For Immediate Release | 09-25-20
Media Contact | Nicole Capone
Direct | 602-542-0713
Phoenix - The Arizona Corporation Commission held its monthly Open Meeting to discuss and vote on various utilities and securities agenda items. Here is a brief recap of the meeting highlights:
Commission Orders Oro Valley Advisers to Pay $2.57 Million in Restitution for Investors in Veterans’ Income Stream Scam
The Corporation Commission ordered William Andrew Smith, Christopher Spence Cox and their Oro Valley investment advisory firm, Smith & Cox, LLC, to pay restitution of $2,574,103 in connection with a veterans’ income stream scam. The Commission found that Smith and Smith & Cox, LLC sold 53 unregistered income stream investments that were based on the monthly payments veterans receive for their pension or disability benefits.
The Corporation Commission found that Smith and Smith & Cox, LLC committed securities fraud and investment advisory fraud by touting the income stream investments to their clients as safe and secure while failing to disclose the risk that federal law may prohibit the sale of veterans’ pension and disability payments, failing to disclose eight cease and desist orders by other states against the promoter of these investments and failing to disclose an Internal Revenue Service lien against Smith for unpaid taxes from 2007 and 2008.
The Corporation Commission revoked Smith’s and Smith & Cox, LLC’s investment advisory licenses and ordered them to pay $252,000 in administrative penalties. The Commission found that Cox is a control person of Smith & Cox, LLC and ordered that Cox be jointly and severally liable to pay $2,574,103 in restitution for his firm’s securities fraud violations. The Commission also ordered Cox to pay $105,000 in administrative penalties.
The Corporation Commission also found that Mark Corbet of California participated in 48 of the 53 unlawful sales because he solicited the veterans to sell their monthly pension and disability payments. The Commission ordered that Corbett be jointly and severally liable to pay $2,284,660 of the restitution ordered against Smith, Cox and Smith & Cox, LLC and to pay $105,000 in administrative penalties.
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-21044A-18-0071.
Commission Finds Former Investment Professional Committed $4.5 Million Securities Fraud
The Corporation Commission ordered former securities salesman and investment adviser representative Conrad Coggeshall of Tempe and his affiliated company to pay $4,524,873 million in restitution and a $150,000 administrative penalty for defrauding investors.
The Corporation Commission found Coggeshall developed close relationships with most of his former investment clients and continued to offer and sell securities and provide investment advice to them after his license and registration had expired in 2018.
The Commission found Coggeshall was the sole, managing member of Business Owners Tax Relief, LLC, but failed to inform investors that he and his company were not authorized to offer or sell securities or provide investment advice in Arizona.
The Commission found Coggeshall represented to investors that the promissory notes and investment contracts were safe and insured yet the investors suffered significant financial loss. The Commission also found Coggeshall misused a portion of his clients’ investment funds through his company for unauthorized personal expenses, to day trade securities and to make interest payments to other clients.
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-21103A-20-0095.
Commission Sanctions Scottsdale Couple who Defrauded Investors
The Corporation Commission ordered AuroraTek, Inc. and its two owners, William Alek and Aurora Ellegion of Scottsdale, to pay $742,420 in restitution and a $50,000 penalty for committing securities fraud while selling shares of unregistered company stock.
The Corporation Commission found the respondents defrauded 128 investors, some of whom were their friends and acquaintances. The Commission found the respondents misrepresented investor funds would be used to complete the patent process, finish product development and manufacture alternative sources of energy based on anti-gravity technologies when, in fact, the technology was not yet being manufactured and a significant amount of investor funds went towards the living expenses of Alek and Ellegion. Also, the Commission found the respondents represented to some investors the technology was being manufactured in a factory when company business actually operated out of the home of Alek and Ellegion.
In settling this matter, the respondents agreed to the entry of the consent order and admitted to the Commission’s findings only for purposes of the administrative proceeding. 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-21117A-20-0268.
EPCOR Water to Provide Wastewater Service for New Red Bull Canning Facility
Commissioners approved an application by EPCOR Water Arizona, Inc. (EPCOR), that will allow the utility to enter into special contracts with RRB Beverage Operations Inc., Rauch North America Inc., and Ball Metal Beverage Container Corporations to provide wastewater treatment and services to two new industrial bottling facilities in Glendale, Arizona.
The Open Meeting decision will allow EPCOR to provide wastewater services to these two new industrial facilities at negotiated rates. The bottling facilities will provide upfront capital to EPCOR to begin constructing the necessary infrastructure and handle the additional volume load that these bottling facilities will require for operations. Existing commercial and residential customers of EPCOR will not be funding any of the new infrastructure.
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-20-0209.
Tucson Electric Power Company Joins the Western Energy Imbalance Market
Commissioners approved an application from Tucson Electric Power Company (TEP) to defer the projected operations and maintenance costs associated with implementing its proposed membership in the Western Energy Imbalance Market (EIM).
