For Immediate Release | 3-25-2021
Media Contact | Nick Debus
Direct | 602-542-0728
E-Mail | NDebus@azcc.gov
Arizona Corporation Commission March Open Meeting Highlights
PHOENIX – The Arizona Corporation Commission held its monthly Open Meeting on March 23 and 24 to discuss and vote on various utilities and securities items. Highlights from the March Open Meeting are below:
Commission Approves Two Qualifying Facility Purchase Power Agreements for Arizona Public Service Company
The Corporation Commission approved two purchase power agreements between Arizona Public Service Company (APS) and two Qualifying Facilities, CO Bar Solar A LLC and CO Bar Solar B LLC. Under the federal Public Utilities Regulatory Policies Act of 1978 (PURPA), state regulatory agencies were directed to establish rules for the encouragement of cogenerations and small power production between large-scale utilities and smaller generation producers in the region.
Under the approved purchase power agreements, APS will enter into an 18-year contract with each qualifying facility to purchase all of the renewable energy produced by each of the solar plants at a negotiated rate dependent upon APS’ long-term avoided cost rate. The qualifying facilities consist of two solar generation plants located in Coconino County, Arizona, each with nameplate generation capacity of 80MW. The facilities are expected to be operational in 2023.
Commission Votes to Approve Arizona Water Company Rate Case
The Corporation Commission approved a rate increase for Arizona Water across three separate systems it owns in the state. Arizona Water is a Class A water company operating 22 water systems which serve approximately 92,000 customers in the state. This rate case applies to the company’s Western Group of systems, Pinal Valley, White Tank, and Ajo service areas, which consist of six public water systems: Tierra Grande, Pinal Valley, Coolidge Airport, Stanfield, White Tank, and Ajo.
As proposed in its application, customers on a 5/8 x ¾ meter in the Pinal Valley system using an average of 7,100 gallons will see a monthly bill increase of approximately $10.43, or 27.25 percent. Customers on a 5/8 x ¾ meter in the White Tank system using an average of 9,200 gallons would see a monthly bill increase of approximately $4.28, or 7.61 percent. Customers on a 5/8 x ¾ meter in the Ajo system using an average of 3,500 gallons will see a monthly bill increase of approximately $28.01, or 66.24 percent, which will be phased-in over six years to mitigate rate shock.
A comprehensive amendment was added as a compromise amongst Commissioners to reach a majority to approve Arizona Water’s rate case application. Included is a lowering of the Return on Equity from 9.25-percent to 9-percent, lowering the Post Test Year Plant from 12 to 9 months, phasing-in rates for customers on the Ajo system over six years without the ability to recover lost revenue and interest, and only allowing the company to recover $300,000 over four years of its rate case costs. All of which will result in a lower impact to customers than was originally proposed.
Commission Denies Southwest Gas Corporation Request for an Accounting Order for Recovery of Costs
The Arizona Corporation Commission denied a request from Southwest Gas Corporation (Southwest) for an accounting order associated with the implementation of a Customer Data Modernization Initiative (CDMI) project. The project consists of upgrading two customer-related data systems: the Customer Service System and the Gas Transmission System.
On March 29, 2020 Southwest filed its application for an accounting order requesting to record and defer approximately $96 million in costs associated with the CDMI project in the company’s next rate case. Roughly $83 million would be accounted for as capital expenditures and roughly $12.2 million will be accounted for as operations and maintenance expenditures through 2022. Southwest argued that these critical systems need to be upgraded because they were installed in the 1990’s and lack enhanced cybersecurity features, have significant limitations, and present challenges for keeping pace with today’s market demands and evolving business needs.
The Corporation Commission denied the request because the costs associated with this project do not rise to the level of the extraordinary ratemaking treatment of an accounting order. This issue should and will be considered in a future rate case as that is the appropriate venue for these costs to be evaluated and recovered.
Corporation Commission Sanctions Phoenix Securities Salesman
The Corporation Commission sanctioned Guilford Nergard of Phoenix with a three-month suspension of his Arizona securities salesman registration and a $2,500 administrative penalty for his dishonest and unethical conduct.
The Corporation Commission found that Nergard’s former employer had revoked his discretionary trading authority and subsequently terminated his employment for failure to obtain permission from his clients before exercising a trade.
In settling this matter, Nergard admits to the Commission’s findings and agrees to the entry of the consent order.
Commission Levies Penalty on Gilbert Man and His Companies for Selling Unregistered Real Estate Investments on Craigslist
The Corporation Commission ordered Seth Jardine of Gilbert and his affiliated companies to pay a $10,000 administrative penalty for selling unregistered real estate investment contracts and profit-sharing agreements on Craigslist.com.
The Corporation Commission found that respondents Jardine, EcoVista Development, LLC and EcoVista Avondale, LLC were not registered to offer or sell securities in Arizona when they represented to at least 12 investors that they were raising money to entitle, rezone and develop land to sell to real estate developers.
Respondents have paid full restitution to all the investors. In settling this matter, respondents admitted to the Commission’s findings for the purpose of this proceeding and have agreed to the entry of the consent order.