PHOENIX – The Arizona Corporation Commission held its monthly Open Meeting on February 8 and 9, 2022 to discuss and vote on various utilities and securities items. Below are highlights from the meeting:
Commission Acknowledges Integrated Resource Plans for Regulated Electric Utilities
Commissioners acknowledged 2020 Integrated Resource Plan (IRP) applications filed by Arizona Public Service Company (APS), Tucson Electric Power Company (TEP), and UNS Electric, Inc. (UNS). IRPs are how Commission-regulated electric utilities plan and procure their various energy mixes and resource portfolios for the next 15 years (2020-2035). In addition, Commissioners agreed that Arizona Electric Power Cooperative, Inc. had satisfied its IRP requirements. Myriad amendments were discussed and adopted during the Open Meeting; they are discussed in further detail below.
Chairwoman Lea Márquez Peterson had one standalone amendment adopted during the open meeting, and one joint amendment with Commissioner Jim O’Connor. Her standalone amendment requires APS, TEP, and UNS to use a capacity expansion model in their next IRP process. This will provide additional information for Commissioners to consider in future resource decision. The joint amendment requires APS, TEP, and UNS to work with stakeholders in each utility’s next rate case to develop one or more proposals for the Commission’s consideration to include Demand-Side Resources (such as smart thermostats and energy efficiency upgrades) as part of each utility’s capital investments. The Southwest Energy Efficiency Project and Residential Utility Consumer Office supported Commissioner O’Connor and Chairwoman Márquez Peterson’s joint amendment.
Commissioner Sandra D. Kennedy had several amendments adopted. Her first requires APS and TEP include in their next IRPs a detailed early retirement analysis for their ownership stake in two coal-fired power plants, Four Corners Power Plant and Springerville Generation Station. The second amendment requires APS, TEP, and UNS to include in future IRPs an analysis of opportunities for community scale renewables and storage technology interconnected to the local distribution grid. Her third amendment requires utilities in future IRPs provide objective analysis of portfolios without attempting to steer the Commission to a desired outcome. Her final amendment adds transparency to the IRP process by requiring APS, TEP, and UNS negotiate modeling licenses that permit up to 12 qualifying stakeholder groups and Commission Staff to participate in the process, allowing for expert third-party vetting of utility resource modeling.
Commissioner Justin Olson had one amendment adopted during the proceedings. His amendment will require APS, TEP, and UNS, in addition to the 10 resource portfolios they present in their future IRPs, to also present an analysis of a technology agnostic portfolio, which is the least-cost method of safely and reliably meeting customer demand.
Commissioner Anna Tovar had two amendments adopted. These amendments, one pertaining to APS and one to TEP, require each utility to maximize the value and cost-effectiveness of energy efficiency by requiring that that each utility demonstrate they have implemented 1.3% energy savings over the next three years in their next IRP filing. Further, by January 1, 2030, APS and TEP must include in their IRPs a resource portfolio that includes a demand-side resource capacity equal to at least 35% of 2020 peak demand. It also requires future IRP portfolios include one that eliminates coal unit must-run designations, a portfolio that removes modeling restrictions that limit the amount of energy efficiency that can be selected as a resource option, and a portfolio that removes modeling restrictions on the economic cycling and economic retirement of coal units.
Commission Jim O’Connor, in addition to his joint amendment with Chairwoman Márquez Peterson, had an additional amendment adopted. His amendment requires APS, TEP, and UNS each file in their 2023 IRP a market report on the status of their engagement in regional market development forums, including but not limited to: the Energy Imbalance Market, the Western Market Exploratory Group, the Enhanced Day Ahead Market of the California Independent System Operator, and the Western Resource Adequacy 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-00000V-19-0034.
