With a case filed on May 31, 2019 Johnson Utilities is putting forth allegations that in May of 2019 that EPCOR “sought to purchase Johnson Utilities by making an offer at a substantially less than reasonable value.” The lawsuit continues, “On May 22, 2019 the Arizona Attorney General, on behalf of the Arizona Department of Environmental Quality (“ADEQ”), filed an action against Johnson Utilities, seeking to recover substantial civil penalties for violations that allegedly occurred during the appointment of EPCOR as Interim Manager (the “ADEQ” Lawsuit”).”

“During a telephone call between Joe Gysel, President of EPCOR, USA, and Goerge Johnson, Trustee of the Trust which owns Johnson Utilities that occurred on May 24, 2019, Mr. Gysel urged Mr. Johnson to accept EPCOR’s below market purchase offer, and represented that if accepted, he had been told that the onslaught of regulatory actions against Johnson Utilities -insinuating even the ADEQ Lawsuit – would end”

“Also on the telephone call referenced in the previous paragraph were Gary Drummond, Manager of Johnson Utilities and Troy Day, Vice President of Engineering and Commercial Services at EPCOR.”

“These admitted back door meetings that the ACC has and is having with the ADEQ and EPCOR in an effort to exculpate EPCOR from the ADEQ Lawsuit, raising the issues presented herein before the ACC would be useless and futile. Such also illustrates the urgency necessary to remove EPCOR from the Johnson Utilities operations for the benefit of the Johnson Utilities system and its ratepayers.”

The lawsuit also makes claims of a conflict of interest as “During EPCOR’s appointment, it has consistently acted to undermine the operations of Johnson Utilities with the intent to devalue the Company.”

The claim goes on to say “Specifically, prior to EPCOR’s appointment, Johnson had completed preparations for an 1,000,000 gallon storage tank at Gary Road which would have substantially increased capacity. In spite of its availability since the inception of EPCOR’s appointment and the repeated urging by Johnson operational people to do so, EPCOR failed to activate the tank until May 30, 2019”

“Also prior to EPCOR’s appointment, Johnson Utilities had initiated a project to run a 16-inch line to Silverado Well #1, the completion of which project would have added substantial capacity to service the majority of the ratepayers. EPCOR halted such project over the objection of Johnson Utilities without justification”

Additionally, Johnson Utilities claims “EPCOR proposed and effectuated a moratorium of new connections for land developers within Johnson Utilities service area, which has substantially decreased revenues and has further resulted in the filing of CMG 900, LLC vs. Johnson Utilities in Pinal County Superior Court, which seeks damages against Johnson Utilities arising from the moratorium.”

‘There are no present issues at Johnson Utilities that threaten the public health, safety or welfare, and as such, there is no present need for an interim manager.”

You can read the full documentation on the lawsuit here.

For additional information regarding the ADEQ lawsuit, you can read the article posted on May 23, 2019.

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