Voice Your Opinion In Support Of The Appointment Of An Interim Manager For Johnson Utilities

Order of Abatement

By John Dantico

Now is the time to contact the Arizona Corporation Commission and voice your opinion in support of the appointment of an interim manager for Johnson Utilities.

Now is the time to act!
It only takes a couple of minutes to fill out the online form.

Tell the commissioners to vote FOR the appointment of an interim manager.

Between now and July 24, 2018 you have the opportunity to voice your support for the appointment of an interim manager to take over day to day operations at JU.

It only takes a couple of minutes to file an online public comment with the ACC:

Here is a link to the online form:  http://eservice.azcc.gov/Utilities/PublicComment

The simple online form asks if you are: “FOR”, AGAINST”, “NEUTRAL”

  • FOR means you are FOR the ACC to appoint an interim manager.
  • AGAINST means you are AGAINST the ACC to appoint an interim manager.
  • NEUTRAL means you don’t care either way what the ACC does.

When it asks for a Docket number insert this Docket Number: WS-02987A-18-0050

If you want an interim Manager appointed, tell the commissioners that you want the commissioners to vote FOR the appoint of an interim manager.

To find out more… keep reading

The Arizona Corporation Commission (ACC) should approve the Recommended Opinion and Order (ROO) in DOCKET NO. WS-02987A-18-0050 issued by Administrative Law Judge (ALJ) Sarah N. Harpring, on July 12, 2018. The ROO recommends that based on all of the evidence the ACC should approve the appointment of an interim manager for Johnson Utilities.

You can read the ROO here: http://images.edocket.azcc.gov/docketpdf/0000190097.pdf

It is a big file and may take some time to download.

There are many reasons to appoint an Interim manager at Johnson Utilities
There are several reasons that citizens of our community should support the ACC’s effort to appoint an interim manager for Johnson Utilities.

Almost everyone living in our community has experienced some kind of problem as a result of the products and services provided by Johnson Utilizes. Many people are deeply concerned about the health and safety of their families and neighbors.  The range of problems include: water with  E.coli contaminants, high nitrate levels, sanitary sewer overflows, billing problems, poor customer service, hazardous hydrogen sulfide emissions from the waste water treatment plants and lift stations, low or no water pressure, harassment of citizens that dare to complain, the diversion of funds to unaccountable affiliated companies that syphon off rate payer funds, etc.…  The list is nearly endless.

The last twenty years shows that Johnson Utilities (JU) lacks competent technical and managerial capability to build and operate a high quality water and waste water treatment system that provides reliable quality service.

The evidence shows that for years, JU has consistently and repeatedly failed to comply with the regulatory standards of the Arizona Corporation Commission (ACC), Arizona Department of Environmental Quality (ADEQ), Pinal County Air Quality Control District (PCAQCD), Central Arizona Governments (CAG).

The evidence of JU’s failures was painstakingly documented during 14 days of hearings before the ACC in Docket WS-02987A-18-0050.  Hours of testimony exposed the horror of Johnson Utilities.  You can see the entire 14 days of hearings by clicking links at the end of this article.

JU failed to provide adequate evidence to show that JU has made adequate investment in the infrastructure of the water and wastewater treatment systems.

The evidence from Docket WS-02987A-18-0050 shows that approximately 1/3 of JU’s top line revenues (at least $9 million a year) are diverted to an unaccountable JU affiliated entity, named Ultra Management, LLC that is owned by Johnson family members. One of the apparent results of JU’s perverted and unaccountable management arrangement is that for years JU has apparently not provided adequate investment in the plant and equipment of the JU water and waste water treatment systems.

The many years of health and safety violations committed by JU are a direct and proximate result of JU’s failed management structure whereby  JU syphons off about 1/3 of all the revenue that JU collects to the unaccountable affiliated business entity named Ultra Management, LLC. Apparently rate payer money was NOT PRUDENTLY INVESTED in maintaining and building adequate capacity to serve the community. It was syphoned off for the benefit of George Johnson’s family.

JU’s failures demonstrated yet again
JU’s technical and managerial failures were demonstrated yet again on Sunday, July 1, 2018 when hundreds if not thousands of JU’s rate paying customers were deprived of adequate water pressure.  In some cases customers LITERALLY HAD ABSOLUTELY NO WATER AT ALL.

Years of inadequate management have severely impaired this utility. Nothing short of sweeping remedial management effort and millions of dollars of carefully planned, well-engineered, capital improvements can correct the deferred maintenance and inadequate capital investments made up to this point in this utility.

The inadequate technical and managerial capacity of JU is clearly an emergency.  There is a well-documented clear and present threat to the health and safety of thousands of people. Not only is the threat to public health and safety imminent, the harms are happening right now!

The evidence shows that it is urgently incumbent upon the ACC to immediately appoint an interim manager.

JU is a monopoly and must be regulated
Because JU is a private company they have put their priority upon maximizing company profits.  That is a very “American”, “Capitalist”, “free-enterprise” objective.  No one faults JU for wanting to make money.

The problem is that JU is operating in a monopoly economic environment.  That means they are the ONLY company customers can purchase water and sewer services from. JU has no competitors.

The ACC gave JU an exclusive government sanctioned monopoly to JU to be the ONLY provider of water and waste water treatment in our region, by issuing JU a Certificate of Convenience and Necessity (CC&N).

The genius of the American free market system is that market forces (competition) create a competitive environment where different companies compete for a consumer’s dollar.  Whichever company provides the best product at the best price gains market share.  If a company gets too much market share, gets lazy, and stops providing quality products and services to its customers, a competitor emerges to compete for the consumer’s dollar. If the dominant company responds to the market threat and improves product quality and service they may be able to maintain their market dominance.  If the dominant company doesn’t overcome the competitor’s quality and price challenge, the dominant company will lose market share to the competition. This concept is called “market discipline” or “the discipline of the market place”. It’s one aspect of the “invisible hand of the market place” that we typically simply take for granted.

