For Immediate Release | 12-10-20
Media Contact | Nicole Capone
Direct | 602-542-0713
E-Mail | NCapone@azcc.gov
December Open Meeting Highlights
Phoenix — The Arizona Corporation Commission held its monthly Open Meeting to discuss and vote on various securities, railroad and utilities agenda items. Here is a brief recap of the meeting highlights:
Commission Revokes Securities Salesman Registration and Investment Adviser Rep License of Buckeye Man
The Corporation Commission revoked the securities salesman registration and investment adviser representative license of Roman Alejandro Corona of Buckeye based upon disciplinary action taken by the Financial Industry Regulatory Authority (FINRA).
In July 2019, Corona entered into a Letter of Acceptance, Waiver, and Consent with FINRA, in which he consented to a bar from associating with any FINRA member firm in any capacity. According to the FINRA Consent, Corona was discharged by his employer due to concerns that he did not disclose his outside brokerage accounts and initially denied he had such accounts when asked. Corona then refused to appear for on-the-record testimony in violation of FINRA rules. The Corporation Commission found the revocations of Corona’s Arizona registration and license to be appropriate, in the public interest and necessary for the protection of investors.
Commission Pulls Licenses of Scottsdale Investment Adviser Rep and His Advisory Firm
The Corporation Commission revoked the investment adviser representative license of Jeffrey Francis Thompson of Scottsdale and the investment adviser license of his company, Leyenda Capital Partners, which was doing business as JFThompson Wealth Management, LLC.
The state of Colorado permanently revoked Thompson’s investment adviser representative license and his company’s investment adviser license. Additionally, the U.S. Securities and Exchange Commission barred Thompson from associating with any investment adviser, dealer, broker, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. The Corporation Commission found the revocations of Thompson and his company’s Arizona licenses to be appropriate, in the public interest and necessary for the protection of investors.
Burlington Northern Santa Fe Railroad to Upgrade Four Grade Crossings in Arizona
Commissioners approved an application from the Arizona Department of Transportation (ADOT) on behalf of Burlington Northern Santa Fe Railroad (BNSF) to make needed upgrade modifications to four grade crossings in the metro Phoenix area. The crossings to be upgraded are located at Myrtle and Northern Avenues in Glendale, Dysart Road in Surprise, and Meeker Boulevard in the Sun City West vicinity, all running along Grand Avenue.
The four projects all involve upgrading traffic preemption at the crossings from simultaneous to advanced preemptive along with other improvements such as new LED signal lighting, installing new signal houses, new cantilever lighting, and the installation of black-out signs. The project will be funded by the Federal Highway Administration through its Section 130 Highway Crossing Program and by ADOT through matching funds, in a 90-10 split with 90 percent being Federal funding and 10 percent being state funding. The total cost of the project is $1,162,000, with $1,045,800 coming from the Federal Highway Administration and $116,200 from ADOT.
Appaloosa Water Company Rate and Financing Application Denied
Commissioners denied a rate increase and approved a financing application for Appaloosa Water Company (Appaloosa). Appaloosa is a Class E public service corporation providing water service to approximately 238 customers in Yavapai County, Arizona.
The rate increase was denied because the Commission found that Appaloosa’s existing rate structure provided adequate annual revenue to meet its adjusted operating expenses as well as provide sufficient cash flow for contingencies. The Commission did, however, modify the existing rate design which should result in a decrease to the typical customer using 7,244 gallons of water of $1.31 per month.
In March 2020, Appaloosa filed an amended financing application seeking approval to borrow $556,478.07 in order to complete various capital improvement projects. The Commission approved Appaloosa’s request in an amount not to exceed $149,226.06 by obtaining a loan through the Water Infrastructure Finance Authority (WIFA).
