Pinnacle West | Arizona Capitol Times

APS boss promises no more campaign cash for regulators

(Photo by Ross D. Franklin/Associated Press)

The new CEO of Arizona Public Service Co. vowed today the company, its parent company, Pinnacle West, and other known affiliates won’t spend money on campaigns for utility regulators while he’s in charge.

CEO Jeff Guldner’s statement came at a meeting of the Corporation Commission in which he fielded questions, giving them what they waited months to hear: a promise to no longer allow the utility to contribute to the elections of the regulators who will have to regulate them.

Chairman Bob Burns, who has previously received money from APS and its affiliates, asked Guldner back in September — when Don Brandt was still CEO and Guldner was still in waiting to take the top job — if Guldner could commit to not contributing any longer, Guldner said he was not in a position to make that promise.

Guldner brought up the subject again on Tuesday, keeping everybody in suspense before making the commitment.

Burns said it was the only question he wanted answered.

Guldner did want to clarify an additional remark that he cannot control individual employees.

“I do intend to make it clear to the executive team that I will be very frustrated, but I cannot prohibit (under federal election law) them to make contributions individually to commissioners,” he said. Employees can still contribute “fives” as Guldner called, meaning five dollar contributions here and there, but Guldner emphasized he wants all employees to avoid giving commissioners money.

Three of the current commissioners, Lea Marques Peterson, Boyd Dunn and Burns have all accepted contributions from APS and other utilities and now have to disclose it before any vote relating to those companies under a code of ethics pushed by Commissioner Justin Olson last year.

Burns said he did not want to put Guldner in any position where he would violate the law, referring to the five dollar rule, but he did accept the promise and turned it over to the other commissioners.

Dunn commended his fellow commissioners for putting the code of ethics into place calling it “the most comprehensive code of ethics in this area of any commission in the country, if not any state agency” and also commended Guldner for making this promise.

“I think enormously important for APS and I commend you for that statement,” Dunn said.

He said that other utilities have made similar statements in the past, so APS joining the other utilities in vowing to no longer spend on commissioners who have to regulate them is a “healthy attitude.”

Dunn, like Burns, only had one question for Gulder.

“Do you really mean it?”

Guldner said, “Absolutely.”

APS CEO, staff to appear before Corporation Commission

It took the former CEO of APS roughly 10 years to answer questions at the Arizona Corporation Commission and it’s taken less than one month for his successor to do the same.

Jeff Guldner, the current boss of APS – and its parent company Pinnacle West – has accepted the invitation from commissioners to attend the December Open Meeting on Dec. 10 and 11 to answer questions about the rate comparison tool that resulted in thousands of APS customers being put on the wrong plan. Guldner will be accompanied by APS staff, similarly to his predecessor, Don Brandt, when he fielded a variety of questions in September.

The issue being addressed stems from APS recognizing last month that roughly 12,000 customers were misinformed about being on the most cost-effective plan. In fact, they were on a plan that costs more than intended due to errors with the APS “rate comparison tool.”

APS already vowed to give credit to the thousands of affected customers, but it still took months to acknowledge the problem, and Commissioners Boyd Dunn and Justin Olson want answers as to why.

In their respective letters to their peers, both commissioners requested Guldner come in to address this issue. Dunn was not impressed with how the utility handled things.

“I am appalled with the repeated ‘problems’ that have arisen from a seemingly simple Commission directive,” Dunn wrote in his Nov. 20 letter. He requested that Chairman Bob Burns put APS’ rate review on the December agenda for a hearing and potential vote.

In Olson’s letter, he took things even further than Dunn. Olson called for an independent investigation into APS to see if the utility misled the roughly 12,000 customers. He said he thought crediting back customers was a good start, but more needs to be done.

Olson said he wants to ensure that all customers are receiving credible and accurate information and he wants an investigation to get into the “exact issue with the rate comparison tool.”

Burns told Arizona Capitol Times that he still expects Guldner to show up at the January Open Meeting as well.

I still want him to commit to stop spending on political races, Burns said. The chairman previously wanted Guldner to make that commitment during the Brandt hearing in September, but at the time Guldner said he could not make that promise since he was not yet the CEO. Now, Guldner has yet to say anything one way or another.

Suzanne Trevino, an APS spokeswoman, told Capitol Times via email that “this is an important discussion between APS leadership and the Arizona Corporation Commission, and Jeff Guldner has already committed to having that conversation.”

The Arizona Advocacy Network also stepped in on Guldner’s first day as CEO on Nov. 18, demanding he discontinue APS’ efforts to contribute to political campaigns. The progressive group started a petition saying that APS has lost all public trust due to its large campaign contributions and trust can be restored if political spending stops.

“For years, APS was among the most trusted institutions in Arizona. As you are aware, that is no longer the case,” the petition reads.

A fourth commissioner has also requested to hear from APS officials in January.

Commissioner Sandra Kennedy wants answers on Brandt’s new consulting contract with Pinnacle West totaling nearly $2 million for one year of work.

Brandt is set to make $25,000 for 11 months and nearly $1.5 million for the final month of a one-year contract with Pinnacle West. Kennedy wants all documents relating to the agreement and has more questions she wants answered.

The lone Democrat on the commission was notably a thorn in Brandt’s side during his questioning at the Corp Comm special meeting in September, which devolved into a shouting match. She was visibly upset at Brandt’s answers and refused to hear any response if it didn’t come from the then-CEO.

Kennedy wants the company to provide information about the scope of Brandt’s consulting duties and other consulting agreements Pinnacle West has made since 2014. Kennedy gave Pinnacle West a deadline of Dec. 13, to not only provide answers to the questions she’s asking, but also to agree to appear in January.

And if she doesn’t get her answers voluntarily before then, Burns said his colleague will issue subpoenas.

Correction: A previous version of this story mistakenly said the APS rate review would be on the December agenda. This has been corrected.

APS chief to step down in November

The head of the state’s largest electric company is stepping down, but not before utility regulators get a chance to grill him next month on company practices and policies.

In a formal announcement Wednesday, Pinnacle West Capital Corp. said that Don Brandt will retire as the president, chief executive officer and chairman of the board, effective Nov. 15. That follows 16 years with the parent company of Arizona Public Service, the last decade holding the three top slots.

But Pinnacle West spokesman Alan Bunnell said that Brandt intends to honor his commitment to testify at the Arizona Corporation Commission as scheduled on Sept. 4. Regulators already have prepared a list of 67 written questions they want him to answer and already are coming up with more.

Commissioners already have some in mind based on Wednesday’s announcement.

Some now appear aimed less at Brandt than at Jeff Guldner, currently the president of the APS subsidiary, who will be taking the reins of Pinnacle West. And that goes to the question of what, if anything, will change under the new leadership.

Commission Chairman Bob Burns, who has been battling with Pinnacle West now for years, including court battles over access to records of “dark money” spending on campaigns, called the company’s behavior until now “unacceptable.”

“I think we need to do everything we can to change that,” said Burns, a Republican on the five-member panel. “Whoever’s in charge, if they don’t change their behavior, there’s problems.”

Democrat Sandra Kennedy, another member of the commission, said she has similar questions.

“I’m trying to give Guldner the benefit of the doubt,” she said. “But he’s going to have to change the culture of the company.”

It was under Brandt’s watch that Pinnacle West funneled $10.7 million through other organizations that, in turn, spent heavily in the 2014 commission race to elect a panel only of Republicans. The recipient groups refused to disclose the source of their cash, citing their status as “social welfare” organizations, which exempts them from some of the same campaign finance laws that apply to others.

In 2016 the company openly spent $4.2 million to keep the commission an all-Republican affair.

It did not participate in the 2018 campaign but instead spent $32 million to quash an initiative that would have required regulated utilities like APS to get more of their energy from renewable sources.

More recently APS has come under scrutiny following reports that several customers died after their power had been cut off. That led to commissioners seeking answers from Brandt about company policies, like notifying people in person before the plug is pulled.

Bunnell said Brandt will be at the commission on Sept. 4 as scheduled.

And the timing of his retirement?

“It has nothing to do with the disconnect issue and the current climate,” Bunnell said.

The change in leadership, however, could bring some peace to the battles between the commission and the utility, especially with regulators seeing the policies of the company being simply the policies instituted by Brandt.

“I couldn’t be happier,” Kennedy said of her reaction to Brandt’s retirement.

“I’m hoping all of this is a problem with Brandt,” she said, saying she is hoping for changes with new leadership. “And I guess only time will tell.”

Burns was a bit more circumspect when asked how he believes Brandt has run the company.

“I guess that wouldn’t be a very good thing for me to be very honest about,” he said. But Burns said he does believe that it is Brandt who set the agenda for the activities of Pinnacle West, including the millions poured into electing certain commissioners.

“And I think their behavior was unacceptable and I think we need to do everything we can to change that,” he said.

APS executive makes no promises on future political spending

Don Brandt, center, CEO of Arizona Public Service and its parent company, Pinnacle West Capital Corp., appears before the Arizona Corporation Commission in Phoenix, Wednesday, Sept. 4, 2019. (AP Photo/Tom Tingle, Pool)

The incoming chief executive of Pinnacle West Capital Corp. refused Wednesday to promise that the company won’t spend money in the future to elect utility regulators of its choosing.

Jeff Guldner told members of the Arizona Corporation Commission that he wasn’t saying there would be a repeat performance of what happened in 2014 and 2016 when the parent company of Arizona Public Service put a combined $15 million into campaigns to elect members of the panel. But Guldner said he cannot give a firm answer because he does not take over from Don Brandt, the current CEO, until Nov. 15.

That answer left commission Chairman Bob Burns unsatisfied, particularly as the commission is constitutionally precluded from barring APS or any other utility from getting involved in political campaigns.

Burns told Guldner that he wants that commitment after he takes over – or else.

“I would suggest that if we do not receive that commitment from APS, maybe we need to change the way that we go about determining return on equity,” the chairman said, suggesting that perhaps the entire board of Pinnacle West should come to the commission the next time APS requests a rate hike.

“I think we would have the opportunity to do a little negotiation and have a settlement right then and there.”

