For Immediate Release | 8-7-19
Media Contact | Holly Ward
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Arizona Corporation Commission August Open Meeting Highlights
PHOENIX — The Arizona Corporation Commission held its monthly Open Meeting Tuesday to discuss and vote on various water, electric, securities, natural gas, and telecom agenda items. Here is a brief recap of the meeting highlights:
Idaho Man and his Company Sold Unregistered Promissory Notes
The Corporation Commission ordered Roland B. Woolsey of Idaho and his affiliated company, Skytrace, Inc., to pay $142,500 in restitution and $10,000 in administrative penalties for offering and selling unregistered promissory notes. Woolsey and Skytrace, Inc. were seeking to raise $10 million in order to market a web-based inventory application but are not registered to offer or sell securities in Arizona.
In settling this matter, the respondents neither admit nor deny the Commission’s findings, but agree to the entry of the consent order. 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 S-21055A-18-0309.
Cedar Grove Water, Inc. to Incur Long-Term Debt and Rate Increase
Commissioners voted 5-0 to approve Cedar Grove Water, Inc’s application for a rate increase and authority to incur long term debt to make various system improvements. Cedar Grove is a Class D utility providing water service to approximately 400 customers in an area of Apache County approximately 12 miles east of Show Low.
The company requested authorization to incur $445,232 in long term debt from CoBank. The term will be a 20-year loan with an interest rate not to exceed six percent. The debt proceeds are intended to fund the construction of two transmission pipeline interconnections to link the company’s main system to a satellite system that is served by a single well with declining productivity, which could lead to future water supply shortages absent the interconnection. Proceeds will also finance the deployment of a Supervisory Control and Data Acquisition system and the replacement of the company’s meters with radio read meters. A residential customer with a median usage of 2,383 gallons per month should expect to see a cumulative monthly bill increase (base rates and debt service surcharge) of roughly $15 per month.
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 W-20541A-17-0112 and W-20541A-18-0161.
Electricity Disconnection Procedures Finalized
Commissioners approved 10 regulated utility company modifications to termination of service procedures. In June, Commissioners ordered all regulated utilities file new termination of service rule language to comply with the Corporation Commission’s decisions 77260 and 77261. Tuesday’s vote incorporates a disconnection prohibition period for residential customers from June 1 through October 15, a new notification process during that period, limits on the specific days a utility is permitted to disconnect residential customers, and the prevention of late fee or interest accrual during the prohibition period for the majority of regulated utilities. Two utility companies are approved to adhere to disconnection rules based on temperature. Garkane Energy Cooperative, Inc. and Navopache Electric Cooperative Inc. will be required to prohibit electricity shutoffs when the temperature reaches 95 degrees Fahrenheit or more.
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 E-00000A-19-0128.
Commissioners Briefed on Backlog of Blue Stake Requests
The Corporation Commission’s Safety Division will hold CenturyLink QC accountable for a severe backlog of 32,000 blue stake locate tickets by issuing a $115,500 fine. During today’s Open Meeting, the company reported it is currently two tickets past due and is currently working to complete the backlog of locate tickets as well as all new locate tickets received.
Commission staff noted they have not received complaints on the company since July 8, shortly before the Commissioner’s last Open Meeting and briefing on this matter. CenturyLink stated it agrees to the fines recommended by the Safety Division and is willing to enter into a mutually agreeable consolidated consent agreement. As a condition of the consent agreement, CenturyLink agrees to ongoing reporting requirements for the next 12 months on the number of outstanding locate tickets on a monthly basis.
Commissioners directed Commission staff to prepare a conforming order for Commissioner consideration and possible vote. CenturyLink stated it will comply with the conditions stated in the memorandum.
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 T-01051B-19-0135.
Arizona Water Company Rate Application
Commissioners voted to approve Arizona Water Company’s application for a determination of the fair value of its utility plant and property, and for adjustments to its rates and charges for utility service furnished by its Northern Group.
Arizona Water Company is a Class A water utility providing water service throughout Arizona via three ratemaking groups: the Northern Group, the Eastern Group, and the Western Group. This case concerns the company’s Northern Group, which supplies water to approximately 20,500 customers in Coconino, Navajo, and Yavapai Counties. The Northern Group is comprised of the Navajo service area, consisting of the fully consolidated Lakeside and Overgaard systems, and the Verde Valley service area, consisting of the fully consolidated Pinewood, Rimrock, and Sedona systems. The Navajo service area includes the Forrest Towne, Lakeside, Overgaard, and Pinetop Lake public water systems and the Verde Valley service area includes the Pinewood, Rimrock, Sedona, and Valley Vista public water systems.
Six of the eight public water systems have water loss that exceeds the Commission’s general 10-percent standard. As a result of the water loss, Arizona Water Company developed an Aging Infrastructure Replacement Plan which is a 5-year plan outlining projects for seven of the eight public water systems to replace water mains, service lines, fire hydrants, and meters at a cost of $24.3 million.
Commissioners discussed the company’s cost of equity which was an issue disputed by the parties to the case including the company, the Residential Utility Consumer Office (RUCO), and Commission staff. Commissioners voted 3-2 in favor of an amendment put forward by Commissioner Dunn to set the cost of equity at 9.33 percent as initially recommended by RUCO. Commissioners also unanimously voted in favor of Chairman Burns’ amendment adopting a zero percent rate of return on the company’s fair value increment. The fair value increment represents the amount by which the fair value rate base exceeds the original cost rate base.
The Commission approved the new rates and charges for all service in the Northern Group systems provided on or after September 1, 2019. The Commission also ordered Arizona Water Company’s off-site facilities fee tariff remain in effect at its current rates for its Northern Group divisions/systems. Further, the Commission ordered the System Improvement Benefits (SIB) mechanism surcharge and Arsenic Cost Recovery Mechanism (ACRM) surcharge approved in Decision No. 74081 be discontinued September 1, 2019, and authorized a new SIB mechanism and ACRM tariff. The Commission also approved a low income and active military personnel tariff and reinstatement of a Purchased Power Adjustor Mechanism. 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 W-01445A-18-0164.
Commissioners reconvened for the August staff meeting on Wednesday, August 7, 2019, followed by the continuation of the Corporation Commission’s energy rules stakeholder workshop.
A complete list of agenda items and a broadcast of the Commissioners’ August meetings are available on the Corporation Commission’s website: http://azcc.gov/live.
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The Arizona Corporation Commission was established by the state’s constitution to regulate public utilities and business incorporation. The Corporation Commission is Arizona’s co-equal, fourth branch of government. 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.