Corporation Commission Provides Plan for Debt Relief for Ratepayers Related to Covid-19 Pandemic
The Commission voted 4-1 to approve an amended plan for electric utilities in Arizona to provide debt relief to ratepayers. In September 2020 Commissioner Sandra D. Kennedy filed a letter outlining concerns that the conclusion of the summer disconnection moratorium coupled with Covid-19 would put many customers in a situation where they would be unable to pay their electric bills. At the September Open Meeting, staff was directed to bring back at a future Open Meeting a Recommended Order to address the concerns outlined by Commissioner Kennedy.
Commissioner Boyd Dunn offered an amendment, with friendly amendments from Commissioners Kennedy and Marquez Peterson which was ultimately adopted. Under the new deferred payment relief plan, customers will be enrolled in a minimum eight-month deferment program, allowing existing arrearages to be averaged over an eight-month period. Customers will also see a $250 credit applied towards their balances. The eight-month deferred payment period will begin on January 1, 2021.
Johnson Utilities, Update from Interim Manager
During an update from Johnson Utilities, LLC, the company’s Interim Manager, EPCOR, informed the Arizona Corporation Commission that funding the capital improvement plan in Decision No. 77330 is a serious concern and remains an issue preventing EPCOR from starting some capital projects. Pecan Phase IV Expansion & IPS Headworks projects cannot commence construction until Johnson Utilities ownership secures financing consistent with Decision No. 77641 as amended by Decision No. 77674 or unless the proposed acquisition of Johnson Utilities by EPCOR is approved.
The Pecan plant is approaching its treatment capacity and it will take approximately 12 months to complete the expansion construction. There are not enough funds available from operations or from hook-up fees to complete this project. Ongoing issues and concerns implicated in the ACC vs. Johnson Utilities lawsuit cited above include the ordering paragraph in Decision No. 76785 to indemnify and hold harmless the interim manager, further legal action against EPCOR, and payment of attorneys' fees by Johnson Utilities (utility operations).
The Section 11 Wastewater Treatment Plant continues to be out of compliance for water and air quality constituents. Many improvements have been made to the plant and the wetlands that have greatly improved noxious odor issues and have made incremental improvements on water quality compliance, but the plant is not capable of coming into compliance with the amount of flows currently going to the plant.
EPCOR maintains its position that the only sure way to come into compliance with all regulatory requirements is to build the Copper Basin plant and decommission the Section 11 plant.
A representative of the ownership of Johnson Utilities, L.L.C., informed the Commissioners that it has sought financing to fund capital projects pursuant to Decision Nos. 77641 and 77674but today has been unsuccessful in securing financing. The Commissioners requested that Johnson Utilities, L.L.C.’s ownership file something in this docket indicating all efforts taken to date by the Company to secure financing.
Outside legal fees for Johnson Utilities continue to accumulate. The available cash balance from operations is approximately $4.572 million.
Commission Concludes Rate Application for Southwest Gas Company
Southwest Gas proposed increasing rates such that the typical single-family residential customer with average annual usage of 24 therms would have seen an increase of $6.23, from $36.16 to $42.39, or 17.23 percent on their bills. The Commission rejected this request.
Instead, the Commission adopted several amendments to the Recommended Opinion and Order, resulting in a smaller increase such that the typical single-family residential customer with average annual usage of 24 therms will see an increase of $3.50, from $36.16 to $39.66, or 9.68 percent on their bills. Commissioner Kennedy voted against this increase.
The revised schedules of rates and charges shall be effective for all service rendered on and after January 1, 2021. Southwest Gas Corporation will notify its customers of the authorized rates and charges and their effective date by means of an insert in its next regularly scheduled billing and by posting notice on its website in a prominent manner and conspicuous location.
A complete broadcast of the Commissioner’s December 8-9, 2020 Open Meeting is available on the Corporation Commission’s website: http://azcc.gov/live.
The Arizona Corporation Commission was established by the state’s constitution to regulate public utilities and business incorporation. The Corporation Commission is Arizona’s co-equal, fourth branch of government. 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. To learn more about the Arizona Corporation Commission and its Commissioners, visit http://azcc.gov.