Burns also charged that the political spending is part of a larger plan by Pinnacle West to “capture” the commission to ensure that it got the decisions the company wanted on issues like requests for higher rates. And Burns even charged that Gov. Doug Ducey has had a hand in the process, including the appointment of Andy Tobin to the panel, an appointment Burns said was very “disruptive.”

“I have no proof,” Burns conceded later to Capitol Media Services. “But it smells.”

“This is the first time we’ve heard a lot of these concerns,” said gubernatorial press aide Patrick Ptak. He said the commission does its job and the governor does his, including filling vacancies on the commission as constitutionally required.

Tobin has since resigned to take a job in the Ducey administration, with the governor appointing Lea Marquez Peterson to replace him.

Burns wasn’t the only one with sharp comments about Pinnacle West – and specifically the way Brandt has run the company for the past dozen years.

Commissioner Sandra Kennedy told Brandt he “behaves like a kingpin,” operating Pinnacle West in a way to benefit only to the company to the detriment of its customers and the public at large.

“You have, in essence, created a machine to purchase any and every elected official and defeat anyone in your way,” she said.

The daylong hearing was called in the wake of the discovery that a Sun City West woman had died last year of heat-related conditions after APS disconnected her power on a 107-degree day after the failure to pay $51 of a $176 bill. And there were several pointed questions about what commissioners saw as the failure to provide Stephanie Pullman with adequate notice.

But much of the discussion centered around the policies of Pinnacle West in spending money on elections.

Burns cited reports that showed Pinnacle West and APS had looked at plans as far back as 2009 to set up and fund “grassroots” organizations with the specific goal of convincing Arizonans that the decisions being made by the Arizona Corporation Commission were contrary to the interests of the public and ratepayers.

Then in 2013, company lobbyist Jessica Pacheco hosted a fundraiser at the Phoenix Country Club for Justin Pierce in his race for secretary of state at a time his father, Gary, was a commissioner.

That took a more concrete form in 2014 when Pinnacle West quietly funneled money through other groups, including the Free Enterprise Club, the Arizona Cattle Feeders Association and Save Our Future Now to undermine the campaigns of some Republicans who were seeking commission seats because they were supportive of requiring utilities to get more of their power from solar and other renewable sources.

All totaled Pinnacle West spent $10.7 million on that race, with the outcome being the successful campaigns of the two Republicans it backed.

Attorney William Maledon, who represents the company, confirmed Wednesday that an FBI probe into expenditures made in the 2014 race remain under investigation. He declined to provide specifics citing confidentiality requirements.

In 2016 the company was above board in the spending of $4.2 million to ensure the commission remained an all-Republican affair.

There was no reported spending on candidates in 2018, with Pinnacle West instead putting more than $30 million into a statewide campaign to defeat a ballot measure that would have mandated the use of more renewable energy.

Commissioner Boyd Dunn pointed out that the panel, by itself, is powerless to limit corporate spending on campaigns, even when it is by a utility to elect preferred regulators. But he said that’s not an answer.

“Because it is legal it does not make it right,” he told Brandt.

Commissioner Justin Olson agreed.

“Our utilities should not spend money electing their regulators,” he said.

There also was some kickback from Pinnacle West when the questions got very specific about exactly what happened in the Pullman case.

State utility regulator Boyd Dunn July 10, 2019, at the Corporation Commission. Dunn wants changes to ethics rules to disqualify commissioners from voting on matters when they have received campaign help from someone involved in the case. (Capitol Media Services photo by Howard Fischer) — Boyd Dunn (Capitol Media Services photo by Howard Fischer)

The utility recently settled out of court with the family. And Maledon said family members have asked that the specifics of the case not become a part of the hearing on disconnection policies.

That explanation left Kennedy unsatisfied.

“We should know what happened,” she said, telling Maledon that the company settled with the family to keep from having to answer questions.

But some details did emerge.

Daniel Froestcher, an APS vice president, acknowledged that no one actually made personal contact with Pullman, instead leaving a notice on her front door. That annoyed Dunn.

“A lot of us in the summer are not using the front door,” he said, instead entering the house through the carport. And Dunn questioned why no one actually bothered to knock on her door.

Froestcher told commissioners he used to do the job of contacting customers.

“I had dogs released on me,” he said. “I have been verbally threatened and one time I had a weapon pulled on me.”

Hence the change in policy. But that drew a skeptical response from Dunn who questioned how likely it was that people living in what is largely a retirement community are a threat.

Froestcher said it’s a system-wide policy, with APS serving customers in 11 of the state’s 15 counties.

Brandt deflected multiple questions from Kennedy who complained about the rates and customer service.

“The reality is, for the vast majority of our customers, electricity is a bargain,” he said, citing national figures that show the average household spends just 1.6 percent of its take-home pay on power.

APS had no similar figures for its own customers. But Brandt defended the charges.

“Research shows a vast majority of our customers are not concerned with their electric bill.”

Brandt also defended company spending on things like sponsorships, like having the APS logo displayed at sports arenas.

“It projects a positive image,” he said, telling commissioners that the cost of these – he provided no figures – comes from corporate profits and not from direct customer payments.

APS parent company again discloses grand jury subpoenas in filing

Editor’s note: This story and headline has been revised to clarify that the February 2019 report to the Securities and Exchange Commission was not the first time the company disclosed it received federal grand jury subpoenas related to the 2014 election.

Arizona Public Service’s parent company first received federal grand jury subpoenas in 2016 for documents related to the 2014 elections.

APS admitted March 29 to giving $10.7 million to dark-money groups that spent heavily in the 2014 race to elect two statewide utility regulators.

Pinnacle West has made the disclosure of the grand jury subpoenas in each of its quarterly reports to the U.S. Securities and Exchange Commission since June 30, 2016, and most recently in an annual report filed in February.

According to the February report, first noticed by the Arizona’s Politics blog, the subpoenas namely sought information related to the 2014 secretary of state and Corporation Commission races, including records involving Pinnacle West’s CEO Donald Brandt and communications between company personnel and “a former ACC Commissioner.”

“Pinnacle West is cooperating fully with the United States Attorney’s office in this matter,” according to the SEC report.

APS and Pinnacle West fought for years to keep commission Chairman Bob Burns from forcing them to disclose their spending in 2014. They even took the fight to court and won when a judge said Burns alone had only limited authority to issue and enforce subpoenas.

That changed when Democrat Sandra Kennedy was elected to the commission in 2018, and Commissioner Boyd Dunn signed onto their fight to get the information.

That gave the trio a working majority on the five-member commission, increasing the likelihood that the company could be forced to hand over the long-sought documents.

APS finally turned them over on March 29.

But the February SEC filing and the previous filings go further than that.

The federal grand jury subpoenas are evidence of an investigation that led to the federal court case known as “Ghost Lobby” last year.

Former Corporation Commissioner Gary Pierce, his wife Sherry Pierce, lobbyist Jim Norton and water utility owner George Johnson were indicted for allegedly cooking up a scheme in which the Pierces were paid for commission votes that favored Johnson.

The case ended in a mistrial after jurors could not reach a unanimous verdict, and the feds opted not to try the case again.

At the time, Gary Pierce’s attorney, Pat Gitre, said the FBI’s investigation was rushed and inadequate.

“I think there were other forces in play… which we’re not allowed to talk about,” Gitre said.

But documents filed in the lead-up to the trial and conversations in court revealed the case stemmed from a larger investigation dubbed “Operation High Grid.”

Gary Pierce has already acknowledged talking to federal investigators about the 2014 secretary of state’s race, in which his son, Justin Pierce, was a Republican primary candidate.

Capitol Media Services’ Howard Fischer contributed to this report.

APS withholds spending in Corp Comm primary elections

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The state’s largest utility is staying out of the Republican primary race for two open Arizona Corporation Commission seats, risking a shakeup that could have serious ramifications for the company.

Whether the literal powerhouse that is Arizona Public Service has had a change of heart about its history of election spending or recent events have given the company pause, only company insiders can know. A representative of the company declined to comment for this story.

But by not spending in the primary, APS leaves itself vulnerable to unfriendly newcomers and a commission willing to take another crack at retail electric deregulation.

That would open up the energy retail and generation markets to competition for utilities like APS that are currently allowed to operate as regulated monopolies.

Eight candidates are vying for the open seats this year, five of whom are running as Republicans.

Tom Forese (Photo by Katie Campbell/Arizona Capitol Times)

Incumbents Tom Forese, commission chairman, and Justin Olson were running in the Republican primary as a slate but recently parted ways. Though Forese pushed back on rumors of the rift earlier this week, their split became clear when Olson criticized him during a Republican primary debate August 14.

Commission observers have speculated that Forese’s lackluster campaign could cost him the election.

That could be enough to pave the way for Rodney Glassman, who has staked out a clear anti-APS position on the campaign trail. Also in the running are Jim O’Connor and Eric Sloan, both of whom support reviewing last year’s APS rate hike.

Olson has also been known to take positions that conflict with the company’s interests, expressing willingness to dig into election spending in 2014 and opening the door to the deregulation conversation. Both are topics Commissioner Bob Burns is fond of as an ardent APS foe.

Three Democrats are also facing off in the primary. Former Commissioners Bill Mundell and Sandra Kennedy have teamed up against Kiana Maria Spears, who has been criticized for her campaign treasurer’s three-decade history with APS. Mundell previously served on the commission as a Republican but has said he switched parties because of APS’s influence over his GOP colleagues.

Ultimately, seven of these eight candidates are likely votes in favor of at least entertaining deregulation.

Competition would radically alter the environment in which APS currently operates.

As a legal monopoly regulated by the Corporation Commission, APS has guaranteed customers, guaranteed growth and guaranteed profits. The latter translated to spending power in the 2016 election cycle, during which APS was not shy about backing its allies and spending against its foes. However, the company has categorically refused to say if it was the source of millions in dark money spent in 2014.

But such activities have brought APS and its benefactors under scrutiny.

Former Paradise Valley Mayor Vernon Parker said it was a bad move for APS to start spending in the Corporation Commission elections to begin with. Parker ran unsuccessfully for a seat on the commission in 2014. He said he has no doubt APS was the source of nearly $900,000 in dark money that was spent against him in the Republican primary that year – ironic because he said he likely would have sided with the company more often than not.

