The following is an update from EPCOR-Interim Manager for Johnson Utilities

December 12, 2018
Docket Control
Arizona Corporation Commission
1200 West Washington Street
Phoenix, AZ 85007

Re: Johnson Utilities, LLC – Update from Interim Manager – Docket No. WS-02987A-18-0050

To whom it may concern,
Please find EPCOR Water Arizona Inc.’s written update regarding Johnson Utilities, LLC, for the month of December. EPCOR’s update also includes a draft capital plan, where EPCOR has identified the critical capital needs for the next 3 years. EPCOR plans on providing written monthly updates going forward, with the hope that the written update can provide for a more efficient and timely update, and take the place of verbal updates at the open meeting. Please let us know if this is acceptable, and if you have any questions.
Regards,
Jason D. Gellman
Counsel, Rates & Regulatory Affairs
iqeIIman@epcor.com
Phone: 623-445-2442

1. ADMINISTRATION

1.1 Ultra Agreement

  • EPCOR pays only justifiable utility expenses and has not paid the Ultra invoices.
  • EPCOR and the Johnson Utilities, LLC (JU) owner have had discussions regarding termination of the Ultra agreement.
  • At this time the Ultra agreement is a non- issue for EPCOR as the interim Manager.

1.2 Hunt Agreement

  • All utility personnel working at JU are still employed by Hunt Management.
  • EPCOR and JU owner are working together provide for raises to all utility staff, and Hunt has agreed to pay vacation bonus to staff in line with industry standards.
  • EPCOR has not paid the Hunt Management margin fee.
  • EPCOR looks forward to working with JU owner for further staff improvements.

1.3 Human Resources

  • Two of the five supervisory “Foreman “positions have been filled for wastewater collections and wastewater treatment plants. Active recruitment is ongoing for the remaining three Foreman positions.
  • An oncall program has been implemented to ensure proper and adequate after hours service order and emergency response is managed properly.
  • EPCOR worked with the JU owner and Hunt Management to pay vacation bonuses for time that was taken away previously.
  • EPCOR is also working on implementing an after-hours live phone monitoring system, to ensure that customer calls outside of regular business hours are answered by a live person.

1.4 Finance

  • Hired a third party accounting firm (CBIZ Mayer Hoffman) to perform independent audit on agreed upon procedures to confirm and validate financial processes and controls. Fieldwork has been completed and the report is being drafted.
  • Met with Republic Bank of AZ to more efficiently move funds and earn on JU cash balances. Republic Bank of AZ has updated our transfer and ACH capabilities to make it easier for cash management and it is working on a proposal for earnings on our cash balances.

2. OPERATIONS

2.1 Water

  • Progress is being made in stabilizing water pressure in various portions of the JU service territory. These improvements are being accomplished through installation of Variable Frequency Drive (VFD) motor controllers, installation of air relief valves, and valve sweeps toverify proper valve positioning. Pressure loggers are continually deployed to gather real-time data to allow further adjustments to system operations.
  • Quotes are in for the installation of a pressure reducing valve (PRV) from the Magma and Ricky well sites to the Oasis portion of the system. This will address water pressure and quality issues in Oasis.
  • Work has begun on repairing the chlorine sheds that had significant operational and safety issues.
  • An analysis of all electrical panels has been completed by a contractor and is now being used to solicit bids for a repair program. Temporary electrical panels are being constructed to allow for repair and/or replacement of the permanent electrical panels systematically without any service interruption.
  • Updated blending plans to address water quality concerns have been submitted to ADEQ for review and approval.
  • The temporary Reverse Osmosis (R.O.) treatment unit remains in operation at the Johnson Ranch 4 well. The second R.O. treatment unit has been staged at the Morning Sun Farms plant to provide a treatment option for those sources should water demands create the need. An easement will be required for this R.O. system and discussions are ongoing with Beazer Homes and the Morning Sun Farms HOA.
  • Work has begun on installation of the Ion Exchange treatment system at the Main Yard water plant to treat Johnson Ranch Wells 3, 4&5 as well as Morning Sun Farms water treatment plant.
  • EPCOR is working on an access agreement with the San Tan Heights HOA to equip and reintroduce the San Tan 1 well into the system. This has the potential to bring up to an additional 800 gpm of good quality water to the system.
  • We have implemented use of door hangers to improve customer service.

