PHOENIX – The Arizona Corporation Commission held its monthly Open Meeting on July 12 and 13, 2022 to discuss and vote on various utilities and securities items. Below are the highlights from the meeting:
Remedy Order Against Frontier Communications Approved
The Commission voted to approve a Remedy Order for Citizens Telecommunications of the White Mountains, Citizens Utilities Rural Company, Navajo Communications Company, and Frontier Communications of the Southwest (collectively Frontier). Following discussion at the June Open Meeting, the Commission directed Staff to prepare for its consideration a remedy plan for Frontier, citing several points Commissioners wanted included in the plan. This move comes after a lengthy period of sporadic 911 and other service outages in Frontier’s service territory.
Chairwoman Lea Márquez Peterson’s amendment adopted several recommendations from St. Johns’ Police Chief Lance Spivey which added provisions to the Remedy Order. All provisions contained in the Remedy Order are outlined below:
Commissioner Sandra Kennedy’s amendment directed Staff to examine the viability of the appointment of an interim manager for Frontier. However, this amendment does not have any impact on the provisions contained in the Remedy Order.
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-03214A-21-0198 et al.
Global Water Utilities Rate Consolidation Approved
The Commission unanimously voted to approve a rate case application from Global Water Utilities. On August 28, 2020, Global Water Utilities (Global) filed rate case applications for 11 separate utilities: Santa Cruz, Palo Verde, Northern Scottsdale, Tonopah, Eagletail, Red Rock, Turner Ranches, Picacho Water, Picacho Utilities, Balterra, and Hassayampa. As part of its request, Global proposed a region-based rate consolidation, grouping Santa Cruz, Red Rock (water), and Picacho Water together in the Pinal County Water Consolidation; grouping Palo Verde, Red Rock (wastewater), and Picacho Utilities in the Pinal County Wastewater Consolidation; and grouping the Tonopah, Eagletail, and Northern Scottsdale utilities in the Maricopa County Water Consolidation. Balterra and Hassayampa’s rates will also be harmonized with common rate structures.
The Recommended Opinion and Order (ROO) voted on by the Commission approved the proposed rate consolidations. It also adopts a 9.2-percent return on equity and accepts 12 months of post-test year plant. Further, the ROO adopted a 20-percent acquisition premium for Turner Ranches and Red Rock, which will be recovered across the entire Pinal County Water and Wastewater consolidations.
Several amendments were adopted during the Open Meeting. Chairwoman Lea Márquez Peterson’s amendment requires Global to consolidate into single public service corporations to match the rate consolidation requests that were approved. Commissioner Sandra Kennedy’s amendment ensures that the Commission retains its ability to review and take potential action to the Internal Revenue Service’s issuance of a private letter ruling related to Global. Finally, Commissioner Jim O’Connor’s amendment approved a Sustainable Water Charge Adjustor without a forward-looking component, allowing the rate to adjust as often as semi-annually, to allow the rate to be adjusted upon Staff review and approval, and require the Plan of Administration be approved by the Commission.
The monthly bill impacts after Phase 3 for the various utilities are below:
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 SW-20445A-20-0214 et al.
UNS Gas, Inc. Purchased Gas Adjustor Surcharge Approved
The Commission voted to approve an application from UNS Gas, Inc. (UNS) for a temporary increase to its Purchased Gas Adjustor (PGA) rate. UNS filed its application in May 2022 seeking this approval to reduce the current under-recovered PGA bank balance related to the unprecedented changes in the natural gas commodity pricing market that have occurred over the past 24-months. UNS delivers natural gas to approximately 165,000 customers in Santa Cruz, Mohave, Yavapai, Coconino, and Navajo Counties.
As of March 31, 2022, the UNS PGA bank balance was under-collected by approximately $7.5 million. The under-collection is largely due to the volatility in wholesale pricing of natural gas from the Permian and San Juan Basins. Natural phenomena, such as winter storm Uri in Texas and record-breaking heat waves in 2020 and 2021, have contributed directly to the sharp fluctuations in the wholesale natural gas market.
The new PGA surcharge will be $0.04150 per therm which will allow UNS to recover the $7.5 million in under-collection. Customers with an average monthly usage of 43 therms will see an approximate monthly bill increase of $1.81.
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-04204A-22-0116.
Arizona Electric Power Cooperative, Inc. Transmission Project Approved
The Commission voted to approve sample order 2 granting a modified Certificate of Environmental Compatibility (CEC) by the Arizona Power Plant and Transmission Line Sighting Committee for Arizona Electric Power Cooperative, Inc. (AEPCO). The CEC allows AEPCO to construct a new 115/138 kilovolt (kV) transmission line called the Saguaro to Marana 115/138 kV line.
The project will consist of construction and operation of a new transmission line between the planned Trico Electric Cooperative Inc. Adonis Substation and the existing AEPCO Marana Substation near Marana, Arizona, consisting of two separate transmission line configurations. The project will be used by three separate electricity providers, AEPCO, Trico, and Tucson Electric Power Company.
The CEC was modified following public comment from a resident of the San Lucas community. Chairwoman Lea Márquez Peterson offered an amendment which was adopted that stipulates that the line be constructed as far north from the San Lucas community as feasible outside the 300-foot corridor. The amendment further requires AEPCO to continue to communicate with the San Lucas HOA and the town of Marana.
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 L-00000A-22-0102-00203.
Commission Orders More than $4.49 Million in Restitution for Investors Defrauded by Real Estate Investment Scheme
The Corporation Commission found Premier Asset Management Group, LLC and multiple individuals defrauded investors with a real estate investment scheme involving unregistered promissory notes.
The Commission ordered respondents Michael Barry Eckerman of Paradise Valley, Bernardine Ann Michalik (Shields) of Scottdale, Venessa Sandoval of Tempe, their spouses, and Premier Asset Management Group LLC to pay restitution amounts ranging from $1,460,259 to $4,495,136 and to pay administrative penalties of up to $400,000.
The Commission found Premier Asset Management Group, LLC bought high-end real estate properties to fix up and rent out or sell, funded with notes purchased by investors, most of whom lived in Arizona.
The Commission found the promissory notes were marketed to potential investors via cold calls, promising above market returns that were higher than other typical investments. However, none of the respondents were registered to offer or sell securities in Arizona.
The Commission found the respondents committed securities fraud by failing to disclose investment risks, Mr. Eckerman’s history of failed real estate companies, and various legal actions taken against Mr. Eckerman and his prior real estate companies. In January 2022, the Commission sanctioned Mr. Eckerman and Luxury Management Group, LLC for defrauding investors with an investment involving real estate and luxury automobile rentals (Decision #78419).
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 S-20996A-16-0467.
Commission Sanctions Two Arizona Realtors and Start-up Company for Fraudulent Real Estate Securities Offering
The Corporation Commission ordered real estate agents Rosicella Joplin and Christopher Olson of Scottsdale and their affiliated company Sync Title Agency, LLC (Sync) to pay $50,000 in restitution and a total of $15,000 in administrative penalties for committing securities fraud.
The Corporation Commission found the respondents offered and sold the unregistered membership interests in Sync while not registered to offer or sell securities in Arizona.
The Corporation Commission found the respondents misrepresented that the investment in Sync would be a “slam dunk” and was “basically fail-safe” and that Sync would be open for business within a month.
The Corporation Commission also found the respondents failed to explain to investors that a portion of the invested funds would be used for the personal expenses of Mr. Olson and Ms. Joplin and for their other business operations rather than for Sync’s start-up and capitalization.
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-21131A-20-0345.