He said APS’s spending has tainted the commission and those perceived to be beholden to the company, offering Forese as an example. Now, Parker suspects the so-called “Ghost Lobby” trial in particular has made APS reticent and waiting to see what more could unravel.

“Operation Ghost Lobby” was the name given to the federal bribery case brought against former Corporation Commissioner Gary Pierce, his wife Sherry Pierce, lobbyist Jim Norton and utility owner George Johnson. The case went to trial but ended in a hung jury, and has since been dismissed.

Parker said that case just scratched the surface, and there’s more not yet known that could expose APS.

“Ghost Lobby” stemmed from “Operation High Grid,” a larger investigation into spending in the 2014 elections, widely believed to include APS’s involvement.

“Hopefully, they’ve seen that being involved in the Corp Comm races can drag them into things that they probably should not be involved in,” Parker said.

Then there’s the far more optimistic possibility he entertained: “No pun intended here, but hopefully they’ve seen the light that it’s best to let the voters make up their own minds.”

But attorney Court Rich, of Rose Law Group, scoffed at the notion that APS has “seen the light” and decided that it’s inappropriate to spend in elections.

“Someone was seriously making that statement?” Rich said. “The idea that APS has decided to get out of politics – there’s no evidence to support that.”

Rich is the director of Rose Law Group’s Renewable Energy Department. His solar energy clients have fought APS for years. While APS hasn’t gotten involved in the Corporation Commission races just yet, it has spent millions on a campaign to keep the Clean Energy for a Healthy Arizona initiative off the ballot.

If approved, the initiative would mandate that 50 percent of electricity generated in Arizona come from renewable sources by 2030. APS and its allies argue that such a high mandate, which far exceeds current Corporation Commission mandates, would increase power costs.

And Rich anticipates APS will “continue to spend like crazy in the general election.” For now, the company seems comfortable with the race and is simply waiting to see who comes out on top after the primary. Perhaps then a negative campaign against its least favorite candidates would be the most prudent use of the company’s money, Rich said, or maybe APS doesn’t anticipate a major shakeup at the commission in any event.

No candidate will ever say he or she is beholden to APS, Rich said, but even an unwilling Republican would likely be better for the company than a Democrat on the commission.

“Certainly it’s fashionable for candidates on either side to not speak highly of APS right now,” he said. “But maybe they have a better feeling about some of the primary candidates and they don’t think they have to worry.”

With deregulation back on the table, though, APS may have to rethink its strategy entirely.

Commissioner Bob Burns, who will leave office in 2020 because of term limits, insists it’s re-regulation.

“That was a $5 million-plus word fought over in 2013,” he said, referring to the last time the commission considered the issue.

At first, all five commissioners at the time were on board, Burns recalled, but APS turned it into a “public political campaign.”

“And then all hell broke loose, and money started flying,” he said. “I guess you could say it was never in the control of the commission.”

The effort died soon after.

Then-Commissioner Gary Pierce flipped and moved to end discussion of the issue after the commission was advised that deregulation would likely require a voter-approved amendment to the Arizona Constitution. Then-Commissioner Brenda Burns was the only dissenting vote as her colleagues voted 4-1 to end the debate.

Bob Burns said APS sees the prospect of competition as a significant threat to its income.

He’s heard the phrase “utility death spiral” thrown around in years past, but he doesn’t hear that anymore and disagrees with the premise anyway.

Burns sees technology on the rise and capable of altering the status quo. Even if that means APS won’t be in the energy generation business in the future, he said distribution needs will still give the company space to function.

And that space may well be APS’s future: a distribution monopoly but perhaps not much more.

Arizona Public Service vows all clean power by 2050

Jeff Guldner (AP Photo/Ross D. Franklin)

Arizona’s largest electric utility said January 22 that it plans to switch to 100% carbon-neutral power generation by 2050, a sharp turnaround from a company that spent tens of millions of dollars two years ago to fight a ballot measure requiring it to use renewable sources.

The move by Arizona Public Service is the latest in a string of targets set by states or utilities in the U.S. West to go carbon neutral as climate change pushes the region away from traditional sources like coal. Domestic coal-fired power generation has declined 40% over the past decade, contributing to a steep decline in coal mining and several bankruptcies.

APS Chairman and CEO Jeff Guldner said the plan is different than the defeated ballot measure known as Proposition 127, which would have required utilities to get half their power from renewable sources by 2030. The new plan comes close to that but can be changed if needed.

“Flexibility is always the best thing to have when you’re dealing with future energy policy,” Guldner said. “The biggest concern we had with 127 is there was no flexibility. It would have been ingrained in the (state) Constitution.”

As part of the plan, the company will close a major New Mexico coal-fired power plant seven years early but rely on the nation’s largest nuclear power plant as it adds renewable power, battery storage and other sources.

The company operates and owns the majority of the massive Four Corners Power Plant outside Farmington, New Mexico. It uses coal from a mine in the Navajo Nation, and 80% of its 327 workers are Native American.

Nuclear

The company plans to keep relying on the Palo Verde Nuclear Generating Station west of Phoenix to provide about 25% of its power past 2050. The three-reactor plant is the largest in the nation and will be more than 60 years old by then. It produces power with no carbon emissions.

By 2030, APS expects 65% of its power to be carbon neutral, including 45% from renewable sources. The company spent $38 million in 2018 to fight a proposal requiring half its power come from renewables by the same year.

In the U.S. West, major utilities in New Mexico and Colorado have announced similar plans. California plans to be carbon neutral by 2045, while Nevada passed a law requiring 50% renewable power by 2030.

APS expects to use utility-scale solar power plants, greatly increase battery storage and see growth in rooftop solar. Homeowners are installing solar panels even after Arizona regulators cut the amount they can get for pumping excess power back into the grid. Natural gas will be a significant bridge as the company seeks new technology to replace gas power plants.

APS will stop using coal for power generation by 2031, when it plans to end operations at Four Corners. A major plant in northeastern Arizona that APS bought power from closed last year, and it plans to shutter the two units its owns at the Cholla Power Plant in eastern Arizona in 2025.

Burning oil and coal emits carbon dioxide, a greenhouse gas that is fueling rising global temperatures and climate change.

The Arizona utility, owned by a publicly traded holding company known as Pinnacle West Capital Corp., serves 2.7 million people.

APS came under fire in recent years for spending millions to back favored candidates for the Arizona Corporation Commission, which regulates utilities and must approve the company’s plans, including rate increases.

Guldner, who took over as CEO in November, told regulators this month that the utility won’t spend on future commission elections.

The decision to move to carbon-free power by 2050 was partially driven by public support for ideas behind the ballot proposal, Guldner said. The measure was initially popular but lost by a wide margin after APS spent big to highlight its costs to consumers. APS also has been hearing from major customers and others about clean power.

Response

Clean power advocates praised the company’s plan but said it was clear APS could have met the terms of the 2018 ballot proposal.

“We think it’s a good start,” said Sandy Bahr, director of the Sierra Club’s Grand Canyon Chapter. “Obviously, we need to be going carbon free. Climate change is the biggest challenge we face, and it’s certainly affecting us big time here in Arizona.”

Tom Steyer, a Democratic presidential candidate and billionaire who funded much of the campaign backing the proposition, called the announcement “a huge win for the people of Arizona.”

“Our efforts behind Proposition 127 in 2018 have moved the state to a clean energy future,” he said in a statement.

APS aims to send a clear message to industries supplying utilities that it needs innovative ideas to boost carbon-neutral power.

“That 2050 piece is not just a symbolic commitment,” Guldner said. “It’s meant to be a signal that says this lets us focus on solving the gaps in the technology and the gaps we have today so that we can get there.”

Arizona utility helps fund Ducey re-election campaign

Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)

The state’s largest electric utility and its top executives are funneling money into campaigns to ensure that Doug Ducey remains governor for another four years.

Pinnacle West Capital Corp., parent company of Arizona Public Service, has donated $10,200 to the Ducey for Governor campaign through its political action committee. That’s on top of $5,100 that CEO Don Brandt has given to the same committee and an identical amount to the separate Ducey Victory Fund.

Brandt’s wife, Ginger, has put her own $5,100 into the Ducey for Governor fund.

James Hatfield, the company’s executive vice president and chief financial officer, also has put $5,000 combined into the two funds. Ditto for David Falck, another executive vice president and general counsel.

And Robert Aiken, another VP, put in $1,000 to help the governor get reelected.

But the biggest donation does not show up in state campaign finance reports: Pinnacle West has given $100,000 of corporate money directly to the Republican Governors Association.

What’s important about that donation is that the RGA then can turn around and use money from its war chest to help influence the election. It did precisely that in 2014 when it put nearly $5 million into campaign commercials attacking Democrat Fred DuVal, making it the single largest source of funding that secured Ducey’s win.

The dollars found in reports so far represent what is publicly required to be disclosed. What is not known is whether Pinnacle West is giving money to other groups to help influence Arizona politics.

The extent of that spending is precisely the focus of the lawsuit now playing out in Maricopa County Superior Court.

What is known is that two “dark money” groups spent $3.2 million in 2014 to help elect Republicans Doug Little and Tom Forese to the Arizona Corporation Commission, the organization that sets utility rates. But the groups, Save Our Future Now and the Arizona Free Enterprise Club, have refused to disclose their donors, saying that’s not required because the Internal Revenue Service classifies them as “social welfare organizations.”

APS, for its part, will neither confirm nor deny that either it or Pinnacle West was the source of those dollars.

Since then, Commissioner Bob Burns has tried to question corporate executives about the spending, arguing that it is relevant to the panel’s 4-1 vote last year allowing APS to collect an additional $7 million a month from customers. When APS balked, Burns took his case to Judge Daniel Kiley who has yet to rule on the issue.

Pinnacle West was more up front in the 2016 campaign, admitting it spent $4.2 million to ensure the utility regulatory commission remained an all-Republican affair.

It also is apparently planning a major role in this year’s race.

