ANNUAL REPORT FISCAL YEAR-2016-2017

 
    The Arizona Corporation Commission’s mission is to power Arizona’s future by ensuring safe, reliable, and affordable utility services; growing Arizona’s economy as we help local entrepreneurs achieve their dream of starting a business; modernizing an efficient, effective, and responsive government agency; and protecting Arizona citizens by enforcing an ethical securities marketplace.  
     
    WHO WE ARE  
       
 

 

 

The Arizona Corporation Commission was established by the state’s constitution to regulate public utilities and business incorporation. The five Commissioners elected to the Corporation Commission oversee executive, legislative, and judicial proceedings on behalf of Arizonans when it comes to their water, electricity, telephone, and natural gas resources as well as the regulation of securities, pipeline, and railroad safety.

Arizona is one of only 13 states with elected Commissioners. In the other 37 states, Commissioners are appointed by either the governor or the legislature. The Arizona Commissioners serve a four-year term and can serve two consecutive terms. In case of a vacancy, the governor appoints a Commissioner to serve until the next general election.

To learn more about the Arizona Corporation Commission and its Commissioners, visit http://azcc.gov/commissioners.

 
       
    MEET THE COMMISSIONERS  
       
   
 

 

Chairman Tom Forese was sworn into office in January 2015 and became Chairman in January 2017.
Full bio: http://azcc.gov/tforese

   
 
   
       

Commissioner Burns was sworn into office in January 2013. He was re-elected and began his second term in January 2017.
Full bio:
http://azcc.gov/rburns

 

Commissioner Little was sworn into office in January 2015. He served as Chairman from January to December 2016. Commissioner Little resigned in September 2017 to accept a position with the Department of Energy.
 

 

Commissioner Tobin was appointed by the Governor to fill an empty seat on the Commission in January 2016. He was elected to his first term and sworn into office in January 2017.
Full bio:
http://azcc.gov/atobin

 

 

Commissioner Dunn was sworn into office in January of 2017.
Full Bio:
http://azcc.gov/bdunn

 
 
    2016-2017 KEY ACCOMPLISHMENTS  
   

 

 

 

VALUE OF SOLAR
The Arizona Corporation Commission made a historic decision that balances the cost and the value of solar by creating new solar tariffs and rules. The decision offers fairness to current customers, incentives for new customers, and fairness to non-solar customers. It represents a monumental achievement and, when considered as part of a major rate case, provided the groundwork for the first of its kind agreement nationwide between solar interests and a large electric company.

 

 

HELPED RURAL COMMUNITIES CONNECT
The Arizona Corporation Commission entered a unique partnership with the Governor’s Office, the Superintendent of Public Instruction, the Secretary of State, and a nonprofit called EducationSuperHighway to build broadband infrastructure for rural and tribal schools and libraries that currently do not have adequate internet services. The initiative will impact entire communities regarding economics, public safety, and community access to telemedicine and other internet-based services.

 

 

 



PROTECTED RURAL WATER CUSTOMERS

In the 2016-2017 fiscal year, the Arizona Corporation Commission created several new policies to help small, struggling water companies and their customers. The Commission created a Small Water Ombudsman Office and worked with other key state agencies to create the Water Emergency Team. The Commission was able to allocate monies from the Legislature's designated Small Water Systems Fund for the first time and saw the first, streamlined acquisition of a small water company under the new policies.

 

 

 

STREAMLINED FILINGS FOR LLCs AND CORPORATIONS

In the 2016-2017 fiscal year, the Corporations Division launched several processes that streamline corporation, LLC business, and utility filings by allowing more online services and email communications versus standard mail. The Corporations Division conducted a “lean” audit which helped identify areas for increased efficiency and develop a process to enter documents into the system the same day they are received.

Utilities and other parties in cases have the option to receive all filings by email instead of standard mail which reduces time, and the costs of paper and postage. Smaller utilities, which account for 82% of utilities in the state, now need to submit one copy of their filing compared to the 13 copies previously required.

All corporations are able to file their Annual Reports online without expedited fees. Reports are examined at the time of filing by computer rather than manually, reducing the processing time to one day and saving Arizona corporations an estimated $700,000 per year. New laws, supported by the ACC, also went into effect in 2016-2017 that reduce regulatory burden and increase the use of technologies to make filings more efficient.

