For Immediate Release | 11-9-20
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 securities and utilities agenda items. Here is a brief recap of the meeting highlights:
Commission Sanctions Attorney and Several Individuals for Selling Fraudulent Investments in Veterans’ Pension and Disability Benefit
The Corporation Commission ordered South Carolina attorney Candy Kern-Fuller and her law firm, Upstate Law Group, LLC, to pay restitution of $2,943,438 and administrative penalties of $480,000 in connection with a veterans’ income stream scam marketed to Arizona investors. The Corporation Commission also ordered Arkansas resident Michelle Plant, Performance Arbitrage Company, Inc. of Mississippi, California resident Mark Corbett and Texas resident Michael David Woodard and his company, Financial Product Distributors, LLC, to pay restitution of $371,191 and administrative penalties of $21,000 each in connection with the same scam. The Commission found that these individuals and entities either made, participated in or induced the sale of unregistered income stream investments, which were based on the monthly payments veterans receive for their pension or disability benefits.
The Corporation Commission found that Kern-Fuller and the other respondents in this matter failed to disclose to investors the risk that federal law may prohibit the sale of veterans’ pension and disability payments. The Corporation Commission found that Kern-Fuller and Upstate Law Group, LLC continued to be involved in unlawful sales of these securities after multiple cease and desist orders from other states found similar investments had violated securities laws in those jurisdictions. The Commission found Kern-Fuller and the other respondents failed to disclose these cease and desist orders to Arizona investors.
The Corporation Commission found that the unethical conduct of Kern-Fuller and Upstate Law Group rendered illusory their advertised role as the investors’ independent counsel, deceiving investors into a false sense of the investment’s safety.
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-21049A-18-0223.
Former Real Estate Broker Sanctioned for $1.36 Million Securities Fraud
The Corporation Commission ordered former real estate broker Richard D. Saba, Jr. of Scottsdale and his affiliated company to pay $1,362,099 in restitution and a $50,000 administrative penalty for committing securities fraud.
The Corporation Commission found Mr. Saba was the sole, managing member of Saba Tooth Tiger, LLC, which was doing business as Saba Investments out of his home, but was not registered to offer or sell securities in Arizona. The Commission found Mr. Saba and his home-based company sold unregistered promissory notes and investment contracts to 31 investors, most of whom were Arizona residents.
The Corporation Commission found Mr. Saba and his company represented to investors that they were raising capital to purchase an inventory of “collectible” items for the purpose of selling these items online for a profit. However, the Commission found Mr. Saba and his company failed to disclose to several investors that a substantial portion of their investment funds would be used to pay commissions; that Mr. Saba had incurred a significant amount of debt that jeopardized the investors’ investments; and that Mr. Saba’s company and online business were not profitable for at least two years.
Further, the Corporation Commission found Mr. Saba and his company paid undisclosed commissions to a registered securities salesman and licensed investment adviser representative who was sanctioned by the Corporation Commission in September 2020 for offering and selling to his clients the unregistered promissory notes and investment contracts issued by Mr. Saba and his company (see S-21103A-20-0095).
In settling this matter, Mr. Saba and Saba Tooth Tiger, LLC admitted to the Commission’s findings only for the purpose of the administrative proceeding but agreed to the entry of the Commission’s consent order.
All documents relating to this agenda item can be found in the Corporation Commission's online docket at https://edock t.azcc.gov and entering docket number S-21106A-20-0173.
Alliant Gas, LLC, Rate Increase Approved
Commissioners approved a rate increase for Alliant Gas, LLC (Alliant) during the November Open Meeting. Alliant filed an application to raise rates on August 22, 2019. Alliant is a Class B utility providing gas service to approximately 1,280 customers in its Page division and 7,150 customers in its Payson division, the rate application sought to gain approval for a rate increase for both divisions.
The Commissioner’s approved total annual operating revenue for the Page division of $2,680,218, an increase of $327,030, or 13.9 percent over the test year revenue of $2,353,188. For its Payson division, the Commissioners approved total annual operating revenue of $7,664,293, an increase of $1,220,610, or 18.94 percent over test year revenue of $6,433,684. Alliant will retain its current rate structure and additionally will implement low income, deployed service member and disabled veteran assistance program tariffs.
Under the approved rate structure, a residential customer in Page with an average monthly usage of
21 therms will see an increase on his/her monthly bill of approximately $11.57, or 24.75 percent, from $46.73 to $58.30. A typical residential customer in Payson with an average monthly usage of 24 therms will see an increase on his/her monthly bill of $13.37, or 22.56 percent, from $59.27 to $72.64.
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 G-20889A-19-0200 and G-20889A-19-0252.
Century Link Updates Commission on 911 Outage Remediation
Century Link updated Commissioners today regarding recent problems with outages that have resulted in 911 service going down in some rural communities throughout the state. These outages have resulted in 911 services to be unavailable in certain locations. Under Commission Decision No. 77664 issued June 30, 2020, Century Link is required to submit regular updates regarding remediation efforts to ensure such outages are not a recurrent issue.
