News Release

Arizona Corporation Commission September Open Meeting Highlights

For Immediate Release | 9-11-19

Media Contact | Nicole Capone

Direct | 602-542-0713

Email | ncapone@azcc.gov

Arizona Corporation Commission September Open Meeting Highlights

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

Commission Sanctions Arizona Company and Salespeople for Defrauding Investors

The Corporation Commission ordered Trager, LLC and five of its salespeople to pay a total of $100,000 in administrative penalties for committing securities fraud and other securities violations. The salespeople are also required to disgorge their sales commissions totaling $349,092.     

The Corporation Commission found that Trager, LLC and its salespeople raised more than $22.86 million for a group of related companies known as Woodbridge, primarily from Arizona investors. However, Trager LLC and its salespeople, Ronald Horn of Prescott, Daniel Rondberg of Mesa, Randy Rondberg of Mesa, Jason Walter of Glendale and John Walter of Peoria failed to disclose to some investors the risks of investing in these types of securities and/or about the legal action taken against Woodbridge by other states. The Woodbridge companies and the person who controlled them were the subject of Commission orders issued in November 2018.

In settling these cases, the respondents neither admit nor deny the Corporation Commission’s findings, but agree to the entry of each of their respective consent orders. 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-21038A-18-0022.

Former Securities Salesman Sells Unregistered Promissory Notes

The Corporation Commission ordered Robert S. Smith of Mesa to pay $142,500 in restitution and $10,000 in administrative penalties for offering and selling unregistered promissory notes for an Idaho company, Skytrace, Inc. The company was seeking to raise $10 million in order to market a web-based inventory application. The Corporation Commission found Smith was a former securities salesman in the state of Washington, but was not registered to offer or sell securities in Arizona.

Skytrace, Inc and its co-founder, Roland B. Woolsey of Idaho, were the subject of Commission orders in August 2019. In settling this matter, Smith admitted to the Commission’s findings only for the purposes of this proceeding and agreed 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.

Jake’s Corner Water System Approved for New Water Storage Tank and Finance Application

Customers of Jake's Corner Water System will see a gradual increase in their monthly bills through a three-part phase-in of rates and debt service surcharge.

The increase, which customers will see as a “debt service surcharge,” was approved through a financing application so the company could fund the construction of a new 10,000-gallon water storage tank and various related appurtenances. The company was authorized to incur the $89,640 in long term debt necessary for the improvements from the Water Infrastructure Finance Authority of Arizona. The proposed term of the loan would be 20 years and the loan would be at an interest rate not to exceed 4 percent.

The company’s proposed projects will help the company return to compliance with the Arizona Department of Environmental Quality requirements.

The average customer with median usage of 3,534 gallons that is already paying the company’s existing emergency monthly surcharge of $16.32, would see a decrease in their monthly bill by 1.6 percent, from $34.77 to $34.21 in the first year of the phase-in. By the third year of the phase-in, a customer with median usage who is currently paying the emergency surcharge would experience an increase in their monthly bill of $34.67, or 99.7 percent, from $34.77 to $69.43. The impact from the surcharge, once implemented, will add approximately an additional $35.04 per month for a cumulative bill impact of $69.70, or 200.5 percent from $34.77 to $104.47 from both the base rate increase and the implementation of the surcharge in the third year of the phase-in.

An increase in total annual operating revenue to $18,681, an increase of $14,200, or 316.9 percent, resulting in an operating income of $3,369, or an 18.03 percent operating margin was approved.

Jake’s Corner is a Class E utility providing water service to approximately 19 customers in an area of Gila County approximately 18 miles south of Payson.

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-20935A-18-0281 and W20935A-19-0131.

New Tariffs in Place for Ajo Improvement Company Wastewater, Electric and Water Divisions

Commissioners approved a deployed service member tariff and disabled military veterans discount program tariff for Ajo Improvement Company customers. The discount rate for disabled military veterans is 10 percent of the total bill for all utility services received from the company or $15.00 per month, whichever is less. The company will also provide a credit to deployed service members of the United States Military equal to the total cost of the basic and volumetric water, electric and wastewater service charges as well as applicable taxes. The company will defer these costs and seek recovery in its next rate case. Participation for deployed service members tariff is limited to 50 customers, but the company is permitted to seek Commission approval to change participant limits based on level of participation. Both tariffs became effective September 10, 2019.

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-01025A-17-0361, E01025A-17-0362 and WS-01025A-17-0363.

Johnson Utilities Interim Manager Reports Improvement in Water Pressure

During an update from Johnson Utilities, LLC Interim Manager, EPCOR stated that it has made great strides in water pressure concerns after reports of low water pressure. Elevated water pressure has been observed due to upgraded equipment. Electrical equipment is being upgraded to accept generator power which in return will help sustain water pressure during power outages. A new Ion Exchange has been installed and is operating. The Magma 1 well is producing water at a rate of 700 gallons per minute. This will help meet demand and increase water pressure in the Magma subdivisions. The Morning Sun Farms and Main Yard systems are being upgraded and will receive an additional pump to maintain water pressure during high demand events. Pipeline projects are being evaluated to increase water supply to other areas.

EPCOR staff highlighted that there have been no sanitary sewer overflow in the last 60 days. Odor alleviation efforts such as regulating water levels and chemical addition to wetlands have been made at the Section 11 plant. A noticeable decrease in odors has been observed and the deep zone cleaning project is 75 percent complete.

Regarding finances, Johnson Utilities is developing a finance plan for the capital plan approved in Decision No.#77330. The company is also preparing for its rate case with an August 31, 2019 test year to be filed by December 31, 2019.

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-18-0050.

Commissioners Agree to Hold Natural Gas Moratorium Until September 19 Workshop

Commissioners made the decision to table the discussion and vote on a natural gas moratorium for electric generation. Commissioners will revisit this item on Thursday, September 19 at a Special Open Meeting regarding the possible modifications to the Commission's Energy Rules and to discuss changes to Resource Planning and Procurement in 2019, 2020 and 2021 and to the Modification to the Rules on Resource Planning and Procurement.

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-00000V-15-0094.

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 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.

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