For Immediate Release |4-15-2021
Media Contact | Nick Debus
Direct | 602-542-0728
E-Mail | NDebus@azcc.gov
Arizona Corporation Commission April Open Meeting Highlights
PHOENIX – The Arizona Corporation Commission held its monthly Open Meeting on April 13 and 14 to discuss and vote on various utilities and securities items. Highlights from the April Open Meeting are below:
Corporation Commission Votes to Send Disconnection Rules to Formal Rulemaking
Commissioners voted 3-2 to send a draft rules package regarding utility disconnections during extreme weather conditions to the formal rulemaking process. This action comes after nearly two years of workshops and stakeholder meetings to develop appropriate thresholds for when a utility may and may not disconnect a customer’s service during periods of extreme heat and cold.
Myriad amendments were adopted by the Commission during the April Open Meeting. An amendment offered by Commissioner Sandra D. Kennedy and adopted adds additional reporting requirements regarding bill arrearages and decreases the amount of arrearages to be reported from $300 to $100. Commissioner Justin Olson’s amendment allows for gas and electric cooperatives to continue utilizing the currently approved tariffs with the notice requirements for terminating service. Commissioner Anna Tovar offered several amendments which were adopted which will have the following effect: customers on a payment plan who miss one payment or only make a partial payment within a 12-month period will not have their payment plan terminated resulting in the outstanding balance to be due immediately; raises the arrearage threshold for termination of service for electric utilities from $100 to $300 and from $75 to $100 for gas utilities; allows flexibility for utilities to develop in-person notification options with local stakeholders and encourages use of technology in communicating with customers; sets a temperature threshold under which utilities cannot terminate service at 95°F; and requires utilities to work with local stakeholders to develop programs to assist vulnerable populations with heat-related safety concerns.
The action taken by the Commission at the April Open Meeting sends the disconnection rules package to the formal rulemaking process, where the public will again have an opportunity to provide input on the draft rules, before coming back before the Commission for a final vote in the future. The existing June 1 through October 15 disconnection moratorium will remain in effect until the Commission formalizes the rules package.
If you are interested in providing input, you may file written comments in the docket by June 28, 2021. The Commission Hearing Division will also hold two telephonic public comment sessions on June 28 and July 1, 2021 at 10 a.m. To participate dial 1-866-705-2554 and use passcode 241497# to speak, and passcode 2414978# to listen only.
Commission Approves a Change Allowing for Increased Usage of Solar in Low Income Housing
The Corporation Commission unanimously approved a revision to Arizona Public Service Company’s (APS) Service Schedule 3 which will allow for increased deployment of solar projects in low income, multi-family housing.
APS filed an application January 31, 2020 seeking approval to revise its Service Schedule 3, allowing for master metering of low income, multi-family housing that uses solar power behind the meter. This change shifts the financial incentive to conserve energy from tenants to property owners and/or property managers, allowing them to provide low-income housing to more residents at a lower cost. Because utilities are included with rent, the incentive to conserve energy is not with the tenant. However, tenants will still be in full control of their own thermostats. Allowing for master metering behind the meter at these types of residential dwellings will encourage increased deployment of solar projects, which could offset energy costs and potentially result in improved housing quality for low-income residents. Additionally, to add a level of consumer protection, developers of these projects agreed to update the Commission over the next two years regarding any issues or complaints from tenants.
Arizona Public Service Company Granted Filing Extension for Aggregation Tariff
Commissioners voted to allow Arizona Public Service Company (APS) more time to develop and file its distributed demand-side resource aggregation tariff (aggregation tariff). APS was originally directed to file its aggregation tariff proposal by December 1, 2020 but the Commission has since extended the deadline three times, first to April 1, 2021, then to May 1, 2021 and now to October 1, 2021.
By granting APS an extension to October 1, 2021, the Commission has given APS a full calendar year from when the original order was issued. As part of an amendment from Chairwoman Lea Márquez Peterson, a detailed timeline was introduced by which the tariff must be in place, clarifying ambiguity in the steps that would be taken between now and October 1 and providing greater certainty regarding the date customers can expect to participate in the program. By April 1, 2022 the tariff must be in place which will allow customers to take advantage of the program in summer 2022. Additionally, Commissioner Jim O’Connor offered an amendment which requires APS to provide a cost-benefit analysis of the aggregation tariff to be filed when APS submits the final tariff proposal for approval by the Commission.
This tariff, once finalized and approved by the Commission will allow the aggregation of distributed demand-side resources such as smart thermostats, connected hot water heaters, and energy storage systems. The tariff will compensate aggregators for the value any and all demand-side devices provides to the grid. This includes compensation for the value of energy, capacity, demand reduction, load shifting, voltage support, and other ancillary services. As a result, a portion of the benefits should flow to Arizona consumers who adopt new technologies, and a portion should stay with the aggregators for the value they provide in synchronizing otherwise isolated resources.
