State reaches settlements in Johnson Utilities cases

The state has settled water and wastewater violations with Johnson Utilities, the most cited private utility by the Arizona Department of Environmental Quality  since 2017. 

The agreements were announced Tuesday, Jan. 26, by officials from the Arizona Corporation Commission and ADEQ. The settlements are expected to bring relief to about 62,000 water and 40,000 wastewater customers in the Florence, Queen Creek and San Tan Valley area and more than $40 million in ratepayer benefits.

Pivotal to these agreements was the ACC’s Dec. 22 vote to conditionally approve EPCOR USA Inc.'s purchase agreement of Johnson Utilities, which when complete, includes acquiring Johnson Utilities' assets, and transferring to EPCOR the associated certificate of convenience and necessity, that is, the right and responsibility to provide service.

Since being installed as interim manager by the ACC in July 2018, and taking operational control of water and wastewater systems, EPCOR has made significant improvements to Johnson Utilities.

The agreements include the following conditional elements:

• EPCOR and Johnson Utilities must contribute 30%, or no more than $21 million of the cost of a new wastewater treatment facility within the Johnson Utilities service area. Ratepayers would not be responsible for paying those costs.
• $10.3 million dollars of eligible prior equipment expenses will be written off by the utility and will not be included in the pending or future rate cases. This equates to roughly $22 million that will not be paid by ratepayers over the life of the equipment.
• Land valued at approximately $15 million will be contributed to EPCOR by Johnson Utilities and will not increase utility customer rates. Some portions of this land may be used to locate or generate revenue for a new wastewater treatment plant.
• EPCOR will bring Johnson Utilities’ drinking water and wastewater facilities into compliance with all Arizona environmental regulations through a return to compliance plan. 

“Execution of these agreements represents the end of a long chapter in Johnson Utilities’ history and will ensure residents of San Tan Valley will have safe and reliable water and wastewater service moving forward and allow critical economic development in the area to continue, said ACC Chairwoman Lea Márquez Peterson.

These agreements are the culmination of several years of problem solving and compliance- and assistance-related to 57 counts listed in the ADEQ and the Arizona Attorney General’s Office May 2019 civil case brought against Johnson Utilities, LLC, Hunt Mgt, LLC and Ultra Management, LLC in Arizona Superior Court.