PHOENIX – The Arizona Corporation Commission held its monthly Open Meeting on October 12, 2022, to discuss and vote on various utility, securities, and railroad items. Highlights from the meeting are below:
Arizona Electric Power Cooperative, Inc. Financing Application Approved
The Commission voted 3-2 to approve a financing application from Arizona Electric Power Cooperative, Inc. (AEPCO). In July 2022 AEPCO filed a financing application seeking approval to secure interim financing in an amount not to exceed $72 million. The financing will be used by AEPCO for a new generation project to procure 80 Megawatts (MW) of generating capacity to meet its resource needs beginning in the summer of 2024. AEPCO states that construction of a new 80MW natural gas generation project will further allow the utility to provide reliability to its members and provide reliability for ongoing and future integration of renewable energy resources. An amendment from Commissioner Jim O’Connor that was adopted removes an interest rate cap which was proposed in the initial Recommended Opinion and 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 E-01773A-22-0187.
Southwest Gas Corporation Customers to Receive Monthly Bill Credit
The Commission voted to approve an application from Southwest Gas Corporation (SWG) seeking approval of a Tax Expense Adjustor Mechanism rate adjustment. The application reflects a decrease of $9 million in base revenue requirement and $4.3 million associated with over refunded Tax Reform Credits. SWG will refund approximately $4.7 million of net tax savings to its ratepayers, based on 739,018,591 therms at the rate of $0.00637 per therm. Residential customers will receive a monthly bill credit of $0.07 during the summer months based on an average consumption of 11 therms, and $0.23 during the winter months based on an average consumption of 36 therms.
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-01551A-21-0411.
Rate Increase and Financing Application for Mescal Lakes Water Systems, Inc Approved
Commissioners voted 3-2 to approve an application from Mescal Lakes Water Systems, Inc. (Mescal Lakes) seeking approval to increase rates and approval for a financing application. Mescal Lakes is a Class E water utility providing water service in an area near Benson in Cochise County, Arizona. The company serves approximately 526 customers in a roughly two square mile service area.
Mescal Lakes has not had an adjustment to their rates since 1999 and was seeking a rate increase due to the length of time since its last rate case and the increased costs to operate its system. Commissioner Jim O’Connor offered an amendment which was adopted that will keep the original rate design contained in the Recommended Opinion and Order while also adopting Staff’s proposed revenue requirements. Mescal Lake’s total operating revenue of $279,558 is an increase of $56,636, or 25.41-percent over test year revenue and with operating expenses in the amount of $232,236, resulting in operating income of $46,322 and an operating margin of 16.97-percent.
Mescal Lakes will also be able to seek financing in an amount not to exceed $1,130,657 from either the Water Infrastructure Finance Authority (WIFA) or its parent company Hearthstone Utilities, Inc. The financing is for projects which include: a new 50,000-gallon water storage tank, replacement of all direct-read customer meters with radio-read meters, installation of a booster pump variable frequency drive system at its inactive Well Site #1, and others.
Customers will see monthly bill increases as a result of the rate increase and the estimated loan surcharge. Residential customers on a typical 5/8 x ¾-inch meter, with a median usage of 3,480 gallons will see an approximate bill increase of $3.53, or 12.31-percent. With the estimated loan surcharge of $18.60, the typical residential bill for a 5/8 x ¾-inch meter, with a median usage of 3,480 gallons, would increase to $50.81, a total increase from current rates of $22.13, or 77.16-percent.
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 numbers W-02472A-22-0119 and W-02472A-22-0120.
Commission Finds Hedge Fund Manager Bilked Investors with Million-Dollar Penny Stock Scheme and Other Investments
The Corporation Commission ordered hedge fund manager Christopher S. Walkup of Scottsdale and his affiliated company Wealthcorp, LLC to pay $1,268,446 in restitution and $296,000 in administrative penalties for defrauding investors.
The Commission found Mr. Walkup and his company engaged in twenty transactions with multiple investors. The Commission found Mr. Walkup touted his investing and business acumen and described himself as the manager of a large hedge fund without disclosing information necessary to assess the truth of these claims. Mr. Walkup or his company were not registered to offer or sell securities in Arizona.
The Commission found the investors purchased shares of stock in Amylex Pharmaceuticals, a Philippines-based company and/or Northsight Capital, a company in the marijuana business.
Among the litany of material omissions and misleading statements, the Commission found Mr. Walkup overstated the company stock’s prospective value increase in a matter of months but omitted the company’s past performance, non-existent revenue, operating losses and liabilities. Additionally, the Commission found Mr. Walkup failed to discuss financial risks and provide offerees and investors financial or operation information as required by law.
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-21066A-18-0415.