Tucson Electric Power Company Distributed Generation Interconnection Manual Approved
Commissioners unanimously approved Tucson Electric Power Company’s (TEP) Distributed Generation Interconnection Manual at its February Open Meeting. The creation of these manuals was required following the Commission passing rules dealing with the interconnection of distributed generation facilities. TEP’s manual lays out technical and safety requirements that customers within its service territory must follow when interconnecting a distributed generation system, such as residential and commercial solar projects, to the existing grid. The manual is meant to create a standardized process for customers wishing to interconnect a distributed generation system. Several amendments were offered and adopted during the Open Meeting.
Commissioner Anna Tovar had three amendments adopted, one being a friendly amendment to an amendment offered by Commissioner Jim O’Connor. Her first amendment removes a financial risk to a customer should a project exceed the 180-day deadline for completion. The amendment requires utilities to provide an extension of time to complete the project if the customer can demonstrate they have been moving forward in good faith. As the manual was originally drafted, the customer would forfeit any monies expended towards completion if an extension was not granted. Commissioner Tovar’s second amendment requires the manual to be modified to remove the barriers to Super Fast Track and Fast Track systems. It also resolves issues regarding burdensome equipment requirements, transfer trip shutdown equipment, cost accounting, deposit amounts, and inverter requirements.
Commissioner Jim O’Connor had two amendments unanimously adopted. His first permits the use of Meter Socket Adapter (MSA) technology, which will save customers time and money with what could otherwise be a costly and complicated upgrade of their existing electrical panel. Commissioner Tovar’s friendly amendment to Commissioner O’Connor’s MSA amendment adds a reporting requirement for safety concerns associated with MSAs, and an annual reporting requirement to detail how many MSAs are deployed in TEP’s service territory. Commissioner O’Connor’s second amendment allows TEP the ability to submit a revised manual with a list of MSA products, brands, and features which will not be allowed for use by customers in TEP’s service territory. However, TEP must submit that list for Commission approval before any products are disallowed for use by 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 E-01933A-20-0116.
Commission Approves Procedural Timeline to Examine Just and Equitable Transition for Coal-Impacted Communities
Commissioners approved Commission Staff’s recommended procedural timeline and process for examining the just transition for coal-impacted communities. This issue involves the closures of fossil fuel generation plants throughout Arizona, specifically in Native American communities in Northeastern Arizona.
The adoption of the procedural timeline lays out a schedule for conducting workshops in the impacted communities and putting together a stakeholder policy working group to develop and make policy recommendations to the Commission. Both in-person and virtual workshops and town hall meetings will be held throughout the state and in New Mexico beginning in mid-February to hear from the impacted communities. Commissioner Anna Tovar had an amendment adopted that will add an additional five virtual town hall meetings to the proposed schedule.
The policy taskforce will submit its final recommendations to the docket by May 2, 2022. On May 11, 2022, the policy taskforce will hold a workshop to present its findings and final recommendations. By July 15, 2022, the recommended opinion and order and staff report must be docketed.
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-00000A-21-0010.
Navopache Electric Cooperative, Inc. Energy Efficiency Waiver Denied
Commissioners approved Navopache Electric Cooperative, Inc.’s (Navopache) energy efficiency implementation plan. Commissioner Sandra D. Kennedy offered an amendment which was adopted that rejected Navopache’s request for a permanent waiver of its obligations under the Commission’s Energy Efficiency Standard. The amendment requires Navopache to develop a plan to come into compliance with the standard. The energy efficiency programs include an LED lighting program, a consumer education program, a weatherization program, an audit program, a retrofit program, and an ETS heater 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-01787A-21-0183.
Commission to Send Letter to Regulated Utilities Regarding Covid-19 Vaccine Mandates
Commissioners on a 3-2 vote approved a motion from Commissioner Jim O’Connor to direct Commission Staff to draft a letter to regulated utilities regarding Covid-19 vaccine mandates. Specifically, the letter will convey that the Commission has approved a no vaccine mandate policy for regulated utility employees. Additionally, the Commission asks that utilities file in the docket any information about employees who are or have been terminated because they did not get vaccinated. Finally, the letter will let utilities know that the Commission may impose fines or penalties on any regulated utility found to be in violation of this policy.