A group called Arizonans for Sustainable Energy Policy was set up in September to make independent expenditures in future campaigns. As of the most recent report, the organization has $3.2 million, all of that coming from Pinnacle West.

J.P. Twist, who runs the governor’s reelection effort, said there’s a legitimate reason that Ducey has two separate campaign committees: It gives people a chance to give twice and not run afoul of campaign finance limits.

Individuals are limited to just $5,100.

What that means, said Twist, is someone who wants to give Ducey, say $10,000, can have that first $5,100 go directly to the governor. Anything above that, he said, is given to the Arizona Republican Party which then can use the dollars for things to help the governor and other GOP candidates, like get-out-the-vote efforts.

Twist acknowledged the state party has its own fundraising efforts. But he said there’s a reason for having the cash raised under Ducey’s name.

“Having the governor’s name attached to it helps raise money,” said.

But Twist denied that’s an additional financial way of currying favor with Ducey.

“That’s not at all how it works,” he said. “You’re assuming somehow donating money gives you influence in the Ducey administration, which would not be accurate.”

As to the spending for this year’s election, company spokeswoman Jenna Rowell isn’t answering questions.

“We don’t discuss individual contributions,” she said in a prepared statement in response to questions from Capitol Media Services. “In general, we support candidates we believe will continue Arizona’s economic growth.”

But the company’s written policy spells out that that, in general, it may support candidates and organizations that “share an interest in public policy that furthers our business objectives and promotes our mission of creating a sustainable energy future for Arizona.”

“The company’s contribution decisions are based on what is in the best interests of Pinnacle West and not based on the personal preferences of our executives,” the policy reads.

And Rowell said that all contributions are funded by Pinnacle West shareholders and not APS customers.

But whether that’s true is part of the lawsuit Burns has filed against the company. He wants a closer look at the parent company’s political expenses because all of the parent company’s money comes from its APS revenues.

Pinnacle West is apparently interested in some other races. For example, it has so far given 50,000 of corporate dollars to the Republican Attorneys General Association.

As in the governor’s race, those funds run through the national committee can come back to influence what happens in Arizona. That’s what happened in 2014 when RAGA spent more than $3 million in commercials attacking Democrat Felicia Rotellini, helping to elect Republican Mark Brnovich.

The spending by Brandt and his wife is not limited to seeing Ducey spend another four years as the state’s chief executive.

The pair have together put $5,400 into helping former state Sen. Debbie Lesko win her bid for Congress. She is running in the special election to replace Trent Franks who stepped down late last year in the wake of sexual harassment allegations.

Big money already at play in newly filed clean-energy initiative

The state’s largest utility wasted no time in spending money to discredit a ballot measure that seeks to increase renewable energy goals.

The Clean Energy for a Healthy Arizona campaign, backed by California Democratic billionaire Tom Steyer, filed its ballot measure with the Arizona Secretary of State’s Office on February 20.

The measure seeks to amend the Arizona Constitution to put in place a requirement for 50 percent of energy that large utilities use to come from renewable sources by 2030.

In order to get on the 2018 ballot, the campaign needs to collect 225,963 valid signatures of registered voters.

The measure defines an “affected utility” that must comply with its 50-percent renewable mandate to be a public service corporation, which would affect utility companies like Arizona Public Service and Tucson Electric Power.

The measure will not affect the state’s second-largest utility, the Salt River Project, a quasi-government entity.

The measure defines renewable energy as an energy resource that is “replaced rapidly by a natural, ongoing process” and specifically excludes resources like municipal solid waste combustion, trees larger than 12 inches in diameter, nuclear energy or fossil fuels.

The 50-percent requirement would ramp up over the next decade, with 12 percent required by 2020 on up to 50 percent by 2030. By 2030, 10 percent of the renewables must come from distributed energy like rooftop solar.

Before the measure was even filed, a group backed by APS parent company Pinnacle West spoke out against it, and the group again struck back after the measure was filed.

“Arizona families and employers face a clear and present threat in the form of an initiative filed today for the November ballot. This proposal seeks to impose burdensome, California-style energy regulations on Arizona – meaning higher electricity costs and reduced power reliability for Arizona families,” Arizonans for Affordable Electricity spokesman Matthew Benson said.

Benson told the Arizona Capitol Times his group has received “major initial funding” from Pinnacle West, but he said it hopes to raise more money from other entities as the campaign continues. Benson wouldn’t say how much money Pinnacle West has given so far, saying “the committee will disclose funding as required with the next report.”

Pinnacle West has also given about  $3 million to another committee for the 2018 cycle, Arizonans for Sustainable Energy Policy, which Benson is the spokesman for. A similar group, the AZ Coalition for Reliable Electricity, which Benson was also the spokesman for, received about $4 million from Pinnacle West in the 2016 cycle and spent to support Republicans for Arizona Corporation Commission seats.

Pita Juarez, the spokeswoman for the ballot measure, said the initiative would reduce pollution and electricity costs while improving public health, which is why voters and APS’s own customers favor clean energy.

“It’s a shame that APS would spend its customers’ money opposing a measure those customers support and that would lower their costs and improve their health,” Juarez said.

Billionaire Steyer to spend money to ‘educate’ voters on utility

In this photo taken Wednesday, June 27, 2018, environmental activist & billionaire Tom Steyer poses at his offices in San Francisco. Arizona’s largest utility is fiercely opposing a push to mandate increased use of renewable energy in the sun-drenched state, setting up a political fight over the measure funded by Steyer. (AP Photo/Eric Risberg) — In this photo taken Wednesday, June 27, 2018, environmental activist & billionaire Tom Steyer poses at his offices in San Francisco. (AP Photo/Eric Risberg)

Having burned through $28 million in a pair of losing political battles in Arizona last year, California billionaire Tom Steyer is now prepared to pump some more cash into the state.

But unlike last year, it’s not to affect the outcome of elections, at least not directly.

Instead, it’s designed to “educate” voters about what NextGen America, Steyer’s political action committee, believes is the outsize influence that Arizona Public Service has on state politics. And that, according to organization spokeswoman Aleigha Cavalier, should ultimately affect how people vote in future elections.

Cavalier would not specifically disclose how much Steyer intends to spend.

The billionaire hedge fund manager funneled $22.8 million last year into Proposition 127. That measure would have required investor-owned utilities like APS and Tucson Electric Power to generate at least half of their power from renewable sources by 2030.

It was rejected by a margin of 2-1 after Pinnacle West Capital Corp. spent more than $32 million of its own cash against the proposal.

Steyer had no better luck with his bid to oust state Attorney General Mark Brnovich.

That came after Brnovich’s office altered the description of the measure that appears on the ballot, adding wording that Steyer and Prop 127 proponents said was specifically designed to help APS. The change was so radical that Eric Spencer, who at the time was state elections director, called it “eyebrow raising.”

Steyer then spent $3.9 million in attack ads on Brnovich. But the Republican incumbent still outpolled Democrat January Contreras by about 90,000 votes out of more than 1.3 million ballots cast.

This time, however, Cavalier said the money is going to be focused not on specific ballot measures or political campaigns but on educating voters on how APS is using money from ratepayers to exercise its own influence.

“We want to make sure that we’re continuing that work to make sure that people know the level of corruption that goes on in Arizona because of APS,” she said.

APS spokeswoman Suzanne Trevino derided the effort.

“It seems very hypocritical that a person who doesn’t even live in our state … is accusing a company that has done business for more than a century in Arizona of having undue influence when we are working to craft responsible energy policy,” she said. And Trevino said that whatever money Steyer is spending now is “positioning for the 2020 election.”

A key focal point of the Steyer-financed campaign is going to be the rate hike for APS approved by the Arizona Corporation Commission last year by a 4-1 margin.

That increase was supposed to boost the average bill of consumers by about $6 a month and generate an extra $95 million for the utility. But commissioners have been taking a second look amid complaints by many customers that their rates have gone up much faster.

And then there’s the question of whether the utility is actually bringing in more than the permitted increase.

APS reported earlier this month that its profits in the first three months of this year were $17.9 million, compared with $3.2 million at the same time last year. APS officials said the difference was a combination of an unusually cold winter and lower operating costs.

That led to figures of income of $500 million.

Cavalier contends that the commission vote is a direct result of the utility putting commissioners of its choosing in place.

That specifically includes the recent disclosure that Pinnacle West gave $10.7 million to organizations that spent heavily on the 2014 Corporation Commission race to secure the election of favored utility regulators.

It did openly admit to spending $4.2 million on commission races in 2016; there were no reports of Pinnacle West spending this past election.

“I think the money was spent to elect their own regulators,” Cavalier said. So one point behind the messages will be to urge APS customers to call commissioners to rescind the rate hike.

Cavalier acknowledged that the $95 million figure was the result of a deal among various intervenors in the case, including the Residential Utility Consumer Office. But she said they signed off on that deal because they did not believe they could get a better deal out of the commission.

A spokesman for APS previously has said that any spending on races and lobbyists comes not from ratepayer dollars but from the profits of the parent company.

That, however, ignores the fact that APS – and the money it gets from customers – is pretty much the sole source of income for Pinnacle West.

What Steyer hopes to achieve in Arizona is only part of his broad political agenda.

Steyer has been behind a push on members of Congress to impeach President Trump. While his Need to Impeach campaign has gained some attention among some elements of the Democratic Party after the release of the Mueller report, party leadership has been talking the issue down.

More recently, Steyer announced that he is launching a campaign to disbar Attorney General William Barr. That follows allegations that he lied to Congress about the Mueller report.

This story was revised after publication to include comments from an APS spokeswoman.

Brnovich sues Prop 127 campaign over political ads

Claiming he’s been defamed, Attorney General Mark Brnovich is suing the backers of the Proposition 127 campaign for telling what he said are lies about him.

Legal papers filed Wednesday in Maricopa County Superior Court claim commercials paid for by the Clean Energy for a Healthy Arizona Committee say there is a link between Brnovich’s changes to the Proposition 127 ballot description and money from the parent company of Arizona Public Service to help his reelection campaign.

Brnovich said there was no communication between him and the state’s largest electric utility as he crafted the ballot language and added that the new renewable energy mandate, if approved, would occur “irrespective of cost to consumers.” And he defended that language even though state Elections Director Eric Spencer, a Republican like Brnovich, called it “eyebrow raising” and suggested the changes come with both political and legal risks.

