After four weeks of testimony in an evidentiary hearing and a deadline of May 25, 2018 set for closing briefs, the Arizona Corporation Commission staff filed their official recommendation regarding the appointment of an interim manager for Johnson Utilities - an interim manager should be appointed.
Citing staff's filing, "Johnson Utilities has demonstrated a pattern and practice of furnishing its customers with unjust and unreasonable service despite having been given the opportunity to correct its system with appropriate maintenance, replacements, and upgrades. The Company has two decades of regulatory non-compliance, a demonstrated lack of candor with its regulating agencies, and an apparent unwillingness to accept responsibility for its historic and current problems. The evidence indicates, moreover, that the Company's system is in a rapid state of decline as a result of rate-payer money being diverted from the Company to other unregulated entities that are either owned, directly or indirectly, by Mr. George Johnson, and/or members of his immediate family."
Staff's brief continued stating their primary concerns are to "guarantee that the Company is being appropriately run during the peak-demand summer season; to curb the ongoing sanitary sewer overflows and hydrogen sulfide emissions, to the extent possible; and to protect the integrity of the Commission's pending rate case, which required unfettered access to the Company's books, records, and water and wastewater systems. Staff does not believe the current management will facilitate Staff in that latter endeavor, and therefore moves for the placement of a Commission-appointed interim manager as soon as possible."
In addition to Staff's recommendation, the Residential Utility Consumer Office (RUCO) and John Dantico, a local San Tan Valley resident who intervened in the case, filed closing briefs also recommending that the Commission appoint an interim operator.
RUCO states that "Johnson Utilities is a poorly run, high risk operation that has escaped effective and sound regulation for far too long. The hearing in this matter has made clear that local and state regulation to this point is fixated on compliance, and not enforcement which has created a culture at Johnson Utilities of continuing, repeated, and frequent environmental violations with little or no consequences and without effectively remedying the root cause of the problems. Unfortunately, for the customers of Johnson and the people who work and live in and around the service area, these violations have created, among other things, health and safety concerns"
Jeffrey Crockett, one of the attorney's representing Johnson Utilities disagreed with the recommendations. Crockett believess that the commission has no authority to appoint an interim manager and even if it did, the Commission could not meet its own standard applied in prior cases.
Additional response briefs will be filed by June 1, 2018. Administrative law judge Sarah Harping will then write a recommended order that the ACC will vote to either support or reject.
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