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 RU-00000A-21-0373.
Commission Sanctions Promoters of Offshore Trading Program, Orders $450,000 in Restitution for Investors
The Arizona Corporation Commission ordered Archimedes Foundation Trust Group of Mesa and multiple other respondents to stop promoting an offshore trading program and to pay restitution and administrative penalties for bilking investors out of $450,000.
The Corporation Commission found that respondents Archimedes Foundation Trust Group, David Hart, Kirk Koskella (aka Kirk James), Conrad Defriese and Wolfgang Kovacek offered and sold unregistered investment contracts and promissory notes issued by Archimedes Foundation Trust Group within or from Arizona to six investors. However, the respondents were not registered to offer or sell securities in Arizona. The investors have not received any investment returns or a return of their $450,000 principal investment.
The Corporation Commission ordered the respondents to pay the following:
The Corporation Commission found that Koskella, using the name Kirk James, fraudulently claimed to be an attorney and the "legal advisor" of Archimedes Foundation Trust Group. Additionally, the Commission found Archimedes, Hart, Koskella, Defriese, and Kovacek made misrepresentations and/or omissions of material facts, including failing to disclose to at least two of the investors Koskella's federal criminal conviction and permanent injunction from the Securities and Exchange Commission (SEC) for fraudulently selling $500 million in corporate revenue bonds that the Koskella knew were worthless.
Also, the Corporation Commission found that, as signers on Archimedes' business account, Hart and Tucker misused a portion of the investor's funds for personal expenses not related to the Archimedes investment program.
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-21157A-21-0195.
Commission Finds Promoter of Offering in OTC Drug Stock Defrauded Investors
The Arizona Corporation Commission ordered respondents Bret Butler Reiss of Scottsdale and his affiliated company, Global Capital and Equity, LLC, to pay $436,500 in restitution to investors and a $30,000 administrative penalty for committing securities fraud.
The Corporation Commission found Reiss and affiliated company solicited investors to purchase shares of stock in Neurocyte, Inc. Investors were told that Neurocyte, Inc. was set to “go public,” representing the company owned the rights to an over-the-counter migraine pain reliever called Migranade. The Corporation Commission found the respondents misrepresented to investors that some ex-NFL football players and a well-known actor had taken Migranade and experienced relief.
The Corporation Commission found that Reiss met some of the 22 investors through an online dating website but did not inquire as to each investor’s net worth or whether or not the investor would qualify as an accredited investor. Reiss and his affiliated company were not registered to offer or sell securities in Arizona.
The Corporation Commission found Reiss and his company represented to investors that they did not have to be registered to sell Neurocyte stock because it was an exempt offering. Further, the respondents did not tell investors if the company Neurocyte stock was required to be registered and frequently created a sense of urgency for investors to purchase shares.
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.
Commission Sanctions Former Securities Salesman and His Real Estate-Related Companies for Defrauding Elderly Investor
The Arizona Corporation Commission ordered former securities salesman Jeffrey Robert Simbric of Campe Verde and his affiliated companies—AZ REl School, LLC and SFG Real Estate Holdings, LLC—to pay $14,371in restitution and a $5,000 administrative penalty for defrauding an elderly investor with a real estate scheme.
The Corporation Commission found Simbric met the elderly investor after selling him a walk-in bathtub and installing it in the investor’s home. Subsequently, it was found Simbric asked the elderly investor if he wanted to invest in “flipping” houses, but Simbric and his companies were not registered at that time to offer or sell securities in Arizona.
The Corporation Commission found Simbric misrepresented to the elderly investor that he had purchased properties related to the investment, using investor funds for his personal use. The Commission found that Simbric had been barred from acting as a securities salesman by the Financial Industry Regulatory Authority (FINRA) for deceiving a client and was a convicted felon for theft and criminal impersonation.
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-1133A-20-0382.