Economists and governments have recognized that in a water and waste water treatment utility market, it does not make economic sense to have multiple companies compete.  Why?  Because it is not logical from a cost benefit perspective to have multiple competing companies each own and provide multiple water and sewer lines, to each house, so consumers can  have  free choice to select the best water and waste water treatment provider.  Imagine if  a new water and sewer company wanted to provide services, all the streets would have to be tore up to lay new water and sewer pipes to every home and business.  It just does not make sense. It’s what’s called a natural monopoly. Most utilities result in a natural monopoly.

The result of a natural monopoly is that the competitive forces that typically bring market discipline against poorly performing companies simply do not exist in the utility sector.

Economists and governments have recognized this natural monopoly market condition the world over.  That is why citizens empower government regulators to bring the effects of market discipline to a monopolistic market through various regulations.  The regulations and regulators are supposed to provide a type of market discipline to utilities. For example the Arizona Department of Environmental Quality (ADEQ) is supposed to assure water quality, and protect the environment, and where the water comes from – in our area it’s the aquafer, in other areas it’s rivers. The Central Arizona Governments (CAG) Water Quality Planning department is supposed to provide technical review of wastewater facility plans, public participation, and technical assistance to local governments for water quality control issues. The Pinal County Air Quality Control District (PCAQCD) is supposed to assure that JU operates their Waste Water Treatment System in a way that toxic hydrogen sulfide emissions don’t poison people living in the vicinity of JU’s WWTP. One of the things Pinal County’s Planning and Zoning Commission is supposed to assure that homes and subdivisions are not constructed too close to an existing WWTP.  The Pinal County Board of Supervisors (BOS) is supposed to not approve additional development of subdivisions when there is already inadequate water and waste water treatment systems in place to service existing customers.  The Arizona Corporation Commission (ACC) is supposed to assure that the rates customers pay are fair and reasonable so that customers receive quality water and sewer service at a reasonable price, and the utility owner receives a fair return on investment.

Because there are NO COMPETITORS to apply the regular free market disciplines in JU’s government sanctioned monopolistic environment,  JU’s customers can’t simply switch to a competitor.  There is no competition.

That is why citizens are forced to rely on government regulators to provide what is lacking (market discipline) in a monopoly environment.  When good regulations are in place, and good regulators effectively enforce the regulations, most of the benefits of a competitive environment can occur; Things like product quality, competitive pricing, adequate service, environmental safety.

A monopolistic economic environment requires citizens to inform Government regulators when a company fails to deliver.  There are no competing companies to do the work for you. The “invisible hand of the market place” that brings market discipline, does not exist in a monopolistic economic environment.  JU does not have any competitors to force JU to improve their service.  The ONLY WAY to get JU to improve their service is to contact your public servants at the ACC.  You have to tell the regulators about your problems with JU, and demand that they take action to correct the problems at the utility.  That is what their job is all about.

Right now is the best opportunity to bring about change at JU
Because of your complaints and public comments, the ACC ordered hearings to take place; The hearings have taken place, the evidence has been presented, the intervenors have presented evidence to support their side of the story, JU has provided evidence to support  their side of the story, the Administrative Law Judge has summarized all of the evidence and arguments presented throughout the hearing, documented the facts, and provided the 5 members of the Arizona Corporation Commission with a Recommended Opinion and Order (ROO)that an interim manager be appointed by the ACC to run JU.  On July 24, 2018 the 5 elected Arizona Corporation Commissioners will have the opportunity to accept, amend, or eject the ROO. Then the Commissioners will vote whether or not to appoint an interim manager for JU.

Tell the commissioners to vote FOR the appointment of an interim manager.

Between now and July 24, 2018 you have the opportunity to voice your support for the appointment of an interim manager to take over day to day operations at JU.

It only takes a couple of minutes to file an online public comment with the ACC:

Here is a link to the online form:  http://eservice.azcc.gov/Utilities/PublicComment

The simple online form asks if you are: “FOR”, AGAINST”, “NEUTRAL”

  • FOR means you are FOR the ACC to appoint an interim manager.
  • AGAINST means you are AGAINST the ACC to appoint an interim manager.
  • NEUTRAL means you don’t care either way what the ACC does.

When it asks for a Docket number insert this Docket Number: WS-02987A-18-0050

If you want an interim Manager appointed, tell the commissioners that you want the commissioners to vote FOR the appoint of an interim manager.

Now is the time to act!

Links to ACC Hearings information

ACC Docket WS-02987A-18-0050 to appoint an interim manager for JU:
http://edocket.azcc.gov/Docket/DocketDetailSearch?docketId=20379#docket-detail-container2

ACC Staff exhibits in the case:
https://drive.google.com/open?id=1fFpbIq-g0Y2ssnI3sbRYcjisqOFGvIGn

Complete transcripts of the case in zip format:
https://drive.google.com/open?id=1EoSEdV6QWbwR0delqryzoSE1AkFpizpr

 

How to Watch the Video of case:

  • http://www.azcc.gov/livebroadcast.asp
  • Look on page for heading:  “Archived Videos
  • go to “Hearings Archives 2018
  • Then look at second column listing event dates,  scroll down to Apr 16, 2018 for the first day of hearings, and work your way up the list for various days of the hearing identified in first column – Open Meeting/Hearing – XX-XX-XXXX – WS-02987A-18-0050 – Johnson Utilities. Click on “video” to watch or “MP4 Video” to Download

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