But what most offends Brnovich – and a key basis for the lawsuit – are contentions in commercials paid for by the committee that the attorney general is “corrupt” and that he was helping to “rig” the election.

With early voting already started and the election just two weeks away, Brnovich is not asking a judge to order the commercials halted. Instead he is seeking unspecified damages and a punitive award “to punish defendants and deter it and others from emulating defendants’ conduct.”

Arizona Attorney General Mark Brnovich (Photo by Katie Campbell/Arizona Capitol Times)

Attorney Dennis Wilenchik who represents Brnovich acknowledged the question of the damage to his client’s reputation – assuming he wins the lawsuit – cannot for the moment be quantified.

If Brnovich wins his race against Democrat January Contreras, Wilenchik said it may be his client would simply seek his legal fees.

And if he loses?

The most visible damages would be the loss of his $90,000 salary. But Wilenchik said that charging publicly that Brnovich, as a state official, is corrupt, is “extremely hurtful” to his career.

“He’s a lawyer,” Wilenchik said.

“There could be Bar complaints about him,” he continued. “After the election, we’ll assess that.”

In a prepared statement, D.J. Quinlan, spokesman for the Proposition 127 campaign, said the lawsuit “will fail.”

At the heart of the issue is the role the attorney general plays in elections.

By law, the explanations that appear on the ballot of propositions are crafted by the secretary of state, subject to review and alternations by the attorney general.

Proposition 127 would constitutionally require most utilities to obtain half of their power from renewable sources by 2030. That would override the current policy of the Arizona Corporation Commission which sets a 15 percent renewable goal by 2025.

That policy is subject to review and amendment based on changing factors, including cost. The initiative has no such escape clause.

Based on that, Brnovich added verbiage to the ballot language to say that the 50-percent mandate, if approved, would come “irrespective of cost to consumers.” That is precisely the argument APS has been making against the measure, with the utility within days then using the explanation in its commercials.

The TV ads financed by the pro-127 organization accuse Brnovich of doing the company’s bidding, even superimposing APS logos on his suit jacket similar to the outfit of a NASCAR driver.

More to the point, the ad cites the more than $400,000 that Pinnacle West Capital Corp. gave to the Republican Attorneys General Association, a group that in turn has spent more than $1.2 million to win Brnovich another term.

“He rigged official ballot language to help APS block affordable solar,” the commercial says, urging voters to “say no to corruption and higher bills” and telling people to vote against Brnovich and in favor of the initiative.

Wilenchik said there are several problems, starting with the fact that any money APS and Pinnacle West gave to the national association was not earmarked to help Brnovich. And he said Brnovich had no communications with APS about the change in ballot wording, saying the added verbiage is factually accurate.

But he said the wording of the commercials is “patently false,” with words like “rig” implying that someone illegally and wrongfully interfered with an election.

“Nothing of the sort occurred here,” Wilenchik said. And he said Brnovich did not “manipulate” the ballot language “but rather exercised his duty as Arizona attorney general to assure that the descriptions of ballot measures are fair and accurate and provide necessary and appropriate information to the voting public.”

He also brushed aside Spencer’s comments about the changes being “eyebrow raising,” saying that Spencer himself sought to include language in the explanation of Proposition 127 that Brnovich believed would have been designed to sway voters.

Spencer, in an email to the Attorney General’s Office responding to the proposed addition, said the new language “is certainly eyebrow-raising because it cites information exogenous to the ballot measure itself.” That term means that the words in the explanation are not taken from the ballot language itself but from outside factors.

“But I’m sure you’ve calculated the legal and political risks of adding that,” Spencer added.

Commissioners reject Burns’ request for subpoenas

The Arizona Corporation Commission today voted down one commissioner’s requests to greenlight subpoenas and allow him to question utility executives about their election and lobbying expenses.

Commissioner Bob Burns, a Republican, has sought for nearly two years to disclose electioneering spending by Arizona Public Service or its parent company, Pinnacle West.

Today’s vote is the latest in a lengthy battle between Burns, his fellow commissioners and APS, which has spanned from subpoenas to no votes on other APS projects to the courtroom. But it was the first chance for all the commissioners to vote yes or no on Burns’ quest.

The utility openly spent millions through an independent expenditure group on the 2016 election, including money that boosted Burns. It is also alleged that the utility funneled funds to dark money groups that spent to help out Republican commission candidates Doug Little and Tom Forese in 2014.

The commission’s latest vote clears the way for Burns to go back to court and seek disclosure that way, now that his fellow commissioners haven’t allowed him to pursue his request further through Corp Comm proceedings.

APS and Pinnacle West officials did not attend the meeting today nor argue against Burns as part of the proceeding.

Burns wanted the commissioners to direct an administrative law judge to make APS officials appear at a hearing to answer questions about the company’s political and spending on lobbying over five years, and to allow Burns to question them through an attorney.

He also said the other four commissioners, all Republicans, may need to be disqualified or have to recuse themselves from APS’s ongoing rate case because of utility spending on their behalf during the 2014 and 2016 elections.

The questioning would come as part of APS’s ongoing rate case, in which the utility has asked to increase customers’ rates by about 4.5 percent on average, equaling about $6 per month.

Burns also wanted the commission to halt the rate case proceedings until an investigation into disqualification was completed.

Critics of the commission say the APS spending issue has cast a shadow over the regulatory body, as speculation over the utility’s involvement in the 2014 election has continued to swirl since then.

Earlier this month, the commission quickly moved to investigate Johnson Utilities, a water company that federal prosecutors allege was involved in a scheme to bribe former commissioner Gary Pierce.

The commission approved an order, written by Commissioner Boyd Dunn that says Burns didn’t show disqualification was needed for the other four commissioners. Dunn also wrote that Burns doesn’t have the standing to recuse commissioners because he isn’t a party in the case, meaning his due process rights aren’t violated.

APS argued in a filing that Burns’ subpoenas weren’t relevant to the rate case because the test year for setting new electricity rates was 2015, and none of the type of spending he sought were included as expenditures in the rate case. The commission’s order agreed with the utility’s assessment, saying the subpoenas seek information that is irrelevant to the rate case.

Instead of using the rate case, the commission could look at external influences on the commissioners as part of its ethics review, the order says. The subpoenas “blur the lines between ratemaking and policymaking,” Dunn wrote.

And Burns’ attempt to question utility executives was “overly broad, irrelevant to the rate case and not reasonably calculated to lead to the discovery or admissible evidence,” the order says.

Burns responded in a letter, saying Dunn’s order “misses the point entirely” and “appears to mirror APS’s talking points,” which he claims are riddled with “factual inaccuracies and incorrect legal conclusions.”

Burns said he wants to protect the rights of all parties in the rate case, which he believes every commissioner should be concerned with. Burns said he found it “highly insulting” that Dunn wrote the commission couldn’t legally protect ratepayers from undue influence by a monopoly utility.

“I ask and demand that my fellow commissioners answer – ‘if not us, then who?’ Commissioner Dunn’s order answers, to APS’s delight, ‘let them protect themselves if they can.’”

Burns also demanded that the commissioners who voted against his disqualification investigation detail any interactions and communications they had with APS, Pinnacle West or any affiliated entities or lobbyists during their campaigns. He wants them to also tell the public when and how they learned or even suspected APS or Pinnacle West had financially supported their campaigns.

The commission’s vote allows Burns to demonstrate to a Maricopa County judge that he has exhausted all non-judicial remedies in his quest to unveil the utility’s rumored dark money campaign.

The primary purpose of today’s meeting was to show Superior Court Judge Daniel Kiley that he has been unable to compel APS and Pinnacle West to produce documents he’s seeking related to the 2014 election.

Kiley in May declined Burns’ request to force the companies to comply with his subpoenas on the grounds that it would be premature for him to rule on the matter until after the commission votes on it.

The long-awaited vote today led to some harsh rebuttals from commissioners, who have increasingly clashed with Burns as he has become more and more laser-focused on disclosing election spending.

Commissioner Doug Little, in explaining his vote against Burns, said he disagrees that he would need to recuse himself from the APS rate case. He said Burns’ allegations that he has a conflict of interest in the case were based on “supposition, rumor, innuendo and unfounded media reports.”

Commissioner Andy Tobin took multiple swipes at Burns during the meeting. At one point, he said he would vote to support the other commissioners who also recognize “how out of control Mr. Burns is.” Tobin said he had “no interest” in explaining his votes to Burns.

“Nothing surprises me with him, except for a desperate need for constant attention,” Tobin said of Burns.

Conservation group to spend $2.8 M to sway Corp Comm vote

If money is speech, the state’s largest electric utility is not going to have the only voice this year in trying to affect who gets elected to the Arizona Corporation Commission.

Chispa Arizona is launching a $2.8 million television ad buy Thursday in its bid to get support for Democrats Sandra Kennedy and Kiana Sears. And the organization, an affiliate of the national League of Conservation Voters, also is planning some radio and Internet advertising aimed largely at the state’s Latino community.

The move comes as Pinnacle West Capital Corp., the parent company of Arizona Public Service, already has put $3.2 million into an account specifically to influence elections.

To date, that committee operating under the banner of Arizonans for Sustainable Energy Policy, has not made contributions to individual candidates. But it has doled out $300,000 to the Arizona Republican Party to support its slate.

That still leaves the committee with nearly $2.6 million for a last-minute ad blitz.

Matthew Benson, spokesman for the Pinnacle West-funded group, declined to say Wednesday how that cash would be spent.

“We don’t have any campaign plans to announce at this time,” he said.

And APS spokesman Alan Bunnell declined to say if the company intends to spend money in other ways to influence the commission race.

“We don’t disclose our political strategies,” he said.

Bunnell said the company has promised to disclose all political funding in its annual report. That, however, does not come out until next spring.

But Laura Dent, executive director of the Chispa Arizona political action committee, said her organization sees no need to wait and see what APS is going to do. She pointed out the utility has a record of trying to elect regulators it believes will give it favorable treatment.