2.2 Wastewater

  • The ongoing threat of SSO at the main yard lift station remains. This station is being hydraulically overloaded with flow from the R.O. treatment system. Additionally, this station has historically been hydraulically overloaded during high flow periods of the year. A temporary bypass was installed between the Copper Basin 2 and Copper Basin 1 lift station which has removed flow from the main yard lift station permanently. If this bypass works we will install a permanent connection between CB2 and CB1 to make this flow diversion permanent.
  • The temporary bypass for the force main from the main yard lift station to the Section 11 plant has been operational for a month and construction of the permanent force main relocation is underway.
  • Sludge continues to be removed from the Section 11 WWTP aeration basin 2 to allow for installation of the replacement liner that ADEQ is requiring. Sludge removal is scheduled to be completed in early December.
  • Pump curves for all the lift stations are being evaluated to determine if the proper pumps are installed and identify any necessary replacements as well as properly sizing the missing pumps out of these stations.
  • Capital plans are being devised for improvements to the four wastewater treatment plants based on the Engineering study completed by Waterworks Engineering.
  • Efforts are underway to divert flow away from Section 11 WRF to reduce the load on that plant. In addition, optimization of the treatment process is being explored for the short term, while the longterm plan is to build a new mechanical treatment facility and decommission the existing Section 11 plant.

2.3 Compliance

  • Drinking Water – EPCOR environmental compliance staff worked to ensure drinking water monitoring and reporting requirements were met for the month of November for both JU public water systems (PWSs).
  • Wastewater – One reportable sanitary sewer overflow (SSO) occurred for the month of November. This SSO occurred on November 17, 2018, and the spill amount was estimated to be less than 5000 gallons. Due to the remote location of the SSO and the wastewater having not entered water subject to the Clean Water Act (subject to regulation as a “water of the United States”, the event was not deemed an imminent threat to either human health or the environment. Regulatory notifications were made to ADEQ within the required timeframes.
  • EPCOR staff collected surveillance samples from the Section 11 WRF point of compliance (POC) well. Analytical results indicate that the underlying aquifer has not been adversely impacted by Section 11 operations. Aquifer protection permit (APP) regulatory samples collected after the Section 11 aeration basins point to inadequate treatment, as nitrification is not being achieved. Accordingly, total nitrogen levels are currently exceeding APP parameters.
  • Enforcement – EPCOR staff provided ADEQ with documentation to address reuse water deficiencies at the Club at Oasis Golf Course as outlined in a Notice of Violation (NOV) dated June 19, 2018. On November 9, 2018, EPCOR was provided with a copy of the NOV closure letter.

2.4 Customer Care

Evaluate and move from a two route (15,000 customers per route) to a 6 route meter reading and billing schedule. This will allow for more effective meter reading, billing and collections schedules. The following customer counts are affected:

Old Cycle Number New Route/ Cycle # Customers
Cycle 1 Route 1 4360
Cycle 1 Route 2 3180
Cycle 1 Route 3 4487
Cycle 2 Route 4 6208
Cycle 2 Route 5 4122
Cycle 2 Route 6 5162

 

  • A checklist for new meter service applications to comply with the exemptions in the most recent ACC Decision was circulated for approval to the group. JU staff has been trained to use the temporary checklist and what to communicate to developers in the interim. Brad Finke and Sarah Skaggs of EPCOR are working together to approve meter applications in accordance with the criteria.
  • Initiated Customer Satisfaction Survey for Johnson Utilities. Expected 3 week turn-around for initial results.
  • We are evaluating changes to collection policies: The outreach JU currently does is the regulatory minimum (ACC regulations). We are proposing to use Payment us IVR to reach out to customers two more times prior to disconnection.

2.4 Capital Projects

  • We have developed a 3 year capital plan attached.

2.41 Queen Creek Water Interconnect Proposal

  • It was identified in the October 5, 2018 Johnson Utilities System Evaluation Report by Water Works Engineers that there is a 3,767 pm firm capacity deficit in Regions 1&2 of the JU 11-128 public water system. These regions are located to the northwest, adjacent to Queen Creek, and represent the most densely populated area of the JU system. Demand in regions 1 &2 consist of 88% of the billed customer water use by volume in the 11-128 system. System interconnection from the Queen Creek water system to the JU system is desired to improve the reliability of water service to customers.
  • We have worked with Queen Creek to identify shortterm need for a supplemental water supply which outlines how much water is needed and where and interconnect could be utilized.
  • We are preparing a Letter of Intent for Queen Creek and ACC staff to review.

To view the capital improvement plan you can view the original filing and all attachments here.

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