PHOENIX – The Arizona Corporation Commission met on August 17, 2021, to conduct its monthly Open Meeting. Commissioners discussed and voted on various securities and utilities items. Highlights from the meeting are below:
Commission Approves Green Power Partners Program for Arizona Public Service
Arizona Public Service Company recently applied for approval of its Green Power Partners Rate Rider Schedule (GPP). The GPP will provide commercial and industrial customers with the opportunity to purchase electricity generated from newly built renewable resources. Eligible customers will have three options from which to choose:
Option A – Customer will subscribe to purchase power for at least one year from APS renewable resources that are in service after January 1, 2021. The subscription may be extended with the consent of the customer and APS.
Option B – Similar to Option A, but with the customer able to choose the location of the generating facility. Because of the ability to choose the location, the customer must subscribe to purchase power from that facility for at least 20 years.
Option C – The customer will purchase power from an APS renewable generator that is not part of APS’s currently planned resources. The customer will be responsible for all incremental costs and the length of the subscription will be negotiated and mutually agreed to by APS and the customer.
The Commission’s approval of the GPP will accelerate the addition of renewable resources within APS’s service territory.
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 E-01345A-21-0203.
Commission Approves Rate Decrease for Coronado Utilities, Inc.
Coronado Utilities is a utility providing wastewater service to approximately 1,500 customers in San Manuel, Arizona. Coronado filed a rate increase application on November 20, 2020. Commission Staff reviewed the application and recommended a rate decrease. A formal evidentiary hearing was held at the Commission on June 23, 2021.
Coronado agreed with all of Staff’s recommendations except for Staff’s recommendation that Coronado refund “over-collected” income taxes due to the Tax Cut and Jobs Act. A Commission Administrative Law Judge issued a Recommended Opinion and Order (ROO) that agreed with Staff’s rate decrease recommendation, but disagreed with the refunding of the income taxes.
At the Commission’s Open Meeting, the Commissioners passed an amendment offered by Commissioner Olson that agreed with Staff’s income tax refund recommendation. The ROO had recommended a decrease in rates from the current rate of $54.00 per month to $50.00 per month for residential customers. The tax refund amendment passed by the Commissioners will decrease the rates by an additional $0.52 per month for the next 5 years, bringing the new rates to $49.48 per month for residential customers.
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 SW-04305A-20-0346.
Frontier Communications Gives Update on 911 Outages and Adequacy of Its Equipment in Arizona
Frontier provided the Commission an update regarding the outages that have occurred on its system that adversely affected Frontier’s ability to provide adequate and consistent 911 service to its customers. Frontier indicated that it is hardening its system to help eliminate 911 outages in the future. Frontier indicated that regardless of its improvements, outages may occur due to circumstances beyond the Company’s control, such as third-party cable cuts and electric company power outages.
The Commissioners questioned Frontier regarding the experience and ability of its Board of Directors and management team to get Frontier on the right path to bring its 911 outages to an absolute minimum. The Commissioners stated several times that this issue is a life and death matter and is of the upmost importance to them. Commissioners believe that Frontier must be more proactive in dealing with this issue.
Some Commissioners questioned whether Frontier is the proper entity to provide telecommunications/911 service to rural Arizona. Commissioners acknowledged that Commission Staff is in the midst of its investigation into Frontier’s handling of its 911 outages. Commissioners stated their desire for Staff to complete its investigation as soon as possible, while also stating they realize Staff is currently processing a large number of cases. When complete, Staff’s investigation may contain recommendations for improvements to Frontier’s system and/or a recommendation for an Order to Show Cause (OSC) against Frontier. The OSC could result in sanctions against Frontier.
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 T-03214A-21-0198, T-02115A-21-0198, T-01954B-0198, T-20680A-21-0198.
Commission Approves a Certificate of Environmental Compatibility (CEC) for RE Papago Solar Gen-tie Project
The RE Papago Solar Gen-tie Project (Project) consists of a 34.5/500 kilovolt (kV) Substation and 0.3 mile 500kV transmission line interconnecting the proposed RE Papago photovoltaic solar generating station and storage facility to the Delany Substation. The Project is located approximately 5.5 miles west of Tonopah, Arizona. The Project along with the generating station will allow the addition of more solar electric generation to the grid.
The Arizona Power Plant and Transmission Line Siting Committee held a two-day hearing on this matter. The Committee heard evidence and voted unanimously to approve the Project. The CEC issued by the Committee was forwarded to the Commission, which voted to affirm the Committee’s vote.
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 L-21151A-21-0110-00189.
Commission Finds Investment Advisory Firm Committed Fraud
The Corporation Commission ordered respondent AE Wealth Management, LLC to pay $1,159,400 in restitution to 240 former clients in the Tucson area and a $150,000 administrative penalty for committing investment advisory fraud.
AE Wealth Management is a registered investment adviser with the U.S. Securities and Exchange Commission. In November 2016, AE Wealth Management and Smith & Cox, LLC, an Arizona licensed investment adviser, agreed to become co-investment advisers to Smith & Cox’s clients in southern Arizona.
In March 2018, the Commission’s Securities Division filed an enforcement action against Smith & Cox and other respondents concerning their sales between 2013 and 2015 of U.S. military veterans’ retirement and disability benefits payments to investors. In September 2019, AE Wealth Management learned of that enforcement action and that Smith & Cox had concealed it from AE Wealth Management.
The Corporation Commission found that, instead of terminating its relationship with Smith & Cox and disclosing the 2018 enforcement action to their clients, AE Wealth Management deceived its clients and allowed Smith & Cox to continue to act for eight more months as the clients’ investment adviser.
In settling this matter, AE Wealth Management admits the Commission’s findings, including that it committed investment advisory fraud, for the purpose of this proceeding and agrees to the entry of the consent order. As part of the consent order, AE Wealth Management will pay the $1,159,400 restitution directly to the 240 former clients.
The case involving the remaining respondents—Cornerstone Wealth Management, LLC, Nathaniel S. Barnhart, Christopher Spence Cox, William Andrew Smith and Smith & Cox, LLC—is still pending.
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-21104A-20-0103.
Commission Orders Self-Proclaimed Drug Inventor-Entrepreneur to Repay Investors
The Corporation Commission ordered Charles Hensley of California and his affiliated company, Migranade, Inc. to pay $8,000 in restitution to investors and a $5,000 administrative penalty for committing securities fraud.
In its default order, the Corporation Commission found Charles Hensley and Migranade, Inc., directly and through the other respondents, solicited investors to purchase shares of stock in Neurocyte, Inc. Investors were told that Neurocyte, Inc. was set to “go public” and represented Neurocyte owned the rights to an over-the-counter migraine pain reliever called Migranade, supposedly created by Hensley.
The Commission found Hensley used investor funds for his personal travel, including airfare and a stay at a Las Vegas hotel and casino. Also, the Commission found the respondents failed to disclose a prior guilty plea in 2011 by Hensley related to his delivery of an unapproved drug called “Vira 38,” which was represented to treat influenza. To date, none of the investors have received any investment returns or repayment of their original investment.
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-21149A-21-0089.