Two years ago it spent $4.2 million to ensure that the commission remained an all-Republican affair. And the company will neither confirm nor deny it was the source of $3.2 million spent by two groups, that aren’t required to disclose donors, to elect Republicans in 2014.

“For too long the Corporation Commission has been under the influence of the largest private utility in the state that it’s supposed to regulate,” she said. “I think it’s a moral hazard that the state’s largest utility, which is a private monopoly with 1.2 million captive audience members as customers is the dominant voice in the election of its own regulators.”

A key purpose behind the commercial is to help break the stranglehold the GOP has had on the five-member commission since the 2012 election. It has been the outside spending that has helped keep that unilateral control in place.

Dent wants voters to oust incumbent Justin Olson who was appointed to the panel last year by Gov. Doug Ducey, and defeat attorney Rodney Glassman, the other GOP contender for the two four-year terms up for grabs this year.

Dent said that Chispa, which focuses on environmental issues particularly from the viewpoint of the Hispanic community, believes that Sears and Kennedy will be better choices.

“Latinos are disproportionately affected by climate change,” she said, with Hispanics paying a larger percentage of their income in energy costs. Then there’s the number of Latinos who work outside in agricultural and construction jobs and are exposed to higher temperatures.

“And Latinos are more likely to live in areas with high pollution and they have higher rates of asthma,” she said.

But Dent said the TV commercials, coupled with the online and radio campaign, has another purpose: informing voters of exactly what the Arizona Corporation Commission is and does.

“There’s still a lot of Arizona residents out there that don’t know what this corporation (commission) does, and doing that in a really accessible way,” she said.

Dent said the League of Conservation Voters is the largest’ contributor, though she would not disclose what percentage of the money it is providing.

Alyssa Roberts, a spokeswoman for that organization, said the cash is part of more than $60 million the LCV Victory Fund and its state partners are spending this year, including $25 million to affect state races.

Asked about the source of the dollars, Roberts cited reports filed with the Federal Elections Commission.

The most recent filing shows billionaire Mayor Michael Bloomberg, the former Republican mayor of New York City, as the largest contributor at $2 million. Bloomberg recently reregistered as a Democrat, leading to speculation he is looking at a 2020 presidential bid.

Earlier this month Bloomberg pledged $1 million to back an initiative in the state of Washington to charge large polluters an escalating fee on fossil fuel emissions.

The funding to help Sears and Kennedy is on top of $250,000 that California billionaire Tom Steyer is spending on their behalf. He is the source of virtually all of the funds being spent to promote Proposition 127 which would mandate half of electricity in Arizona come from renewable sources by 2030, a measure opposed by APS.

But Dent said that neither Steyer nor any of his political committees are funding this $2.8 million campaign, directly or indirectly.

Corp Comm candidates debate dark money, renewable energy

The three Republicans running to become state utility regulators warn that putting Democrats in charge of the regulatory panel would turn Arizona into California.

And they don’t mean that in a good way.

In a debate at KAET-TV on September 30, all three Republicans – Jim O’Connor, Eric Sloan and Lea Marquez Peterson – criticized the self-named “solar team” of Democrats Bill Mundell, Anna Tovar and Shea Stanfield. They said electing the Democrats would mean higher rates as consumers are forced to buy what they contend is more expensive power from renewable resources, just as what has happened in California.

“I am a free-market capitalist,” said O’Connor.

He said that the added costs borne by utilities to purchase power from wind, solar, geothermal and other renewable sources is passed on to consumers, complete with utilities even taking a markup.

“It’s a fantasy to believe that there’s some company with an endless pot of gold that can pick up the check for all this social redistribution,” O’Connor said.

“Any time the commission mandates or subsidizes something, Arizonans end up paying more for something than they should have,” said Sloan. He estimates the current requirement for utilities to purchase more solar power has cost ratepayers $1.2 billion.

Marquez Peterson, the lone incumbent seeking one of the three open seats, said she sees the issue through a different lens.

She said California has vigorously forced utilities to move away from fossil fuels. That, Marquez Peterson said, led to rolling blackouts this summer and utilities in that state trying to buy power from Arizona utilities.

Democrats have their own arguments.

On the financial side, Mundell, who was a commissioner for nearly a decade until 2009 – and a Republican at the time – argued that the mandates that he helped approve at the time actually have resulted in $2 billion in savings for customers. The key, he said, is encouraging things like rooftop solar.

“You don’t have to build big, gigantic new fossil fuel plants, you don’t have to build transmission lines,” Mundell said. And he pointed out that utilities are legally entitled to pass on the cost of new construction to ratepayers.

Tovar said it’s also good for the Arizona economy, making the state the “solar capital” of the nation.

“It will be a win-win situation,” she said. “It will create a new economy with green jobs … that will be creating the thousands of jobs that we desperately need.”

Stanfield took her own swipe at utilities, saying they don’t appear to be interested in providing clean and affordable energy. She said that’s why they need to be “strongly encouraged with mandates and standards and held accountable for steps to get to those mandates.”

Some of the debate about current and potential mandates could end up being academic.

In a recent ruling, the Arizona Supreme Court appears to have narrowed the legal role of the Corporation Commission strictly to setting rates.

That, in turn, could undermine the existing requirement by the commission that utilities generate 15% of their power from renewable sources by 2025. And it also would call into question other proposals – including some by Republicans – to wean utilities in Arizona away from fossil fuels.

Despite the differences over such mandates, five of the candidates say they do believe that climate change is real and that it is caused by human activity. Only O’Connor said he has his doubts.

The other key issue in the race could come down to who voters believe is least likely to be influenced by the utilities they are supposed to be regulating.

Next month’s election comes as the commission is coming off years of low public trust, much of that directly related to the fact that Arizona Public Service, the state’s largest electric utility, funneled millions of dollars into prior campaigns for Republicans in the 2014 and 2016 elections.

APS appears to have stayed out of the 2018 race after their practices were unveiled. And, to date, there is no evidence that they are backing any of the contenders, all of whom are running with public financing.

“The dark money has corrupted the commission,” Mundell said. “It’s led to those non-justified rate increases and the crushing of rooftop solar.”

Sloan countered that it hasn’t just been Republicans who have benefited from outside spending, mentioning the $2.8 million that Chispa Arizona, the political arm of the League of Conservation Voters, put into trying to elect Democrats in 2018.

But Sloan’s own background made him a target.

He ran the Arizona Coalition for Reliable Energy in 2016. That was the fund financed by APS that pushed for election of Republicans.

That $10,000 contract, said Mundell, makes him suspect as someone who could be an independent voice and properly regulate utilities.

Sloan described his activities as simply a “get-out-the-vote” effort. That drew a sharp retort from Tovar.

“It was a get-out-to-vote for three Republicans on the commission,” she said.

Both Mundell and Tovar did not dispute that they took money from an APS political action committee when they were members of the Legislature. But she said that was a different time.

“We didn’t have these issues with APS,” Tovar said.

Mundell also found himself defending his previous time on the commission, acknowledging he probably voted for some rate increases for APS but saying he also voted against others.

Prior cash from Pinnacle West Capital Corp., the parent company of APS, also became an issue during the debate. Marquez Peterson not only got $2,500 for her 2018 congressional race from the company, but also $5,000 from David Hutchens, chief executive of Tucson Electric Power.

She said that is irrelevant to the job she wants to keep after Gov. Doug Ducey appointed her to the commission, replacing Andy Tobin who left to become head of the state Department of Administration.

“It in no way unduly influences me as commissioner,” she said. And Marquez Peterson also said that she was involved since joining the commission in approving a new code of ethics for regulators.

“I think that we’ve turned the tide” on the commission’s reputation. Beyond that, Marquez Peterson said that the individuals who were leading APS at the time are since gone.

Corp Comm may take another look at deregulation

The Corporation Commission may soon take another look at retail electric competition, just five years after its last foray into the issue ended with a whimper.

Commissioners Robert Burns, Boyd Dunn and Justin Olson have all submitted recent letters into an open docket asking that the commission explore possible changes to its retail electric competition rules. Those rules currently permit utilities such as Arizona Public Service to operate as regulated monopolies.

Olson said he believes the commission should consider opening up the energy retail and generation markets to competition, which would create competition for regulated monopolies like APS.

“If we’re going to be analyzing what the grid of the future is going to look like and what, if any, policy reforms do we need enacted at the commission in order to accomplish that, I think retail choice is certainly something that needs to be part of that discussion,” Olson said.

Burns said he believes technological advancements in recent years have created more of an impetus for re-regulation – Burns rejected the term “deregulation” – in the energy generation arena. He said he expects resistance from the utility, which he said spent millions fighting the last push for deregulation in 2013.

“It’s only natural that the utilities would be a little uptight about it, a little bit nervous. They’ve got a pretty good deal going,” Burns said.

Dunn said he’s keeping an open mind on the issue, but isn’t making any commitments on deregulation. He noted that he wasn’t on the commission the last time the issue came up, and wants to get some information on it as the Corporation Commission discusses the energy modernization plan that Commissioner Andy Tobin initiated.

“I felt like I’d like to look at the whole concept and just get the communication, get feedback without any sort of agenda on that issue,” he said.

Commission Chairman Tom Forese, who is widely viewed as an ally of APS, hasn’t made any official calls for the commission to explore deregulation. But he told the Capitol Times that he’s willing to discuss the idea, though he said he has a lot of questions, such as how deregulation would work in rural areas and how it would affect people who can’t afford utility services.

Nonetheless, he said there is merit in the idea of hearing from experts and finding out how deregulation has worked in other states.

“There’s no idea so dangerous that it can’t be discussed,” he said.

A spokeswoman for APS said the company has no comment on the issue.

While deregulation could give consumers the option of purchasing electricity from multiple utilities, Burns acknowledged that there will likely be a continued need for a monopoly that controls the transmission and distribution of electricity. It’s not feasible to have multiple utilities running electrical lines to the same house, he said.

Burns, a frequent critic of APS who has clashed repeatedly with the company, is the only member of the five-person commission who was in office during the last time it considered electric retail deregulation. In 2013, then-Commissioner Gary Pierce moved to end discussion of the issue after the Corporation Commission received legal advice that deregulation would likely require a voter-approved amendment to the Arizona Constitution. The commission voted 4-1 to end the debate, with then-Commissioner Brenda Burns as the only dissenting vote.

