News Release

Part II - October Open Meeting Highlights

NEWS RELEASE

For Immediate Release | 10-30-2019
Media Contact | Nicole Capone
Direct |602-542-0713
E-Mail |NCapone@azcc.gov

 

PHOENIX — The Arizona Corporation Commission held its monthly Open Meeting to discuss and vote on various utilities agenda items. Here is a brief recap of the meeting highlights:


Johnson Utilities, Update from Interim Manager

During an update from Johnson Utilities, LLC Interim Manager, EPCOR informed the Arizona Corporation Commission that water pressure has improved throughout the community and that any problematic areas experiencing pressure issues are to be improved by Spring 2020. Hydrogen sulfide odors in the air have greatly improved due to the installation of an automated odor treatment system and the rehabilitation of existing carbon systems. When levels of hydrogen sulfide are above .03 mg/L, the air is automatically treated, but when levels are below .03 mg/L, the system shuts off to minimize costs.

EPCOR stated they are starting to face cash flow challenges as they expect to be cash flow negative by the end of March 2020. To combat this issue, EPCOR proposed raising Hook-Up-Fees (HUF) for new water and wastewater service connections.

Johnson Utilities is developing a finance plan to support the Capital Improvement 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 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-02987A-18-0050 and WS-02987A-15-0284.

Graham County Electric Cooperative Inc. Line of Credit Financing Approved

Commissioners approved Graham County Electric Cooperative’s request to borrow $8,000,000 for the purpose of financing utility infrastructure and $6,000,000 for the purpose of acting as a pass-thru for the Rural Economic Development Loan and Grant (REDL&G) Program.

The REDL&G Program was designed to promote economic growth in rural communities through the use of interest free loans. GCEC intends to use REDL&G loans to encourage development, increase job growth and expand its load in the rural southeastern Arizona communities it serves with ancillary benefit of growing GCEC’s utility load thereby keeping utility rates low for its members. Approval of GCEC's financing application will allow rural businesses to participate in an established federal program for the benefit of Arizona.

GCEC is a Class A not-for-profit electric cooperative serving approximately 5,430 members in Graham County.

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 E-01749A-19-0108.

Arroyo Water Company Approved for Construction of New Water Storage Tank and Finance Application

Arroyo Water Company was approved to transition its current rate design from a flat commodity rate to a three-tier structure with inclining block commodity rates. Arroyo’s residential inverted three-tier commodity rate design will have break-over points at 3,000 gallons and 9,000 gallons that increase by meter size.

Arroyo’s also requested approval to incur $205,240 in long term debt from WIFA. The proposed term would be 20 years and the loan would be at an interest rate not to exceed four percent. The purpose of the debt is to fund the construction of a new 60,000-gallon water storage tank and various related appurtenances as well as a 22 kW generator to provide backup power to the company’s well. In addition, staff also recommended replacement of the company’s 130 meters be included in the scope of the financing.

The financing application was deemed as reasonable and will help the company return to compliance with ADEQ requirements, and as such, the Commission authorized the Company to incur $214,200 in long-term debt from WIFA.

In order ensure that the Company is able to meet operating expenses, fund contingencies and meet the debt covenants of the loan, the company was approved a surcharge mechanism upon closing the loan.

A typical customer on a 5/8 x 3/4-inch meter with median usage of 2,003 gallons per month who is already paying the current emergency surcharge of $16.20 per month would see an increase of their monthly bill by 40.7 percent, from $27.95 to $39.33. Additionally, the WIFA loan surcharge of $14.88 per month would have a cumulative monthly bill impact of a 94 percent increase over current rates (including emergency surcharge) from $27.95 to $54.21.

Arroyo is a Class E utility providing water service to approximately 130 customers in an area of Gila County approximately 25 miles south of Payson.

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-04286A-18-0282 and W-04286A-19-0130.

APS Application for 2019 Renewable Energy Standard Implementation Plan Approved

The Commission approved Arizona Public Service’s application for renewable energy standard implementation plan.

In June 2019 APS filed its 2019 Renewable Energy Standard and Tariff Plan (REST), requesting a budget of $89.9 million to meet previously approved commitments. These commitments include power purchase agreements, production-based incentives, and financial needs for current initiatives that were previously approved. The 2019 budget represents a $2.1 million reduction from its 2018 budget. APS’ REST Plan represents numerous categories by which the company will collect funds through various adjuster mechanisms related to renewable energy programs and initiatives they employ.

Contained in the 2019 application is a request for funding for outreach and to update the Arizona Goes Solar website which has become outdated and requires fixes to make it more user friendly. Additionally, APS is proposing modification of its Green Choice Program to increase participation by better meeting its customer’s preference for resource type.

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 E-01345A-18-0226.

APS Application to Implement Tax Expense Adjustor Mechanism

The Commission approved a tax expense adjustor mechanism for Arizona Public Service.

APS will implement tax related savings associated with protected Excess Deferred Income Taxes (EDIT). Corporation Commission staff approved of APS’ application to refund $64 million of protected EDIT accrued from January 2018 through October 1, 2019 as a one-time bill credit at the rate of $0.006945 per kWh to customers between August 1, 2019 and October 31, 2019. Corporation Commission staff also approved of a monthly bill credit in the amount of $0.001169 per kWh to refund $39.5 million from November 1, 2019 through December 31, 2020. APS anticipates to fully incorporate the impacts of the federal Tax Act within its upcoming rate case to be filed no later than October 31, 2019.

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 E-01345A-18-0003.

Final Rule-making to Proceed Related to Interconnection of Distributed Generation Facilities

The Commission voted to proceed with final rulemaking related to interconnection of distributed generation facilities.

Among other things, the rules for interconnection of distributed generation facilities would establish mandatory technical standards, processes and timelines for regulated utilities to use for interconnection and parallel operation of different types of distributed generation facilities. The groundwork for this rulemaking began in the 1990’s, with numerous workshops held in 2005 and 2006, resulting in the Corporation Commission’s adoption of an Interconnection Document in 2007; this document was to serve as a guide for interconnection until formal rules became effective.

A formal rulemaking docket was opened in October 2007, with rule-making activity in that docket beginning in 2015 with the filing by staff of initial draft rules. Workshops were held in 2016 and 2017 followed by a second revised draft rules being filed in April 2018. In November 2018, staff filed a third revised draft rules for consideration by the Commission. At the Open Meeting in January 2019, the Commission passed numerous amendments and issued a decision directing staff to initiate a formal rulemaking process.

The Commission received written comments from stakeholders regarding the formal rules and oral proceedings that were held in Phoenix and Tucson in March 2019. Due to substantive changes by Commissioner amendments at the July 2019 Open Meeting, a supplemental proposed rule-making process had commenced by Commission decision. On October 2, 2019, the Hearing Division filed its recommend opinion and order regarding the formal rules for Commission consideration.

The Notice of Final Rulemaking package will be filed by November 1, 2019 with the Office of the Arizona Attorney General.

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 October 29, 2019 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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