Queen Creek sign

PHOENIX — Utility regulators have advised EPCOR Water, interim manager of Johnson Utilities, not to sign a water-interconnection agreement with the town of Queen Creek.

The Arizona Corporation Commission released a letter on Monday objecting to the proposed agreement because it may increase costs for Johnson’s customers.

“While the town and the interim manager have been negotiating the cost of the interconnection,” the letter reads, “whatever those costs ultimately are will likely be borne by the current customers of Johnson.”

A spokesperson for Queen Creek told PinalCentral the town is no longer negotiating an interconnection deal after receiving the commission’s recommendation.

After the commission appointed EPCOR to temporarily take over the San Tan Valley utility, the company started discussions with Queen Creek on supplying additional water to satisfy increased demand during the summer.

On April 5, the town filed a draft interconnection agreement with ACC, promising to help EPCOR meet its estimated peak summer demand of 2,100 gallons per minute.

Lawyers for ACC sent an email Monday morning to advise EPCOR that an interconnection agreement “does not make sense” at this time. Not only are construction costs concerning to the commission, the email states, but ACC is worried about an indemnification provision written into the draft agreement.

Queen Creek’s agreement asks for the town to receive the same security against any legal liabilities that EPCOR has. Because Johnson Utilities has a history of suing its adversaries, ACC advised it would be forced to defend Queen Creek and pay any legal fees if a lawsuit were filed.

Queen Creek is currently being sued by Johnson in Maricopa County Superior Court on allegations of business sabotage, which the town has denied in court filings. It’s only one of several court battles that have ensued since the commission began investigating Johnson’s business practices.

Johnson’s customers have complained over the years about high rates and poor water quality, prompting the commission to appoint an interim manager to fix some of the issues.

Johnson has told the commission it opposes the interconnection agreement, arguing it’s unnecessary and too costly for the company. The ACC letter echoed this argument because by the time an interconnection would be completed, it may not be worth the investment.

According to the letter, EPCOR has told ACC it could improve capacity well enough to lift a moratorium on new connections by October. The interconnection with Queen Creek would probably not be done by July, saving only a couple months of time.

An EPCOR representative told PinalCentral it intends to follow the commission’s guidance on this matter and will move forward with its plans to improve the utility company.