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Former Ariz. utilities regulator indicted on bribery charges

A federal grand jury has indicted former Arizona Corporation Commission Chairman Gary Pierce on charges of taking bribes in exchange for the commissioner's vote to increase customer rates for a small water and sewer utility in Pinal County, Ariz.

According to the indictment, brought by U.S. Attorney Elizabeth Strange for the District of Arizona, on Sept. 6, 2011, Pierce called for an order to increase Johnson Utilities LLC's rates by adding more than $18.24 million to the utility's rate base that had previously been disallowed and contrary to the ACC staff's recommendations. The order also included a provision allowing Johnson Utilities to include income tax expenses in a future rate case. The order passed 3-2.

On Feb. 12, 2013, according to a timeline in the indictment, the ACC in a 3-1 vote allowed pass-through public service corporations, such as Johnson Utilities, to recover personal income taxes through rates.

In return for these votes, the indictment alleges that, among other favors, Pierce and his wife, Sherry Ann Pierce, were paid $31,500 from Johnson Utilities' owner, George Johnson through James Norton, a government affairs lobbyist for R&R Partners.

Norton allegedly agreed to act as a conduit between Johnson and Pierce for the purchase land valued at $350,000 for Pierce, the indictment continues. Johnson, who is also owner of Scottsdale Ariz., real estate developer Johnson International Inc., provided the funds for the purchase, the indictment said.

Also, Pierce's wife was paid $3,500 per month for about 10 months in a consulting arrangement Johnson made with an unindicted co-conspirator, the purpose of which was to conceal direct payment of funds from Johnson to Pierce, according to the indictment.

The indictment, filed on May 23 in the U.S. District Court for the District of Arizona, accuses Pierce, Johnson, Norton and Pierce's wife of one count each of conspiracy, federal programs bribery and mail fraud, and five counts of wire fraud, all violations of federal statutes. (CR-17-00713-PHX-JJT)

On May 26, Johnson Utilities notified the ACC that Johnson had removed himself from all management of the company.

Pierce served on the ACC for eight years until January 2015, when he was replaced after his term expired because Arizona law limits commissioners to two four-year terms.

In early 2015 a commission staff member, who was Pierce's former assistant, accused Pierce of helping an outside political group mount an attack on two Democratic candidates who lost the elections. Corporation commission members in Arizona are chosen by statewide ballot and run with a political party allegiance. Pierce now runs Pierce Government Relations, which provides consulting in utility and automobile dealer regulation and transportation issues, according to his LinkedIn profile.

Among his more controversial decisions while on the commission, Pierce moved in September 2013 to abruptly end an inquiry into allowing retail competition for electricity. Two months later, Pierce pushed to put higher costs on rooftop solar customers. However, he voted against a 70-cents-per-kW surcharge on those customers, saying it would not do enough to address the cost shift to nonsolar customers. He called for doing away with net metering and reinstituting up-front incentives instead, but solar parties argued incentives could be too easily withdrawn like before.