Arizona Public Service Company Lost Fixed Cost Recovery Mechanism Adjustment Denied
The Commission denied an application from Arizona Public Service Company (APS) for an adjustment to its Lost Fixed Cost Recovery Mechanism (LFCR). The LFCR allows for APS to recover the fixed costs the company loses due to energy efficiency mandates and distributed generation requirements the Commission adopted in 2006 and 2011. Each February APS is required to file with the Commission its annual LFCR adjustment based on energy efficiency and distributed generation revenue losses from the previous calendar year.
The LFCR rate would have increased from $0.372/kW to $0.509/kW per month for customers on a demand rate, and from $0.00125/kW to $0.00170/kW per month for customers on an energy-only rate. This increase in the LFCR mechanism would have resulted in increases on customer bills. The LFCR was estimated to result in an overall revenue recovery of $38.5 million. The Commission denied the increase citing concerns with the prior Commission mandates and the company’s seemingly high number of additional surcharges and adjuster mechanisms.
Commission Finds Scottsdale Man Defrauded Investors with Real Estate Investment Scheme
The Corporation Commission ordered Troy Michael Bohlke of Scottsdale and Arizona Acquisitions Group, LLC to pay restitution and penalties for defrauding investors with an unregistered real estate investment.
The Corporation Commission ordered Troy Michael Bohlke and Arizona Acquisition Group, LLC (AAG) to pay, jointly and severally, $137,900 in restitution. The Commission ordered Bohlke and AAG to pay, jointly and severally with respondent Jeremy Vincent Diaz, $168,000 in restitution. The Corporation Commission also ordered Bohlke and AAG to each pay $150,000 in administrative penalties—$50,000 of which is owed jointly and severally.
The Commission found that, among the multiple false and misleading statements, Bohlke and AAG misrepresented to certain investors that their funds would be used in real estate and the investment would incur little to no financial risk. The Commission also found that Bohlke and AAG misappropriated investor funds and used much of the proceeds to pay Bohlke and Diaz, and to pay for Bohlke’s personal expenses. Bohlke and AAG were not registered to offer or sell securities in Arizona.
Commission Finds Former Arizona Man Preyed Upon Investors with Multimillion-Dollar Investment Scheme
The Corporation Commission ordered former Arizona resident Frederick Arias to pay $9,075,000 in restitution and a $135,000 administrative penalty for defrauding investors with a multimillion-dollar investment scheme.
In its default order, the Corporation Commission found Arias falsely represented to investors in “The Joseph Project” that their proceeds would be used for after-hours trading that would generate profits for the investors and for religious and humanitarian projects. The Commission also found Arias falsely represented to investors that the investment was totally safe. However, the Commission found most of the investor funds were misappropriated.
To date, none of the investors have received their promised returns. In June 2019, the state of Arizona indicted Arias on seventeen felony counts relating to this unlawful conduct. Mr. Arias was subsequently arrested in the state of Washington, posted bond, but failed to appear at his extradition hearing.
Commission Sanctions Nigerian Man for Offering and Selling Phony Cryptocurrency Investment
The Corporation Commission ordered Abuchi Okoye of Nigeria and his affiliated company Coininvest to pay $2,500 in restitution and a $25,000 administrative penalty for committing securities fraud in connection with cryptocurrency and other alternative investments.
In its default order, the Corporation Commission found Okoye and Coininvest sold the cryptocurrency and other alternative investments under the pretense of being Arcadia Capital, LLC and Arque Capital, LTD, two Arizona securities dealers registered with the Commission’s Securities Division. The actual Arizona businesses have no relationship with or connection to Okoye and Coininvest.
The Commission found Okoye and Coininvest misrepresented their investment program as safe and secure with an assured profit when cryptocurrency is often considered to be a volatile investment. Okoye and his company solicited investors via pirated websites and social media accounts that closely resembled the registered securities dealer.
The Commission’s Securities Division issued a temporary cease and desist order in October of 2020 against Abuchi Okoye and Coininvest to stop offering and selling investments in cryptocurrency and other alternative investments, but Okoye and his affiliated company did not respond to the allegations or request a hearing.
Commission Revokes Securities Salesman Registration of Scottsdale Man for Dishonest and Unethical Conduct
The Corporation Commission revoked the Arizona securities salesman registration of Jerry L. Guttman of Scottsdale for his dishonest and unethical conduct in connection with the offer and sale of unregistered securities in a series of limited liability companies. Guttman was ordered by the Commission to pay a total of $2,176,121 in restitution and $75,000 in administrative penalties for his violations, jointly and severally, with the companies as follows:
In settling this matter, the respondents neither admit nor deny the Commission’s findings, but agree to the entry of the consent order.
A complete broadcast of the April Open Meeting can be found at azcc.gov/live.