Arizona Corporation Commission to Appoint Interim Manager for Johnson Utilities

“Management at this utility has not been appropriate to provide an assurance of public safety”

On Tuesday, July 24, the Arizona Corporation Commission called for new management to lead a troubled Arizona water utility. In a vote of four in favor with one absent, Chairman Tom Forese and Commissioners Boyd Dunn, Bob Burns, and Justin Olson voted to appoint an interim manager to assume operation of Johnson Utilities, LLC as soon as possible. Commissioner Andy Tobin was absent from the meeting.

“I think the evidence is significant, and it is clear that the management at this utility has not been appropriate to provide an assurance of public safety and reliable public services,” said Commissioner Olson. “This is a vote I do not take lightly.”

“I feel this is the only option to protect public health and safety,” said Commissioner Dunn. “The statement of facts is very thorough. From a due process stand point, I don’t know what we could have done differently. I agree with staff, we have the proper authority.”

Update: On Thursday, July 26, after questions and comments for both interim manager candidates that ranged from planning to financial capabilities, Commissioners voted 3-2 in favor of EPCOR.

The Corporation Commission opened an investigation into the billing and water quality issues of Johnson Utilities through an emergency action earlier this year. The focus was an Order to Show Cause as to why an interim manager should not be appointed to guarantee the necessary technical and managerial experience to run a public utility. Following two days of six public comment sessions in San Tan Valley and a three-and-a-half-week hearing with 27 witnesses and more than 200 exhibits, an Administrative Law Judge issued a Recommended Opinion and Order.

On Tuesday, Commissioners agreed with the order, which called for the immediate commencement of efforts to obtain an agreement with an interim manager to run the company. This is the first time the Corporation Commission has called for an interim manager to run a large, Class A utility.

Johnson Utilities, LLC is an Arizona public service corporation that provides water and wastewater utility services in portions of Maricopa and Pinal Counties. The company services more than 25,600 service connections and 35,000 sewer laterals.

During the Special Open Meeting, Utilities Division Director Elijah Abinah outlined the process for selecting an interim manager to the Commissioners. Abinah stated his team contacted 22 potential candidates to gauge their interest and ability to manage Johnson Utilities. The Commission received five responses, and four of those responses showed interest. Those included EPCOR, Global Water, Southwest Gas and a joint proposal from the Towns of Florence and Queen Creek. Abinah stated all four respondents were qualified for the job, but recommended EPCOR as an interim manager based on the company’s technical, financial, and managerial expertise.

Following discussion, Commissioners asked staff to prepare final agreements for their review for both EPCOR and the Towns of Queen Creek and Florence by this Thursday, July 26. Chairman Forese also noted the importance of hearing from the public and the very community affected by this interim management decision. All communication will be posted to the Corporation Commission’s online docket at http://edocket.azcc.gov.

“I realize this form of communication may be odd, but this is the best way to do this where there is 100 percent sunlight on our communications,” said Forese.

Commissioner Andy Tobin did not attend Tuesday’s meeting. On July 16, 2018, the company filed a motion to disqualify Commissioner Tobin suggesting he violated ex parte, a claim Tobin emphatically denied. “I have consistently advocated for the due process of the customer, and I believe the company’s conduct throughout these proceedings only emphasizes Johnson Utilities’ perennial disservice to its customers and obstructionism,” Tobin stated Monday in a letter to the docket. “I will not be complicit in the plight of Johnson Utilities’ customers by allowing the company or this Commission to further delay this matter over a petty legal tactic, and, therefore, I will not be participating at this July 24 meeting.”

All documents related to the investigation into the billing and water quality issues of Johnson Utilities, LLC, including Judge Harpring’s Recommended Opinion and Order, may be found in the Commission’s online docket at http://edocket.azcc.gov by searching for docket number WS-02987A-18-0050

Leave a Reply

Your email address will not be published.

*