Matt O’Connell lives in Florence. He and his neighbors have had problems with low water pressure, backed-up sewage and noxious fumes.
Tom Tingle,

Arizona utility regulators on Tuesday appeared to reach their breaking point with troubled Johnson Utilities, slapping the southeast Valley water company with a $600,000 fine and threatening to revoke its right to operate.

The fine came after the company shut off water to customers. The threat to take its operating license stems from a myriad of other issues.

The embattled company, which serves about 35,000 customers across Florence, Queen Creek and San Tan Valley, has struggled with low water pressure, overflowing sewers and a host of other problems.

Control issues


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The Arizona Corporation Commission last month named another water company, EPCOR USA, as an interim manager to address problems at Johnson Utilities.

But Johnson is not allowing EPCOR to take over as directed.

Commission attorneys considered next steps after learning at 4 p.m. Tuesday that Johnson refused to give EPCOR access to its facilities as the commissioners ordered earlier in the day.

RELATED: Town manager: George Johnson ‘made a serious threat against me’

A federal judge already denied a request from Johnson Utilities earlier this month to prevent the takeover.

The Corporation Commission is hoping Pinal County Superior Court will compel the takeover, filing a motion Monday seeking to find the company in contempt of a previous order.

“In the face of obvious public endangerment, Johnson Utilities has decided to ignore the direction of the commission and try to sue their way out,” Commission Chairman Tom Forese said. “This is our Flint, Michigan. I’m hopeful the courts will uphold our ruling before we have a fatality.”

RELATED: Arizona regulators OK takeover of Johnson Utilities, name two finalists

‘Significant smell’

EPCOR, whose parent company is based in Canada, has about 215,000 customers in 37 communities across Arizona, New Mexico and Texas. 

Shawn Bradford, EPCOR vice president of corporate services, told commissioners on Tuesday that the company has found what it believes are major problems with the water and wastewater company’s pipes and facilities.

“We had some safety concerns related to hydrogen sulfide,” Bradford said, referencing a gas formed in sewer plants. 

The noxious fumes have troubled nearby residents and drawn fines for the company in the past. Bradford said they appear so bad they endanger utility workers.

“It is dangerous for employees to breathe,” he said. “We did not monitor the air quality in the (wastewater) plants, but we noticed a significant smell. It has done significant damage to some of the facilities, to the concrete structures, and corrosion to metal surfaces.”

He also said Johnson Utilities officials have declined to give EPCOR access to all financial documents.

That was about enough for the regulators, who have spent hours listening to customer complaints and investigating the company’s operational issues. 

The commissioners voted 4-0, with Andy Tobin not voting, to order Johnson Utilities to give EPCOR access to all facilities and financial information.

RELATED: Judge slams Johnson Utilities, says company needs emergency manager

Rare move to yank operating certificate

Commissioners directed staff to review whether it is possible to revoke Johnson’s “certificate of convenience and necessity” for multiple acts of malfeasance and the company’s inability to provide reliable service.

Staff members were directed to report back in a month.

A so-called CC&N gives a utility the right to serve a particular area and prevents a redundant water, electric or gas system from being built. Deleting or revoking CC&Ns is rare. It usually only happens to very small companies that provide inadequate service or are financially unable to run the system without charging unreasonable rates.

Johnson would likely be the largest water company in Arizona to ever have this happen.  

RELATED: Water taps dry, sewers overflow as Johnson Utilities owner faces trial

The cause of the fine


The Arizona Republic’s Ryan Randazzo explains what the Arizona Corporation Commission does and how these five elected officials can have a big impact on your electric bill.

The vote to fine Johnson Utilities also was unanimous and stems from the company’s decision to shut off water to customers after a pump failed on May 29 and left some customers with low or no water for 70 hours. 

As Johnson Utilities officials worked through the week to find a replacement pump, order it from New Mexico and install it, the company shut off 120 water meters for landscape irrigation at various sites around its territory.

The commission found that shutting off the meters without notice violated the law. The fine represents the maximum $5,000 penalty for each of the shutoffs.

RELATED: Mistrial in Corporation Commission bribery case

The company can’t charge customers to pay the fine, either, the commissioners said.

“There’s been a continuous record of this company ignoring the rules,” Commissioner Boyd Dunn said. “If companies are disregarding our orders, they are putting the citizens at risk. This penalty is a consequence to the management of the company, not the ratepayers.”

The troubles with the commission follow a mistrial last month for company owner George Johnson, who faced federal charges of bribery and conspiracy. The jury could not agree on the charges, and the U.S. attorney for Arizona has decided not to pursue a retrial.

RELATED: Government gives up on utility bribery case

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