 

 
    PRIORITIES  
   

 

1. ENSURING SAFE, RELIABLE, AFFORDABLE UTILITY SERVICES


The Utilities Division audits utilities statewide to ensure fairness in rates and stability in services to Arizona citizens. The Commission and Commissioners team with other state agencies like the Arizona Department of Environmental Quality (ADEQ) and Arizona Department of Water Resources (ADWR) to find solutions for companies and customers facing a water crisis. In the 2016-2017 fiscal year, the Commission created an interagency Water Emergency Team and created the Small Water Ombudsman Office.

Last year, the Commission regulated 600 Arizona utilities including water and sewer, electricity, gas, telecommunications, and irrigation companies. Staff audited 22 rate cases to determine fair and reasonable rates for utility companies and rate payers, including auditing rate applications for Edmonton Power Corporation (EPCOR), Tucson Electric Power (TEP), UniSource Energy Services, and Arizona Public Service Company (APS) which was completed at the start of the next fiscal year. Here are the results:

  The Commission adopted new policies to allow larger water companies to acquire smaller non-viable companies in a more streamlined fashion. Eagletail Water customers near Tonopah were the first to benefit.

 

  • Completed landmark Value of Solar Decision that ensures fairness to solar and non-solar customers with the end of net-metering.
  • Created the Water Emergency Team to resolve and prevent a water crisis. The team includes representatives from other key state agencies like ADEQ and ADWR to find solutions and proactive responses to keep services flowing safely to residents.

 

  • Processed 44,146 dealer, salesman, securities registrations and investment advisor licenses, and advisor representative licenses.

    Formed 74,482 new corporations and LLCs.

 

2. GROWING ARIZONA'S ECONOMY


The Arizona Corporation Commission’s Corporations and Securities Divisions provide efficient and cost-effective avenues for new business formations and new investment registrations. The Utilities and Safety Divisions ensure the stability of the state’s utility, railroad, and pipeline infrastructures to ensure communities have safe, reliable services which provide the confidence needed for new business to enter Arizona or expand.

  • Changed Arizona Universal Service Fund rules to provide money for broadband construction to connect underserved rural and tribal schools to the internet. This change will raise $8 million in state funds for broadband expansion. The Commission’s work highlights a team commitment with the Governor, the Superintendent of Public Instruction, and the Secretary of State to connect more than 250,000 rural students to the internet who currently do not have an adequate service.

 

   


 

3. PROTECTING ARIZONA'S CITIZENS

 

 

The Commission’s Securities Division helps protect citizens from fraud and takes action against investment professionals who violate state and federal securities laws. The Safety Division inspects pipeline and railroad operations around the state, proactively identifying hazards. The Commission’s Utilities Division handles complaints and conducts field investigations to protect customers against unfair utility practices as well as resolves any billing and service quality complaints.

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  • Assisted 1,899 customers with disputes or complaints
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  • Began investigation into Brooke Water, concerns were raised how the company communicated an outage to the Commission, other government leaders, and the community.
  • Securities Division
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  • Conducted 45 public education programs through Securities Division.
  • Initiated 26 Securities investigations, issued 20 cease and desist orders, ordered $16,951,076 in restitution and $460,000 in penalties.
  • Commission found a convicted felon, a Surprise man, and a Craigslist advertiser committed securities fraud. In separate cases, they are believed to have bilked investors out of more than $12 million.

 


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  • Safety Division

    Inspected seven major intrastate natural and liquefied pipeline distribution operators, 730 master meter inspections, and investigated 128 reported violations of the Underground Facilities Law.

  • Conducted underground damage prevention seminars through partnering with AZ811.

 

 

 

 

 

 

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  • Approved three public railroad/highway crossings for upgrades using federal funds and 11 improvements for existing at-grade crossings.
  • Inspected 1,965 miles of railroad track, 2,055 freight cars, 242 locomotives, 601 at-grade crossings and nine industrial track facilities.
  • The Commission ordered railroad safety improvements, and the ADOT construction project at Bell Road and Grand Avenue in Surprise was completed, creating safer railroad crossing conditions and improved traffic flow.