TEP will be allowed to defer no more than $10 million total over a three-year period in associated operations and maintenance costs for joining the EIM, deferred costs will only be recovered through savings derived from membership.
The Western EIM’s advanced market systems automatically find the lowest-cost energy to serve real-time customer demand across a large geographical area.
All items 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-01933A-20-0039.
Southline Transmission and Tucson Electric Power Company Decision Returned to Line Siting Committee
Commissioners did not approve the 40-252 request from Southline Transmission LLC (Southline) and Tucson Electric Power Company (TEP) to amend a previous Commission Decision No. 75978 which approved the Certificate of Environmental Compatibility in Line Siting Case No. 173. Case No. 173 authorized Southline to construct the non-Western Area Power Administration (WAPA)-owned Arizona portions of the Southline Project, including a new approximately 66-mile 345 Kilo-Volt (kV) transmission line in Cochise County from the Arizona-New Mexico border to the proposed Southline Apache Substation, the associated facilities to connect the Southline Apache Substation to the adjacent AEPCO Apache Substation, and approximately five miles of new 138 kV and 230 kV transmission lines and associated facilities to connect four existing substations to the upgraded WAPA-owned 230 kV transmission lines in Pima and Pinal Counties.
TEP filed its application to amend the decision to permit it to own, construct, and operate one of the two planned 230 kV circuits along a 64-mile segment of the WAPA-owned portion of the Southline Project. The Circuit extends between TEP’s Vail and Tortolita substations and is within a 121-mile section owned and operated by WAPA.
As a result of this request, the Commission voted to send this matter back to the Line Siting Committee for further evidentiary hearings.
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 L-00000AAA-16-0370-00173.
Johnson Utilities, Update from Interim Manager
During an update from Johnson Utilities, LLC, the company’s Interim Manager, EPCOR, informed the Arizona Corporation Commission that the company made it through summer with their water systems operating well, there weren’t any pressure issues reported and the utility had sufficient water to meet demand.
Odor mitigation efforts in Section 11 include sealing up headworks, regulating water levels, chemical addition to wetlands, increasing contact time with aerators, removing old sludge from deep settling zones and increasing the Ecosorb misting system were completed and improvements have been seen from them. However, some of the work that was completed does result in discreet and periodic odor emissions. A significant reduction in odors has been observed through hydrogen sulfide loggers located around the community surrounding the facility. Efforts are being made to further reduce odor emissions on the entire collection system.
EPCOR reported that expansion of the Pecan plant is a priority project but is on hold due to ownership delaying financing for the project.
EPCOR is working with the Town of Queen Creek on terms and conditions of an interconnection agreement. Preliminary design concepts are being developed for potential interconnect points between Johnson Utilities and Queen Creek sewer collection systems. This will provide relief to Pecan water reclamation facility and Section 11 water reclamation facility. An update on this project will be provided at the October Open Meeting.
Regarding the company’s customer care and outreach, overall customer satisfaction is at 87%.
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.
Johnson Utilities’ Pecan Water Reclamation Plant Capital Improvements & Associated Financing
Johnson Utilities, as represented by Jeffrey Crockett, have been directed to file a financing application with the Commission for authorization to obtain financing to cover whatever portion of the $17,938,374.40 costs of the Pecan Water Reclamation Phase IV Expansion and IPS and Headworks Replacement is not met through an equity infusion by the owner or by internally generated funds.
Johnson’s request for clarification of previous Commission decisions was denied because their decisions were not ambiguous.
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.
Johnson Utilities CC&N Deletion & Extension of CC&N Compliance Filing Deadlines
Chairman Burns’ amendment #1 passed and the item was held for a future 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 WS-02987A-18-0329, WS-02987A-12-0136, WS-02987A-06-0077, W-01395A-00-0784, W-02859A-00-0774, WS-02987A-00-0618, W-02234A-00-0371 and WS-02987A-99-0583.
CenturyLink Gives Remedy Plan Update
CenturyLink gave an update to Commissioners on their Remedy Plan that it developed to address the issues noted in the Order to Show Cause regarding 9-1-1 outages and the condition of some of its facilities.
CenturyLink reported that during August 2020, they repaired or replaced more than 500 enclosures and pedestals.
During August 2020, CenturyLink reported 23 informal complaints filed regarding service quality or repairs, representing approximately 0.01% of CenturyLink's approximately 227,000 Arizona voice customers. Zero formal complaints were filed.
The Company met with Page 9-1-1 stakeholders via video conference on August 26, 2020. The next meeting has not yet been scheduled but should take place in late October or early November. Page 9-1-1 stated that their experience with CenturyLink has improved. CenturyLink met with Pima County 9- 1-1 authorities on August 27, 2020. The next meeting with Pima County 9-1-1 will take place in late October or early November.
