PHOENIX – The Arizona Corporation Commission held its monthly Open Meeting on December 15 and 16, 2021 to discuss and vote on various utilities and securities matters. Below are highlights from the meeting:
Commission Adopts Comprehensive Transportation Electrification Plan for Arizona
The Commission adopted a comprehensive transportation electrification plan for the state of Arizona at its December Open Meeting. The bipartisan plan calls for putting approximately 1 million electric vehicles on the road by 2030 according to the plans filed by Arizona Public Service Company (APS) Tucson Electric Power Company (TEP), and UNS Electric, Inc. (UNSE).
The statewide transportation electrification plan will aim to further encourage adoption of electric vehicles across all vehicle classes, including light duty vehicles, medium duty parcel delivery trucks, transit buses, and school buses. Plans also aim to increase the continued build-out of charging infrastructure. The plan will focus on working collaboratively with local and state government entities, community stakeholders, and manufacturers to achieve increased transportation electrification in Arizona.
Several amendments were advanced during the Open Meeting. Chairwoman Lea Márquez Peterson had two amendments adopted which deal with the utility company’s fleets of vehicles, as both APS and TEP have committed to electrifying their vehicle fleets in the coming years. Her amendments require the utilities to file cost reports for that transition for Commission review. Her second amendment requires utilities file, within 120 days of this decision, a budget for each of the programs in the transportation electrification plan.
Commissioner Anna Tovar also had two amendments adopted. Her first requires utilities to file transportation electrification plans every three years. It also ensures that those plans include programs that serve all customer segments, address key barriers to electric vehicle adoption, establish principles to guide future plan development, and are developed with the input of stakeholders. Her second amendment changes deadlines for annual and semi-annual reports to March 15 and September 15 to better align with the utility reporting timeframe for demand-side management programs and to ensure that utilities have a full year of program data to report in their filings.
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-21-0104.
Commission Approves Line Siting Application for Salt River Project to Serve Intel’s Expansion
The Commission unanimously approved a Certificate of Environmental Compatibility for Salt River Project Agricultural Improvement and Power District (SRP) following the recommendation from the Arizona Power Plant and Transmission Line Siting Committee.
The application was to construct a new overhead double-circuit 230 KV transmission line from the existing Henshaw Substation to Intel’s Ocotillo Campus, a new RS-28 Substation to be constructed on Intel’s Ocotillo Campus, and an overhead transition corridor at the existing Schrader Substation – all within the City of Chandler. This will allow Intel to construct new manufacturing capacity, investing more than $1 billion dollars in manufacturing expansion in Arizona, marking the largest capital investment in Arizona history.
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-02217B-21-0322-00195.
Arizona Public Service Company Third-Party Solar and Battery Storage Contracts Approved
The Commission approved an application from Arizona Public Service Company (APS) to include third party storage costs in its Power Supply Adjustor for two battery storage projects, and a third project that pairs solar generation with battery storage.
The first agreement is for 100 MW or 400 MWh of energy storage that will be located near the APS Westwing Substation at the intersection of Happy Valley Road and 119th Avenue in Sun City. The system is expected to be in service by June 1, 2023. The second agreement is for 200 MW or 800 MWh of energy storage that will be located near the APS Raceway Substation at the intersection of Old Carefree Highway and Beardsley Canal Service Road in Peoria. The system is expected to be in service by June 1, 2024. The third agreement is for 60 MW of solar and 60 MW or 240 MWh of energy storage that will be located at 39903 West Elliot Road in Tonopah. This system is expected to be in service by June 1, 2023. All three agreements have 20-year contract terms.
Chairwoman Lea Márquez Peterson offered two amendments which were adopted. The first requires that if APS provides notice of regulatory approval to one of the parties to the Energy Storage System Power Purchase Tolling Agreements then APS must also file a copy of the notice with the Commission. This will help protect ratepayers and give the Commission a better understanding of the impact of its decisions on future rate cases. Her second amendment directs Commission Staff to review, in APS’s next rate case, all Purchase Power Agreements included in the Power Supply Adjustor which have not yet been reviewed for reasonableness and prudency.
