(Disclosure: Rose Law Group represents landowners and homebuilders working with the ACC to find a utility solution in the Johnson Utilities service area.)
By Rose Law Group Reporter
PHOENIX (January 26, 2021) – Officials from the Arizona Corporation Commission (ACC) and the Arizona Department of Environmental Quality (ADEQ) announced today a series of settlement agreements to address historic Johnson Utilities, LLC water and wastewater violations to bring relief to about 62,000 water and 40,000 wastewater customers in the Florence, Queen Creek and San Tan Valley area. Johnson Utilities is the most cited private utility by ADEQ since 2017.
The agreements reached with ADEQ and the ACC are conditioned on EPCOR’s purchase of Johnson Utilities and include the following key elements:
· EPCOR and Johnson Utilities must contribute 30 percent, in no event greater than $21 million of the cost of a new wastewater treatment facility within the Johnson Utilities service area, with that contribution not to be passed on to utility customers.
· $10.3 million dollars of eligible prior equipment expenses will be written-off by the utility and will not be included in the pending or future rate cases. This equates to roughly $22 million that will not be paid by ratepayers over the life of the equipment.
· Land valued at approximately $15 million will be contributed to EPCOR by Johnson Utilities and will not increase utility customer rates. Some portions of this land may be used to locate and/or generate revenue for a new wastewater treatment plant.
· EPCOR will bring Johnson Utilities’ drinking water and wastewater facilities into compliance with all Arizona environmental regulations through a return to compliance plan.
ACC Chairwoman Lea Márquez Peterson said, “Execution of these agreements represents the end of a long chapter in Johnson Utilities’ history and will ensure residents of San Tan Valley will have safe and reliable water and wastewater service moving forward and allow critical economic development in the area to continue. The ACC expresses significant gratitude to ADEQ Director Misael Cabrera for his patience and partnership in working with the ACC in an effort to bring much-needed relief and long-awaited resolution to the people and businesses of San Tan Valley.”
ADEQ Director Misael Cabrera, P.E. said, “In addition to my deep appreciation for the partnership and assistance provided by the ACC, the Arizona Attorney General and Residential Utility Consumer Office staff in achieving this positive outcome, I give special thanks to Jorge “Jordy” Fuentes for his expert knowledge and dedication to consumer advocacy, which were critical to making this settlement possible.”
ADEQ and EPCOR are confident in working together to develop and implement a firm schedule to bring the facility’s water and wastewater services back into compliance. Since being installed as interim manager by the ACC in July 2018, and taking operational control of water and wastewater systems, EPCOR has made significant improvements | See EPCOR interim manager updates >
Pivotal to these agreements was the ACC’s December 22, 2020 vote to conditionally approve EPCOR’s purchase agreement of Johnson Utilities, which when complete, includes acquiring Johnson Utilities’ assets, and transferring to EPCOR the associated certificate of convenience and necessity, i.e., the right and responsibility to provide service.
These agreements are the culmination of years of problem solving and compliance and assistance related to 57 counts listed in the ADEQ and the Arizona Attorney General’s Office May 2019 civil case brought against Johnson Utilities, LLC, Hunt Mgt, LLC and Ultra Management, LLC in Arizona Superior Court.