 

 

 

 

 

4. EFFICIENT, EFFECTIVE & RESPONSIVE GOVERNMENT

 

The Commissioners, Commission’s Divisions, and staff strive to find proactive, consumer-friendly, modern, and transparent services and resources.

Securities Division implemented a new computer database which allows investigators and examiners easier access to all available case data.

Docket Control automated notifications for those who sign-up for electronic notification for service lists on case dockets.

  • New legislation helped corporate filings become more efficient which provides cost savings for Arizona business owners.
  • Hearing Division launched paperless services for utilities and parties involved in cases before the Commission.

 

 
    ORGANIZATION  
       
   

The Commission is organized into nine divisions; Administrative, Communications, Corporations, Hearing, Information Technology, Legal, Safety, Securities, and Utilities. All divisions are headed by a Division Director who reports to the Executive Director.

EXECUTIVE DIRECTOR    

 

The administrative head of the Commission is the Executive Director who serves at the pleasure of the Commissioners. Ted Vogt joined the Corporation Commission in January 2017 and is responsible for the day-to-day operations of all divisions.

Prior to joining the Commission, Ted served three years in the Arizona House of Representatives. After leaving the Legislature, Governor Brewer appointed him to lead the Arizona Department of Veterans' Services. He later served as Chief of Operations for Governor Ducey.

 

 
Ted Vogt
     
     

OPEN MEETING AND PROCEEDINGS
The Commission conducts formal hearings on various Commission issues including rate requests, complaints, securities violations, railroad upgrades, and utility service area extensions. Those items then go before the Commissioners for a vote in the monthly Open Meeting. Also, the Commissioners run staff meetings to provide administrative guidance and policy direction. The Commissioners also hold workshops on key policies impacting utility services and technology to grow the future of Arizona’s utilities and economy. Votes are only taken in Open Meetings and Staff Meetings.

The Commissioners hold public comment at the Commission and publicly noticed meetings in communities around the state. In the fiscal year 2016-2017, Commissioners, along with the Consumer Services Section, held 29 public comment or town hall meetings throughout the state, including Douglas, Flagstaff, Beaver Valley, Camp Verde, Parker, and Yuma.

  In the last fiscal year, the Commission held 83 public hearings/arbitrations, procedural, and prehearing conferences at Commission Hearing Rooms in Phoenix and Tucson. The proceedings are available online for live viewing and are archived online for viewing. http://azcc.gov/livebroadcast
     

83 public hearings/arbitrations, procedural/pre-hearing conferences
29 public comment/town hall meetings
9,355 filings docketed and distributed
277 live broadcasts of Open Meetings, Hearings, Staff Meetings, and Workshops

FISCAL RESOURCES
The Commission is a self-funded agency and contributes more to the state's general fund than it receives. Last year, the Commission generated $60,079,000 with $29,716,900 of that going to the state’s general fund. The Commission contributed $367,000 more to the general fund in the 2016-2017 fiscal year compared to the previous fiscal year.

 

 
    WHAT IS AHEAD?  
       
   

FIVE-YEAR STRATEGIC PLAN

Electronic Filing for Utilities and other Parties
The Commission has been implementing paperless services for docket and corporation filings. By the fourth-quarter of 2019, the Commission estimates all filing and processing will be done electronically.

Arizona Business One-Stop
The Commission, Secretary of State, Arizona Commerce Authority, Department of Revenue, and the Registrar of Contractors are proposing to create a single web portal through which customers can complete required filings at each agency. This would provide efficiencies for new business owners and help them understand all the requirements for their business.

Succession Planning
Nearly 20 percent of the Commission’s workforce is eligible for retirement by 2023. The Corporation Commission is looking to identify skills needed in the next three years and where there may be gaps in recruiting personnel for these skill sets. The Commission is refining its recruitment process, using resources like the National Association of Regulatory Commissioners and Arizona Department of Administration for leadership recruitment.

Fostering a Culture of Continuous Improvement and Customer Service
Staff will focus on implementing Lean Management practices and measures for reducing delays in processing rate cases, business filings, conducting safety inspections, and investigating fraud to deliver excellence in service to customers.

 
       

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