On July 6, 2018, Arizona Corporation Commissioner’s Justin Olson and Andy Tobin proposed an expedited timeline in the Johnson Utilities case’s due to recent complaints. These complaints were not limited to customers alone, as the commissioners also pointed out the immediate issue of public safety found by Supervisor Goodman and Rural Metro finding low water pressure in fire hydrants.

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July 6, 2018

Re: In the Matter of the Commission ‘s Investigation of the Billing and Water Quality Issues of Johnson Utilities WS-02987A-18-0050; In the Matter of the Commission ‘s Investigation of Johnson Utilities, LLC Water Outages. W9-()2987A-I8-015.11

Commissioners and Affected Utilities:

After the cancellation of the open meeting today due to a lack of quorum, we felt that it was necessary to update the public on our efforts concerning Johnson Utilities and propose an expedited timeline for the Commission to rule on both of the above-referenced cases. For much of this year, the Commission has heard serious complaints from Johnson Utilities customers about water quality, water pressure, air quality, billing and customer service issues. In March, the Commission responded to these complaints by issuing an Order to Show Cause as to why an interim manager should not be appointed at Johnson Utilities. In April, the Commission began a lengthy evidentiary hearing on the Order to Show Cause in the water quality and billing docket. After the evidentiary hearing, the Commission became aware of additional issues at Johnson Utilities. A water outage in early June at Johnson Utilities led the Commissions to open an investigation and a second docket to hear evidence on this issue.

The Commission has demonstrated a commitment to due process for all parties involved in these cases. This summer, however, the Commission has continued to receive urgent complaints from Johnson Utilities customers, particularly concerning water pressure. The water pressure is affecting not only customers at home but also Rural Metro’s preparedness to fight fires in the area. This could be an immediate issue of public safety. As such, Johnson Utilities customers deserve a decision on these matters that have been investigated at the Commission. It is our view that the process can further expedited without violating the due process rights of all parties involved. It is not acceptable to us that a process we started in March should take until August before we make a ruling.

We propose below a timeline to hear and issue a ruling in both dockets by the end of July. 

Monday, July l6th – Evidentiary hearing in the water outage docket.

Friday, July 20th – Judge Rodda dockets findings of facts in water outage docket.

Thursday, July 26th – Judge Harping dockets Recommended Order and Opinion including findings of fact in the water outage docket.

Monday, July 30th – Commissioners consider both dockets at a Special Open Meeting.

Sincerely,

Commissioner Justin Olson

Commissioner Andy Tobin

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While San Tan Valley residents would love for this issue to be resolved as soon as possible Commissioner Bob Burns had other ideas. The following is a letter that Mr. Burns added to the docket on July 9, 2018.

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RE: JOHNSONUTILITIES, LLC

INVESTIGATION OF BILLING & WATER QUALITY ( INVESTIGATION OF WATER OUTAGES (WS-02987A-l 8-0151)

Commissioners and Parties:

On July 6, 2018, Commissioners Andy Tobin and Justin Olson wrote a letter to the referenced dockets requesting that the timeline be truncated for these cases to reach an Open Meeting of the Arizona Corporation Commission (“Commission”). While I very much appreciate and agree with the concerns expressed by Commissioners Tobin and Olson in their July 6th letter, I believe that processing the referenced dockets as suggested would actually work against the best interests of the Johnson Utilities, LLC (“JU”) ratepayers.

For over four years now Commission Staff (“Staff’) has been providing the Commissioners with recommendations on several JU cases. With hindsight being 20/20, I believe that neither this Commission, JU nor JU’s ratepayers would be in the position we are all in today if the Commission had agreed with and implemented Staffs previous recommendations.

In both referenced dockets Staff has recommended a process that would allow all parties total and complete due process in a manner that is typical and customary for cases before the Commission. The staff has indicated that this is particularly crucial in these dockets due to the litigious nature of JU. While the schedule proposed by Commissioners Tobin and Olson may technically allow all parties their due process, it would not be typical and customary.

Based on the filings already made by JU in Docket No. 18-0050, I believe it is almost guaranteed that JU will be suing the Commission if we decide that the evidence shows that an interim manager must be appointed. If the Commission does decide, based on the evidence, that an interim manager must be appointed to properly operate the JU water and wastewater utilities, I want to be absolutely positive that we have given Staff every advantage possible in defending our decision before any court.

Another point I would like to make regarding the schedule proposed by Commissioners Tobin and Olson is that it would save at most 15 days from the schedule we are on now (both referenced dockets are scheduled to be on a Commission Open Meeting no later than August 14, 2018). The Tobin/Olson proposed schedule may save even less time than this if the Administrative Law Judge (“ALJ”) in Docket No. 18-0050 dockets a Recommended Opinion and Order (“ROO”) sooner than expected, which is possible because the ALJ has been diligently working on this ROO for several weeks since the close of the hearing. I believe it would be a disservice to the JU ratepayers to ignore Staffs recommendation and interfere with the ALJ’s process, analysis, and discretion.

Again, I would stress that I completely agree with the concerns expressed by Commissioners Tobin and Olson. It is because of these concerns that I believe it would be a disservice to JU ratepayers to, in this case, follow a path that is not usual and customary.

If after all due consideration, we decide to appoint an interim manager, that would mean that we believe that the current management of JU is not capable of and/or willing to provide JU ratepayers with the service they deserve and the only way for the JU ratepayers to receive proper and adequate service is to have some other person and/or entity run the company. If that is truly the case, I want to be sure that this Commission abided by the Arizona Constitution and Arizona law in every respect to ensure that the Commission’s Legal Staff has all the tools necessary to defend die Commission against any JU legal challenge.

Based on my discussion above, I would ask that we stick to the schedule we have established (i.e., have both dockets appear on a Commission Open Meeting no later than August 14, 2018), however, if the ALJ in either docket can docket an ROO sooner than currently expected, then we can schedule an Open Meeting to deliberate and decide this issue(s) sooner than August 14, 2018.

Sincerely,

Robert L. Burns 

Commissioner

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