Hearing officer urges Arizona to seize utility whose owner is involved in bribery case

PHOENIX — A state hearing officer is recommending the Arizona Corporation Commission seize control of Johnson Utilities, at least temporarily, and install its own manager.

The company provides water and sewer services for San Tan, Florence and Queen Creek area homes and businesses.

The finding by Sarah Harping comes after she concluded the company “has failed to provide service and equipment that is in all respects just, reasonable, safe, proper, adequate and sufficient.”

The company has failed to spend the money necessary for repairs and equipment, she said.

But Harping, while finding a laundry list of problems dating back more than a decade, said it would not be appropriate to impose fines and penalties on the firm.

Harping’s recommendation gives utility executives until 4 p.m. July 23 to contest the findings. After that, it will be up to the five-member ACC to decide whether to adopt her recommendation or not.

Company attorney Jeff Crockett said he is still studying the 326-page report and has not yet reviewed it with Gary Drummond who, for the moment, is the utility’s manager and sole employee.

But Crockett said the company, even when it was under the control of George Johnson, who remains the owner, resisted suggestions of naming an interim manager.

“I don’t think there’s going to be any change in that position,” he said.

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Crockett said he will file “exceptions” to Harping’s findings by the deadline.

All this is occurring against the backdrop of Johnson’s federal court trial on charges of bribing former utility regulator Gary Pierce. Both are awaiting the verdict of the jury.

The criminal charges have no direct bearing on what the commission might do, but Harping noted there is a connection of sorts.

Johnson, after being indicted, named Drummond, an attorney, in his place.

Drummond “does not have either an educational background in water treatment and distribution or wastewater collection and treatment or prior experience working in the water or wastewater utility industry,” she said.

Harping said the utility’s problems go deeper, including long-term issues with water quality and pressure.

From 2010 to earlier this year, the company had 78 raw-sewage spillages, each posing “a danger to public health and the environment,” she said.

Other problems she found include inaccurate bills.