San Tan Valley Area Information

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Hearing to Decide if Johnson Utilities and Its Managers Should be Held in Contempt Set for August 24

Hearing to Decide if Johnson Utilities and It's Managers Should be Held in Contempt Set for August 24

Shawn Bradford, Vice President of Corporate Services for Epcor, stated that in good faith Epcor had continued with the necessary steps as requested by the Commission to step in as the interim manger.  Epcor signed a consulting agreement with the ACC on August 1, 2018, contracted with a consulting firm by August 9, 2018, toured four wastewater plants, eleven of the 23 lift stations, and began touring the water plants as of August 14, 2018.

After touring the facilities, Bradford had serious concerns about not only the air and water quality for Johnson Utilities customers, but also the safety of the workers working at the utility.  Bradford stated that the systems were in such poor shape from long time hydrogen sulfide exposure, the equipment could "actually explode".

In addition, Bradford also had concerns that while Johnson Utilities water did not exceed the 10 mg/L limit for nitrates, it was over 9.9 mg/L and was on the "knife's edge" of exceeding the limits, becoming a health concern. Bradford shared his frustration with the Commission that while Epcor has tried time and time again to access the financial systems and accounts for Johnson Utilities, the utility company was unwilling to allow access, stating that without access to the systems, "the utility could not be run".

Commissioner Tobin asked Bradford why not having access to the bank accounts would prevent Epcor from moving forward, as having access to capitol was one of the reasons why the Commission selected Epcor as interim manager. Bradford clarified that Epcor had the capitol to invest in the system as needed.  It wasn't access to the cash that was the issue, it was not being able to access the financial systems. "Without access to the financial systems, we can't pay vendors, employees, or even bill customers" said Bradford. "Without the financial systems, you can't run a utility."

Chairman Forese then asked for a procedural hearing to be called August 16, 2018 so that an Administrative Law Judge could decide whether Johnson and Johnson's managers should be held in contempt for not complying with Decision No 76785.

On August 15, 2018, Staff filed a Notice of Filing Johnson Utilities Failure to Confirm Access, including an email Epcor sent an to Staff, in which EPCOR stated that the interim manager agreement was "suspended until the Conditions Precedent therein are met".

At the August 16, 2018 hearing Staff indicated a desire to file a Motion to have Johnson and Johnson's Managers Held in Contempt.  Administrative Law Judge, Sarah Harpring later ordered that a "hearing in this matter shall commence on August 24, 2018 at 9:00 a.m. at the Commission's offices at 1200 West Washington Street, Phoenix, Arizona 85007, and shall continue, as necessary, at 9:00 a.m. on August 27, 2018, and such other dates as may be prescribed."

The full order can be read here.

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