The legal advice that led to Pierce’s motion stemmed from a 2004 ruling by the Arizona Court of Appeals in Phelps Dodge v Arizona Electric Power Cooperative. In that case, which lasted for seven years, the court struck down as unconstitutional rules that the commission adopted in the 1990s to govern a deregulated electricity market. The Constitution empowers the commissioner to set “just and reasonable rates,” and the court determined that the commission’s rules were an abdication of that responsibility.

Olson said he believes the commission can enact rules to allow competition in the retail electricity market without amending the state Constitution. Just because the commission’s previous rules were unconstitutional doesn’t mean any move by the commission toward deregulation and competition would be, he said.

And Burns and Olson both said the debate could turn out differently than it did in 2013 because there are different people in office now.

CORRECTION: A previous version of this story incorrectly identified Robert Burns as the only commissioner to vote against ending the deregulation discussion in 2013.

Court denies regulator’s request to look at utility’s campaign spending

A judge won’t help Bob Burns force Arizona Public Service to disclose the money it has spent — and may spend in the future — to elect candidates of its choice.

In an extensive ruling Friday, Maricopa County Superior Court Judge Daniel Kiley concluded that Burns, as a member of the Arizona Corporation Commission, has an individual right to look at the books of not only APS but Pinnacle West Capital Corp., its parent company. He said Burns does not need the backing of the majority of the regulatory panel.

And the judge also said that individual right of commissioners extends to the ability to subpoena corporate executives to testify.

But Kiley said none of that matters because the other four members of the commission have refused to enforce the subpoenas. And the judge said he lacks the legal authority to overrule that.

Friday’s ruling, unless overturned, means that Burns will be unable to determine whether APS or Pinnacle West was the source of any of the $3.2 million spent by “dark money” groups in 2014 to help elect Republicans Tom Forese and Doug Little to the panel.

APS will neither confirm nor deny it was the source of those dollars. And the groups contend that their status under federal tax law as “social welfare” organizations exempts them under Arizona campaign finance laws from having to disclose their donors.

Potentially more significant going forward, it means that any three commissioners on the five-member panel can effectively thwart a bid by another regulator to demand a closer look at utility records.

What makes that significant is that Burns, in pursuing the records, contends that the companies are using funds generated from utility customers and that is done to secure “favorable treatment of APS” in rate hike cases. Burns also contends that using ratepayer funds for political influence threatens to “create regulatory capture,” inducing the commission to “approve unreasonable rate burdens for APS customers and/or disregard the financial … interests of such consumers.”

It also comes on the heels of the commission, on a 4-1 vote — with Burns dissenting — to allow APS to collect another $7 million a month from its customers.

In fighting the subpoenas, APS accused Burns of an improper and illegal power grab.

Attorney Mary O’Grady argued that the Legislature has exclusive power to set campaign finance rules. And she said Burns is powerless to require APS to divulge anything more.

“The court is not persuaded,” Kiley wrote. He said just because the state has its own disclosure rules does not strip the commission of its own constitutional powers.

Nor was Kiley impressed with arguments that forcing APS and Pinnacle West to reveal their political spending would discourage them from making future political donations. O’Grady said such disclosure runs afoul of the historic 2010 U.S. Supreme Court ruling which concluded that corporations, like individuals, have a right to participate in political debate, including with their dollars.

“Nothing in that case suggests the First Amendment offers blanket protection against the mandatory disclosure of political spending,” the judge wrote. He noted the justices in that ruling said transparency “enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

But Kiley said while Burns is free to issue his subpoenas, making APS and Pinnacle West comply is another matter.

He said the Arizona Constitution, which establishes the Arizona Corporation Commission as a separate branch of government, gives the panel “as a whole” the power to set its own rules. That, Kiley said, means it takes the full commission — or at least a majority — to issue a contempt citation to APS and Pinnacle West for refusing to comply with a subpoena.

“To look to a court to resolve disputes among ACC members about the proper scope of an investigation risks — indeed, virtually guarantees — undue judicial involvement in the day-to-day affairs of a separate and co-equal branch of government,” the judge wrote.

Kiley said even if he had the expertise necessary to determine what information should be gathered and presented to the commission, including documents and testimony, “the court could not overrule the decision of a majority of the commission about the proper scope of an ACC investigation without running afoul of the separation of powers principle that are at the heart of our system of government.”

Burns said Friday he was reviewing the ruling before deciding what to do next.

Court rejects Burns’ bid to unearth APS campaign spending

State utility regulators have no legal right to investigate their colleagues to determine if they are biased, a judge has ruled.

In a decision released Wednesday, Maricopa County Superior Court Judge Daniel Kiley rebuffed the efforts by Bob Burns to launch a probe into whether one or more of his colleagues on the Arizona Corporation Commission acted improperly in supporting a rate increase for Arizona Public Service because the company provided financial support for their political campaigns.

Kiley, in an extensive ruling, said due process does require that there be an “unbiased adjudication of disputes.” And he said that Burns has a “commendable concern” to ensure that all involved in rate cases have their rights protected.

“However, such due process rights belong to the litigants to the dispute, not to members of the body adjudicating the dispute,” the judge wrote.

In this case, none of the parties to the rate case raised any questions of bias. In fact, all of the 29 parties, including the utility, the Residential Utility Consumer Office and a host of intervenors, all signed off on the deal to allow APS to collect an additional $7 million a month from its customers.

The judge also said he can find nothing either in the Arizona Constitution or state statutes that gives one commissioner the independent authority to investigate whether his or her colleagues should be disqualified from voting on an issue.

Kiley’s ruling has implications beyond this specific dispute and this specific rate case. It also sets the rules for what can happen — and who can question the bias of commissioners — in future rate cases where utilities and others are providing direct or indirect financial help to elect the very regulators who are deciding the issue.

Burns said he is weighing whether to appeal.

The latest ruling is an outgrowth of Burns’ contention that APS or parent Pinnacle West Capital Corp. was the source of $3.2 million spent by “dark money” groups to elect Republicans Tom Forese and Doug Little to the commission in 2014.

Those groups claim their status as “social welfare” organizations under the Internal Revenue Code exempt them from disclosing donors. And APS will neither confirm nor deny it was the source of those dollars.

In 2016 APS openly spent more than $4 million to defeat Democratic candidates, helping to ensure the election of Republicans Andy Tobin, Boyd Dunn — and Burns himself. But Burns, whose reelection bid also was aided with money from solar interests, contends APS didn’t really want him, but feared him less than the Democrats.

Last year the commission voted 4-1 to approve the rate hike deal, with Burns the lone opposition.

Burns at first tried to get access to the records of APS and Pinnacle West to determine if they were behind those 2014 donations. But Kiley, in a prior ruling, said such a subpoena can be issued only if it has the support of the majority of the commission, something Burns did not have.

That left Burns with the argument, just rejected by Kiley, that he should be allowed to investigate whether the other four commissioners had conflicts of interest, meaning they never should have been allowed to vote on the rate hike in the first place.

Even if Burns does not appeal, this may not be the end of the matter.

There is a pending request before the commission to reopen the APS rate case amid charges by consumers that their actual bills went up far more than the utility had promised. That request, currently being reviewed by a hearing officer, is not expected to go before the panel until at least next month when there will be two new commissioners, neither of which voted for the rate hike and both of whom have expressed some support for Burns and his efforts to explore any links between campaign spending and commission action.

That could provide Burns the three-vote majority he needs to pursue the very APS and Pinnacle West records he sought in the first place.

Ducey: Law he signed meant to undermine Prop 127 victory

It ultimately may not matter if Arizonans vote in November to require utilities to generate more of their electricity from renewable sources.

Gov. Doug Ducey acknowledged Friday he signed legislation with the specific intent of allowing the affected companies to ignore the mandate proposed in Proposition 127 by paying a minimal fine. And he said the goal of protecting ratepayers outweighs any voter-approved constitutional provision.

Doug Ducey

“What I want to do is make sure we’ve got affordable, accessible energy,” Ducey told Capitol Media Services. “I don’t think when we have these mandates at the ballot box it gives the flexibility to our entrepreneurs and innovators to bring those solutions to the marketplace.”

That mirrors the claims of Arizonans for Affordable Energy, the committee financed by Arizona Public Service, which is leading the fight against Proposition 127.

That still leaves the question of whether voters have a right to put a requirement that utilities get 50 percent of energy from renewable sources by 2030 into the Arizona Constitution.

The measure Ducey signed would not — and could not — legally override a constitutional mandate. In fact, only another public vote could alter or repeal it.

But the law, which took effect in August, spells out that any violation of a constitutional provision on renewable energy would be only a civil violation. More to the point, it makes the penalty a one-time fine that could be as much as $5,000 — and as little as $100 — effectively allowing utilities to ignore any voter-approved mandate by paying the penalty.

The governor defended that decision.

“I do not want to see hardworking taxpayers and families in our state have their energy rates hiked for a reason that will not improve the environment in our state,” he said.

APS spokeswoman Jenna Rowell said Friday that no decision has been made whether her company would choose to pay the fine rather than comply with what voters approve.

But APS lobbyist Rodney Ross, in testifying for the measure his company helped craft, acknowledged the utility wants the option of ignoring the results of the election if Proposition 127 were to pass.

“If that scenario were to take place, we would engage in a collaborative process with our regulators, with state lawmakers, with affected stakeholders, and together come to a decision regarding what the best course of action is to protect the state, the economy and its ratepayers,” Ross said.

Joe Barrios, spokesman for Tucson Electric Power and UniSource, both of which also oppose the initiative, said the companies “will try to” comply.

“It remains to be seen whether we would be able to do that,” Barrios said, saying the measure presents “some very real operational challenges.”

The admission by both Ducey and the APS lobbyist about creating an escape clause for utilities to ignore Proposition 127 comes as both side of the debate are spending millions of dollars in a campaign that could leave voters with a better understanding of a line popularized by Mark Twain: There are lies, damn lies and statistics.

