14, Mesaland Water Company's emergency petition to rescind Decision 57358, was pulled off the regular agenda following discussion between the parties and their promise to return to the Commissioner's next Open Meeting with a recommended resolution. Item 16, Arizona Corporation Commission inquiry into possible modification to the federal income tax reform rate adjustment, was pulled off the regular agenda at the request of Commissioner Kennedy. Item 19, Tucson Electric Power Company application for approval of its energy efficiency implementation plan was also pulled from January's Open Meeting agenda.
Here are highlights from the regular agenda item discussion and vote:
Commissioners Approve Conforming Amendment for Taxable Income Requirements for Advances and Contributions in Aid of Construction
Commissioners approved a correction to an order issued during November's Open Meeting. The corrective amendment moved Class C utilities into the same bucket as Class D and E utilities for accounting treatment of taxable income.
Water and Wastewater utilities often receive Contributions and Advances in Aid of Construction from developers or ratepayers. These monies are used to build infrastructure that will serve new developments or to serve customers within their existing service territories. The funds can be collected in various ways. Three methods were discussed during the November Open Meeting:

  • Method 1 - Full gross-up
  • Method 2 - Self-pay
  • Method 3 - a sharing agreement

Commissioners in November approved the use of a sharing agreement that makes developers responsible for 55 perfect of the tax liability. This method was endorsed by Commissioners because it more closely reflects the cost to the utility considering the tax benefits associated with new infrastructure. The Corporation Commission approved the three above methods for Class C, D, and E water and wastewater systems. Class A and B companies may only use methods 2 and 3.
Continued discussion of amendments will be done during the February Open Meeting.
All documents related to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number AU-00000A-17-0379.
Commissioners to Hold Vote on EPCOR Water Rate Case January 25
During January's Open Meeting, Commissioners held discussion on the rate case of EPCOR Water Arizona, Inc. The matter was for discussion purposes only. Several parties to the matter and intervenors were present and were given time to speak. No votes were taken during the Open Meeting. Commissioners will reconvene and plan to vote on the EPCOR Water Arizona, Inc. rate case on January 25 at 9 a.m.
All documents related to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number WS-01303A-17-0257.
Commissioners Vote to Commence Formal Rulemaking Regarding Interconnection of Distributed Generation Facilities
Commissioners vote to move forward with publication of a Notice of Proposed Rulemaking regarding the interconnection of distributed generation facilities throughout the state. This vote was preceded by a very lengthy process that involved a myriad workshops, stakeholder meetings, hundreds of comments filed to the docket, and multiple drafts of proposed rules language.
The proposed rules would establish standards for how distributed generation facilities are connected to the existing grid. A distributed generation facility can be any energy-producing source that lies outside a utility's grid, such as rooftop solar or a windmill that generates electricity for its owner's rural property. The rules are intended to ensure that each energy source is safely connected to existing grid infrastructure.
The Notice of Proposed Rulemaking should be published in the Arizona Administrative Register on February 15, 2019, commencing a formal public comment period during which the Corporation Commission will accept written comments filed to the docket. The Corporation Commission will also hold Oral Proceedings to receive oral comments on March 28 in Tucson, and on March 29 in Phoenix. The times and locations for Oral Proceedings will be included in the Notice of Proposed Rulemaking.
Link to the Arizona Administrative Register:
https://apps.azsos.gov/public_services/register/2019/contents.htm
All documents related to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number RE-00000A-07-0609.
A complete list of agenda items and a broadcast of the Commissioner's January Open Meeting is available on the Corporation Commission's website: http://www.azcc.gov/live.
Find a list of the 2019 Open Meeting schedule at /calendar.
 
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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://www.azcc.gov.