During the bimonthly update presentation in the September open meeting, Commissioner Kennedy asked for some information related to the pedestal repair project: (1) the total number of pedestals in CenturyLink's Arizona network and (2) the number of pedestal and enclosure repairs done pursuant to the Remedy Plan done by CenturyLink contractors compared to employees. In response: (1) CenturyLink's records show 8,374,391 total pedestals and similar enclosures in Arizona and (2) thus far, CenturyLink has hired contractors to perform each of the Remedy Plan pedestal/enclosure repairs. CenturyLink continues to comply with bargained-for ratios of work and repairs to be done by employees and contractors. CenturyLink reported that during September 2020, they repaired or replaced approximately 290 enclosures and pedestals pursuant to this program.
CenturyLink/Lumen experienced an outage event on September 28, 2020, from approximately 3:30 p.m. to 4:47 p.m. Arizona time (MST), caused by an Intrado configuration error in devices that work together to manage call processing for the Intrado E911 platform that supports Lumen's NG911 service. CenturyLink/Lumen understands that the event impacted multiple 9-1-1 providers served by Intrado in several states and that the event impacted both vendor partner’s network paths that CenturyLink/Lumen utilizes. CenturyLink/Lumen has provided and continues to provide notifications and follow-up communications about this outage to the PSAPs and the Commission as required by law and its Remedy Plan.
CenturyLink commits that no more than 0.03% of its Arizona voice customers will file informal or formal complaints regarding the quality of their telephone service or repairs monthly, measured on a three-month rolling average. During September 2020, zero formal complaints were filed, however, 20 informal complaints were filed regarding service quality or repairs, representing approximately 0.01 % of CenturyLink's approximately 227,000 Arizona voice 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 number T-02051B-19-0001.
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’s new Ion Exchange (IX) has been in operation for several months and the system continues to be effective in treating the ground water in the region. The construction of a third vessel has been completed and has increased production potential by 500 gallons per minute at the Main Yard facility.
An automated Chlorination project has been completed at the main yard and will treat the 'Treated Water Blend' that is a combination of water treated by ion exchange system and untreated well water. Pipeline and air relief valve projects are also being evaluated system wide to increase water supply to areas that have historically experienced lower flows/pressures.
Funding the capital improvement plan is still a serious concern and remains an issue preventing EPCOR from starting some capital projects. Pecan Phase IV Expansion & IPS Headworks projects cannot commence construction until Johnson Utilities’ ownership secures financing consistent with Decision No. 77641 (June 22, 2020), as amended by Decision No. 77674 (July 15, 2020) or unless the proposed acquisition is approved.
The Pecan plant is approaching its treatment capacity and it will take approximately 12 months to complete the expansion construction. Sufficient funds are not available from operations or from hook-up fees to complete this project.
An agreement was reached with the Town of Queen Creek on terms/conditions of an interconnect. Design is underway for three interconnect points between Johnson Utilities and Queen Creek sewer collection systems to provide relief to Pecan Water Reclamation Facility and the Commission ordered that EPCOR move forward with implementing the agreement with Queen Creek.
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.
Commission Allows Roll Over of Net Metering Credits for Schools into 2021
The Corporation Commission allowed schools qualifying for net metering credits who have not yet been paid-out to roll any unused credits forward into 2021. Net metering includes generation from renewable sources that are not owned by the electric utility in a service territory, such as rooftop solar.
Under the Commission’s net metering rules, if a customer’s energy production exceeds the energy supplied by the electric utility during a billing period, the customer’s subsequent bill is credited for the excess generation.
Many schools throughout the state have installed rooftop solar systems to assist in generating a portion of their total electricity needs, some of these schools have qualified for net metering. Several of the schools have contracts with third-party companies that require they purchase 100 percent of the energy generated from a net metering facility regardless of their capacity to utilize that energy.
Due to the impact on schools of the Covid-19 pandemic resulting in mass closures beginning in March 2020, many have been accumulating net metering credits without the ability to utilize the self-generated energy. Because of this, schools that qualify under the net metering tariffs will be able to roll these credits forward into 2021. Exceptions will be made for those schools who have already been paid in 2020 for the unused kilowatt-hours produced.
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-20-0050.
Gas Utilities and Pipelines Present Winter Preparedness
Each year, the Commission asks Arizona's gas utilities and pipelines to explain how they have prepared to meet the needs of consumers for quality and reliability of service during the winter months.
Alliant Gas, Kinder Morgan, Southwest Gas, Unisource Energy Services (UNS) and Transwestern Pipeline Company presented their preparedness plans to the Commission. Each utility/pipeline stated that while they are prepared to meet the winter demands, they have also implemented protocols in response to COVID-19 that they shared with the Commissioners.
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-20-0069.
A complete broadcast of the Commissioner’s November 4-5, 2020 Open Meeting is available on the Corporation Commission’s website: http://azcc.gov/live.
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.