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-01345A-21-0348.
Commission Moves to Prevent Utility Employees from being Terminated for not Following Vaccine Mandates
The Commission on a 3-2 vote approved a proposal from Commissioners Justin Olson and Jim O’Connor that will prevent the firing of utility employees who choose not to receive the COVID-19 vaccine. Due to looming federal vaccine mandates or policies utilities may adopt independently, Commissioners Olson and O’Connor moved to advance a policy that prohibits regulated utilities from developing, implementing, and enforcing COVID-19 vaccine policies that compel their employees to be vaccinated as a condition of employment. The majority of the Commission concluded that utility employees should not have to choose between receiving a vaccine and keeping their job.
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.
Cactus State Utility Operating Company, LLC Acquires 16 Arizona Water Utilities
The Commission approved the sale of assets and transfer of Certificates of Convenience and Necessity for 16 small, troubled Arizona water utilities to Cactus State Utility Operating Company, LLC (Cactus State). Cactus State is owned by CSWR, LLC. CSWR owns and operates water and wastewater systems in Arkansas, Kentucky, Louisiana, Mississippi, Missouri, Tennessee, and Texas serving approximately 49,000 water customers and approximately 78,000 wastewater customers. Allowing Cactus State to purchase these 16 water companies throughout Arizona will ensure that they are properly managed to provide safe and reliable service to Arizona consumers. Rates for customers of the 16 water companies will remain the same for the time being.
The 16 water utilities the Cactus State is purchasing are: Loma Estates Water Company, Stoneman Lake Water Company, Inc., Sweetwater Creek Utilities, Inc., White Hills Water Co., Inc., Tonto Village Water Co., Inc., Lake Verde Water Company, Inc., El Prado Water Company, Inc., Tierra Mesa Estates Water Co., Inc., Rancheros Bonitos Water Company, LLC, Q Mountain Water, Inc., Citrus Park Water Co., Inc., Harrisburg Utility Company, Inc., Utility Systems, LLC, Forrest G. & Alice W Wiklerson dba Verde Lee Water Company, Inc., and Gonzalez Utility Services, LLC dba Carter Water Company and dba Loma Linda Water Company.
Commission Orders Halt to Real Estate Investment Scheme
The Corporation Commission ordered multiple respondents to pay restitution and administrative penalties for fraudulently offering and selling unregistered LLC membership units and shares of stock involving real estate.
The Commission ordered respondent American Realty Partners, LLC and Sean Zarinegar to pay $11,170,327 in restitution. The Commission also ordered Zarinegar and Performance Realty Management, LLC, to pay $2,159,101 in restitution, and ordered Zarinegar and Corix Bioscience, Inc.to pay $3,035,192 in restitution. In addition, the Commission imposed administrative penalties totaling $850,000.
The Commission found these companies were "fix-and-flip" or "buy-and-hold" real estate companies that would purchase residential real estate, fix them up, and then resell them. The Commission found the respondents, while not registered with the Commission to sell securities, offered and sold in Arizona membership units and shares of stock. In total, the Commission found respondents raised at least $16,579,304 from at least 297 investors.
The Commission found the respondents made false and misleading statements to investors regarding Zarinegar's and Combs' multiple previous orders for fraud and securities violations, Zarinegar's losses in prior real estate companies, management compensation, the use of proceeds, and the use of financing to purchase the properties. Prior to investing, at least two investors were told that all properties would be purchased with cash rather than with financing.
Additionally, the Commission found investment funds were used to purchase personal vehicles for Mr. Zarinegar, Kori Zarinegar, and Mr. Combs, and transferred on at least two occasions to Zarinegar's personal account.
To date, investors have not received any return on their investments.
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-21037A-19-0063.