Key Points:

• A bill allowing public utility companies to securitize assets passed out of the Legislature

• Republicans say the governor will sign the bill with new amendments

• Some Democrats say the bill does not have enough safeguards for utility customers

A controversial public utility company financing measure goes to Gov. Katie Hobbs, and while Republicans say they are confident she’ll sign it, some Democrats are urging her not to.

House Bill 2679 passed a final vote in the House on May 7 after being amended in the Senate a day earlier. However, critics of the measure, which would allow utility companies to transfer debt into low-interest bonds that can be sold to recoup funding from aging or inefficient assets, say it still has significant issues.

The bill, sponsored by Rep. Gail Griffin, R-Hereford, has been hotly debated and sparked conflicts between lawmakers and the Arizona Corporation Commission. It split both the Republican and Democratic caucuses during different floor votes, but the Senate only gave it final approval on party lines. 

Two Senate Democrats who are cosponsors of the bill, Flavio Bravo and Catherine Miranda, ultimately voted against it. But in the House, several Democrats flipped from ‘no’ votes to ‘yes’ votes, with 10 voting alongside Republicans to pass the bill on May 7. 

If Hobbs signs the bill, she could be running afoul of members of her party, including Senate Minority Leader Priya Sundareshan. Hobbs’ office typically does not comment on pending legislation and has declined to comment on this specific bill in the past. 

Proponents of the bill, like Griffin and most Republicans, say it will help utility companies like Arizona Public Service and Salt River Project lower customer costs. The Arizona Chamber of Commerce and Industry has urged lawmakers to support it, saying it will also help attract businesses to the state.

Opponents, like Sundareshan, Attorney General Kris Mayes and environmental groups, say the bill lacks oversight and guardrails that will allow the Corporation Commission to ensure utility companies only use securitization when it is in the best interest of customers. Mayes has even said the bill might infringe upon the constitutionally-granted ratemaking authority of the ACC.

Sen. T.J. Shope, R-Coolidge, sponsored an amendment to the bill in consultation with the Governor’s Office, Senate President Warren Petersen and the Corporation Commission that he says addresses concerns raised by the commission, former commissioners and other stakeholders.

“It will be signed,” Shope said while discussing the bill on the Senate floor on May 6. 

Shope’s amendment did address some problems that Democrats and environmentalists said made the bill unworkable, including removing the ability to securitize unrecovered fuel costs and limiting securitization to current assets with a few exceptions. 

And Griffin said she believes the amendment addressed the constitutional concerns raised by Mayes.

“The Commission’s constitutional ratemaking authority is reinforced with explicit discretion for approval, modification and rejection of any plan that is not acceptable by the Commission,” Griffin said. 

Sundareshan, D-Tucson, and fellow Democratic Sen. Rosanna Gabaldon, D-Green Valley, introduced their own amendments to add more limits to the bill, but those amendments failed in the Senate. Sundareshan’s amendments would have limited securitization to retired assets and would have prevented utilities from securitizing power plants they plan to sell to another company that would keep the plant active.

Sen. Lauren Kuby, D-Tempe, speaking on behalf of Sundareshan as she was absent from the floor May 6, said the amendments were proposed in good faith. 

“These amendments that we’re moving here today, they are truly an attempt to make the bill better,” Kuby said. “We’re not opposed to the tool of securitization … In fact, it’s been used across the country, but not in the case where we don’t have these guard rails. It’s very concerning the way the utilities are pushing to use securitization in Arizona. Our ratepayers must be protected.”

Nevertheless, Republicans voted against all three amendments offered by Democrats. Shope also disagreed with Democrats, who said that not enough stakeholder input was sought to draft or amend the bill.

“I think my colleagues on both sides of the aisle know that this has been stakeholdered, this has been discussed, this has been worked out, and we all have come to this conclusion that — with the Shope floor amendment — the bill is what it is, and we have worked it out,” Shope said during his final comments on the amendment.

After the Senate passed the bill, Sundareshan told the Arizona Capitol Times that she and Democrats were not invited to participate in those stakeholder meetings.

“I’m not aware who exactly was being stakeholdered with, but certainly my caucus was not meaningfully involved,” Sundareshan said. “And I like to point out that I am the member of the Senate Democrats who is an energy and environmental lawyer, so I would think that I should be consulted and maybe engaged on some of this.”

On April 29, Sundareshan joined former Corporation Commissioners Bob Burns and Sandra Kennedy in urging a veto of the bill if Republican amendments did not assuage their concerns. She hopes the Democratic opposition will encourage the governor to consider a veto. 

“I hope that the governor will take notice of the concerns that our caucuses are raising, and that the environmental communities are raising, that the ratepayer communities are raising, that the attorney general is raising, and so even though (Shope’s) communication with (the Governor’s Office) may have indicated that she is willing to sign it, I think that this is additional knowledge that may not have been made public before that they should take into account,” Sundareshan said.