CenturyLink and Staff are working together to establish a statewide 9-1-1 Task Force. CenturyLink has proposed a list of stakeholders to invite and proposed a preliminary structure for the task force. CenturyLink and Staff discussed potential alternatives to this during a meeting on August 24, 2020, and CenturyLink provided contact information for stakeholders. CenturyLink and Staff continue to work together to implement the procedural steps required.
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 T-01051B-19-0001 and T-01051B-19-0183.
Summer Disconnection Moratorium Extended through December 31, 2020 for APS, TEP & UNSE
The emergency moratorium on electric and gas utility disconnections due to non-payment were originally scheduled to end on October 15, 2020. Arizona Public Service ("APS"), Tucson Electric Power ("TEP") and UniSource Electric ("UNSE") provided data on current residential and commercial customer account arrearages. The data indicates that on October 15, tens of thousands of Arizonans may be subject to disconnection from their electric and gas providers, leaving many of them without access to work and school via the internet, air conditioning and other essential services during the COVID-19 pandemic.
APS reported to Commissioners that they voluntarily extended the Company’s disconnection moratorium through December 31, 2020. In addition, APS will implement automatic six-month payment arrangements for delinquent customers at the conclusion of the extended moratorium, which exceeds the four-month terms included in the Company’s Service Schedule 1.
TEP reported that they are extending the suspension of disconnections for residential and small commercial customers through the end of the year. In order to help customers avoid incurring large past due balances during this period, TEP and UNS Electric plan to proceed with the payment plan provisions outlined in Decision Nos. 77372 and 77373 beginning after October 15, 2020. Additionally, the Companies will offer flexible payment arrangements for their customers.
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 E-00000A-19-0128.
Arizona Public Service Company 2020 REST Plan Approved
Commissioners approved Arizona Public Service Company’s (APS) 2020 Renewable Energy Standard and Tariff Plan (REST Plan). APS filed its 2020 REST Plan on July 1, 2019, and requested funding for previously authorized programs such as APS Solar Communities for residential solar installations for limited and moderate-income families; renewable purchase power costs and ongoing program administrative costs; educational outreach; and administration of prior initiatives currently being implemented.
In its REST Plan, APS requested the approval of a budget of $86.3 million for 2020, including $69.1 million that will be collected through the RES Adjustor (REAC-1) in 2020. The 2020 REST Plan budget represents a $3.6 million reduction from last year. APS has six REAC-1 customer categories with REAC-1 adjustor charges being applied based on Kilowatt-Hour usage (kWh), with a monthly cap for each category. The current REAC-1 adjustor rate will remain in effect. The company will continue its Green Choice Program and will also be granted a compliance waiver for the residential portion of the Distributed Renewable Energy Requirement. The Commission did not approve an increase to the budget or the surcharge.
The Commission also approved the implementation of a new pilot program that incentivizes Arizona households to install at-home battery systems. The amount of the incentive was approved at $500 per kW, with a cap of $2,500 per customer.
The Commission also instructed APS to develop a proposal that would compensate energy storage aggregators for the value they bring to the grid for operating fleets of batteries on the distribution system.
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-19-0148.
Arizona Public Service Company Demand Side Management Implementation Plan
The Commission ordered Arizona Public Service Company to maintain the current $0.000982 per kwh and $0.353 per kW Demand-Side Management Adjustment Charge charges approved in Decision No. 76313.
Commissioners approved a $51,928,000 budget for APS's 2020 DSM Plan, which will provide immediate short-term and long-term relief to residential, small business and nonprofit customers of APS in the form of energy efficiency programs that can help customers save on their monthly bills. APS will use $3,284,124 from funds in the DSMAC balance account to fund the 2020 DSM program budget without needing to increase DSMAC collections.
In its 2020 DSM Plan, APS is proposed a modified structure to its previous portfolio, which included a combination of previously approved DSM programs and measures targeted to multiple customer segments. APS intends to continue the programs and incentive levels approved in Decision No. 76313. The 2020 DSM Plan proposes new programs and measures designed specifically to help customers who have been impacted by COVID-19.
Under the approved plan, APS will combine the current Consumer Products, Existing Homes HVAC, and Home Performance with ENERGY STAR programs into one program for Existing Homes. Combining the programs will allow easy access to all the DSM program savings opportunities that are available for existing homes. Combining the Consumer Products, Existing Homes HVAC, and Home Performance with ENERGY STAR programs into the Existing Homes Program will benefit customers and the local trade allies by providing convenience and making it easier to find all DSM opportunities available for existing homes. This program design change will not eliminate or modify any of the currently approved measures or delivery channels in each of the current programs, it will only combine these measures into a single comprehensive program.
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-19-0088.
A complete broadcast of the Commissioner’s September 22-23, 2020 Open Meeting is available on the Corporation Commission’s website: http://azcc.gov/live.