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Regulator sues to void rate increase approved for utility

Bob Burns explains why he was the lone vote against selecting Tom Forese as new chairman of the Arizona Corporation Commission (Capitol Media Services photo by Howard Fischer)

Bob Burns Arizona Corporation Commission (Capitol Media Services photo by Howard Fischer)

Calling the process illegal, a utility regulator is asking the Arizona Supreme Court to void last week’s vote giving the state’s largest electric utility permission to immediately charge its customers an extra $7 a month.

Bob Burns, on the losing end of the 4-1 vote for the rate hike, claims the process followed by his colleagues did not comply with statutory and constitutional requirements for a full airing of all the relevant issues. Specifically, Burns contends he was denied the opportunity to determine what influence that campaign contributions by Arizona Public Service had on the others and whether that tainted their vote.

What all that means, he said is the high court must immediately void the rate increase as a violation of his rights and the constitutional duties of the other commissioners.

Attorney Bill Richards, who is representing Burns, also wants the court to force the other commissioners to cooperate with his client’s investigation and to inform APS, parent company Pinnacle West Capital Corp., and CEO Don Brandt “that they are not excused from providing the information and testimony Commissioner Burns requires to address the bias and disqualification issues in the APS rate case.”

Burns conceded there is no precedent for the legal relief he is seeking. But he told Capitol Media Services that the current political situation forces creation of one.

“There hasn’t been interference or participation or whatever the proper term is of utilities in elections at the rate that APS decided to get into them up to this point,” he said.

That includes the company’s admission it spent $4.2 million last year to elect a commission of its liking and questions about how much of $3.2 million filtered through “dark money” organizations that refuse to disclose their donors spent in the 2014 campaign came from the utility.

The company has agreed to voluntarily disclose future spending — but not until months after the election is over.

“So what good is that,” Burns asked. “We need to put some kind of transparency into the money the utility is spending.”

He said this lawsuit — and any precedent set — is critical to providing voters and ratepayers information on how much utilities are spending to elect the people who regulate them.

“As long as we have one person on the commission that believes it is necessary, and if the court agrees that one person has the authority to open up the books, we have a reporting system,” Burns said.

There was no immediate response from commission Chairman Tom Forese. But APS spokesman Jim McDonald said the company will oppose what Burns is trying to get the court to do.

Hanging in the balance is whether APS gets to keep the additional $7 million a month that it started collecting from customers this past Saturday.

That rate hike followed the 4-1 vote by the commission approving an agreement involving APS, the commission’s own staff, the Residential Utility Consumer Office and most of the groups and individuals who had interceded in the case. That list includes companies that sell or lease solar panels to homeowners and businesses to generate their own electricity after the final deal blunted the financial impact on those customers.

McDonald said the rate review, the company’s first in five years, is “a win for customers and will lead to many benefits.”

Burns, however, said that the commission’s staff at one time concluded the company had shown no financial need to boost its income. But the larger issue, he said, is whether the other commissioners were beholden to APS.

He pointed out that two groups spent $3.2 million in 2014 to elect Republicans Forese and Doug Little to the panel. Those groups have refused to disclose their donors, claiming their status under federal tax law as “social welfare organizations” allows them to keep it secret.

Company officials will neither confirm or deny they are the source of those dollars. But Pinnacle West in a 2015 statement to shareholders, all but admitted it played a financial role in that race, saying that spending by solar leasing companies on behalf of “anti-APS” Democrat candidates caused the firm to “reevaluate” how it would protect what it said were its interests and those of its customers and shareholders in the political process.

It was trying to get to the bottom of that 2014 spending Burns said, that led him to subpoena Brandt and company documents — the subpoenas that the other four commissioners quashed.

Richards said that means the vote to let APS increase its rates took place before Burns had a chance to ascertain how much customer money APS and Pinnacle West spent to get a commission of its choosing, and how all that may have played out in the who voted for the rate increase.

There is some legal basis for Burns to ask the Supreme Court to conclude that his rights as a utility regulator were violated, undermining the commission vote.

In a 2016 formal opinion, Attorney General Mark Brnovich said Arizona law says individual commissioners and their employees may “at any time, inspect the accounts, books, papers and documents” of any regulated utility.

Brnovich also said commissioners may examine utility company officers and employees under oath. And the scope of inquiry, he said, can include political contributions, charitable contributions and lobbying expenses.

In rejecting Burns’ demand to question company executives and review their books to look for political donations, the other commissioners cited the “rule of necessity.”

In essence, that rule says panel members with a conflict of interest need not recuse themselves if doing so would leave less than a quorum. That’s what would happen if four of the five commissioners — excluding Burns — were disqualified.

But Richards charged that’s essentially putting the legal cart before the horse.

He said it is Burns’ investigation that will determine if there are conflicts. And Richards said it might be that just two of the commissioners would be disqualified, still leaving a quorum.

And there’s something else.

Richards said the other commissioners cannot invoke the rule of necessity to block further investigation into the question of whether they have conflicts in the first place.

“Arizona law entitles consumers and intervenors in the APS rate case to know all the facts about commissioner bias, even if were ultimately excused,” Richards said.

One comment

  1. This is outrageous behavior on the part of Arizona Public Service. APS is giving the electric utility industry a black eye and deserves to be censured. The CEO of APS should be fired for cause along with all of the board members that played a part in rigging the election.

    I hope Chairman Burns prevails in the courts.

    But on a separate issue, this behavior on the part of APS demonstrates why PUC commissioners should be appointed, not elected.

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