For the moment, it is the Arizona Corporation Commission that decides how much renewable energy each regulated utility must generate. The standard, last altered in 2006, requires 15 percent by 2025.

As of mid-August, the anti-127 campaign already had spent $10.4 million, much of that in the effort to knock the initiative off the ballot. All of that cash came from Pinnacle West Capital Corp., the parent company of APS.

Proponents, operating under the banner of Clean Energy for a Healthy Arizona, listed $8.8 million as of the same time. All of its cash comes from NextGen Climate Action, a political action committee run by California billionaire Tom Steyer.

The next reports, which will cover the extensive and expensive media campaign now being waged by both sides, are not due until next month.

Both sides have produced their own reports about what voter approval would mean to consumers.

Proponents are relying heavily on a study by the Natural Resources Defense Council which concluded that average electric bills would be $3 a month less if the state enacts the 50 percent renewable mandate by 2030 — and $5 a month less by 2040.

That’s based in part on the assumption that, absent Prop 127, utilities will meet future demands by building new gas-fired generators, which will require they purchase a steady supply of fuel. And history has shown that the price can fluctuate wildly.

By contrast, the NRDC says the cost of solar is dropping.

It does acknowledge that solar, by definition, is available only in daylight hours. But the study includes a presumption there will be not only battery storage but also some “flexible use of (existing) gas turbines and power plants.”

The campaign against Prop 127 relies heavily on a study produced for APS by the Seidman Research Institute at Arizona State University which campaign spokesman Matthew Benson said is based on an analysis of the bills of the utility’s current customers.

It claims the average price of electricity will go from 13.6 cents a kilowatt hour to more than 29 cents. More to the point, the study says that the average residential bill will go from $1,658 a year to $3,594.

Benson acknowledged that is based in part on the presumption that approval of the measure will result in shuttering the Palo Verde Nuclear Generating Station. That is based on projections that there would be so much solar energy that the power would not be needed at peak solar hours but have nowhere to go and that the plant cannot be kept online and operating.

TEP also says Prop 127 would raise rates, but nowhere near the APS projections. Instead, the company figures residential customers would pay at least an extra $500 a year, with a $3,400 increase for the average business.

In a nearly identical statement in opposition, UniSource, TEP’s cousin company, figures a $650 increase for residential customer and $3,400 for business.

Also inherent in the debate is the claim by proponents that shutting down fossil-fueled plants will improve public health. They cite reports by the American Lung Association which rates Tucson a D for air pollution with Phoenix, Yuma and Flagstaff all getting an F.

But a study by NERA Economic Consulting commissioned by APS says the initiative “cannot be expected to improve reported levels of ozone pollution in areas where most Arizonans live.” That’s because much more of the chemical which can irritate lungs and eyes is produced from everything from wildfires to vehicle emissions.

Opponents also contend that if the concern is air pollution, Prop 127 would have allowed nuclear power to be counted toward the goal, as there are no smokestack emissions.

But campaign consultant Bill Scheel said there are health effects from nuclear power, saying there is a link between high rates of cancer in communities in and around Northern Arizona where uranium is mined.

IRC chair – the state’s most important political figure

An aide to Gov. Doug Ducey, a former top attorney for the state’s largest utility company and a former attorney at the Goldwater Institute are among 39 applicants for the chair of the Arizona Independent Redistricting Commission.

The person selected to lead the commission will become the most important person in Arizona politics for the next few years as he or she will be the deciding vote for mapping out the state’s congressional and legislative districts for the upcoming decade.

The IRC chair cannot be registered with a political party. The inaugural IRC chair in 2000 voted with the two Republican members on the five-person commission more than not. And in 2010 the chair voted with the Democrats.

Ducey, a Republican, has been working since the early days in his first term to assure that Republicans win this next round of redistricting. Democrats have accused Ducey of stacking the Commission on Appellate Court Appointments, the body that vets IRC candidates, as well as judicial nominees.

The state Supreme Court was a big factor in the 2010 cycle and could potentially come into play again. Ducey has appointed five of the seven justices – four are Republicans and the other is a conservative-leaning independent.

The job of the Commission on Appellate Court Appointments is to winnow down the total list of IRC applicants to 25 – 10 Democrats, 10 Republicans and five independents. History has shown that for this cycle both political parties will want an independent chair who leans their way to gain a majority on the five-member panel.

THE CANDIDATES

here are several candidates who run in Arizona’s political circles or have been known to work behind the scenes that could make it onto the final list of five, come 2021.

Alec Esteban Thomson, the director of strategic initiatives under Ducey, applied for the job.

Thomson, a Maricopa County resident, previously served as the COO of the Arizona-Mexico Commission. He has an immense resume and one that would appear to go against the narrative of picking a chair with strong Republican leanings.

Thomson has only given money to Democrats through ActBlue ($50 in 2015), he worked with the Human Rights Campaign to elect Hillary Clinton as president in 2016 and he was the chief of staff to former Tempe Mayor Mark Mitchell, a Democrat. But he also worked for Republican Gov. Jan Brewer and is credited recently with working on Ducey’s Mask Up AZ campaign and helping get people to fill out their Census data.

Thomas Loquvam, the general counsel at EPCOR and former Pinnacle West general counsel, also applied for the job. Loquvam left APS’s parent company in April 2019 after nine years. He spent a lot of his time arguing on behalf of the utility at the Arizona Corporation Commission.

Loquvam, the brother of outgoing APS lobbyist Jessica Pacheco, also has ties to the Greater Phoenix Chamber and is registered as a lobbyist for EPCOR, which is a violation of the IRC requirements. However, in his application, Loquvam said he is not a paid lobbyist.

“The nature of my responsibilities with EPCOR require that I register as a lobbyist with the Arizona Corporation Commission … in order to speak with any Commissioner on virtually any issue,” he wrote, adding that he included this information “in an abundance of caution.” He said he is not “specifically paid to lobby.”

Loquvam, a Maricopa County resident, also signed a notarized document stating he will not register as a paid lobbyist during his term on the IRC, if appointed. The term will last 10 years. As of August 27, Loquvam is still listed as EPCOR’s lobbyist on the Corporation Commission database.

Loquvam contributed $250 to Republican Rep. Shawnna Bolick’s campaign for the state House back in 2014, an election she lost. He also contributed thousands of dollars to the Pinnacle West Political Action Committee in several installments.

Nick Dranias is a former Goldwater Institute attorney who lives in Maricopa County. Dranias contributed $250 to Jonathan Paton’s congressional campaign in 2010. Paton is one of the Republican members on the Commission on Appellate Court Appointments, who Ducey reappointed to a new term earlier this year.

Dranias also gave money to Republican Arizona Attorney General Mark Brnovich for his first campaign in 2014 and chipped in hundreds of dollars to a Republican federal PAC called WINRED, where he earmarked at least $100 in June to re-elect President Trump.

Outside of the state’s largest county, there’s Michael Hammond, a Pima County independent who former Governor Brewer appointed to the State Transportation Board. Hammond’s term began in 2015 and runs through 2021. Members of governmental boards or commissions are not eligible to serve on the IRC.

Mignonne Hollis of Cochise County applied for the Commission on Appellate Court Appointments multiple times over the past two years and contributed to campaigns of Republicans and Democrats. Joseph Cuffari, a former commission member who worked for Ducey, suggested Hollis apply for the commission. She also listed Rep. Gail Griffin and Sen. David Gowan, both staunch conservative Republicans, as references for those applications even though she financially contributed to one of Gowan’s previous opponents.

Hollis also contributed to campaigns for former Mesa Mayor Scott Smith, a Republican, in his bid for governor in 2014, and David Garcia, a Democrat, in his bid for state superintendent of public instruction the same year. She also financially supports Planned Parenthood.

Some of the other notable independent candidates:

Christopher Bavasi, Coconino County, the former Flagstaff mayor and a supporter of Democratic Congresswoman Ann Kirkpatrick.
Michael Chihak, Pima County, a former journalist at Arizona Public Media, the Tucson PBS station.
Joseph Citelli, Maricopa County, the chief counsel at the Arizona Registrar of Contractors.
Eric Gorsenger, Maricopa County, a former Corporation Commission staffer who was the plaintiff in challenges to nominating petitions for several Republican candidates this year. He says he is a “lifelong independent.”
Leezie Kim, Maricopa County, general counsel for former Gov. Janet Napolitano, who then followed Napolitano, a Democrat, to the federal Department of Homeland Security as her deputy general counsel. Kim has contributed significantly to several Democrats including President Barack Obama, U.S. Sen. Kyrsten Sinema and Congressman Greg Stanton
Steven Krenzel, Maricopa County, a Ducey-appointed member of the Arizona Industrial Commission. Ducey also appointed Krenzel to the Arizona Housing Finance Authority in 2016, where he served for six months
Lawrence Mohrweis, Maricopa County, one of 10 Democratic finalists for the IRC in 2010, who says in his application he did not get the appointment because he was “too independent.”
Erika Schupak Neuberg, Maricopa County, served as the chair of American Israel Public Affairs Committee, a pro-Israel lobby group with several ties to Arizona lawmakers. She has also contributed roughly $25,000 to several candidates from both parties, including Ducey, Democratic Rep. Daniel Hernandez, Democratic Rep. Alma Hernandez, Republican Rodney Glassman (in his 2018 bid for the Corporation Commission), Democratic Rep. Mitzi Epstein as well as Republican Congressman Andy Biggs, Congresswoman Kirkpatrick, Republican Congresswoman Debbie Lesko, and several others.
Michael Jensen, Maricopa County, the only Libertarian to apply.

THE PROCESS

The Independent Redistricting Commission applications were made public on August 21, and a total of 138 people applied, which is more than in 2010 (79), but fewer than the inaugural commission in 2000 (311). Democrats submitted 55 of the applications and 44 Republicans applied, while 38 independents along with one Libertarian applied for the position of chairperson.

Applicants come from nine of Arizona’s 15 counties. Maricopa has 89 candidates, but no more than one per party can receive the appointment. The counties with no candidates are Yuma, Navajo, Santa Cruz, La Paz, Graham and Greenlee.

The process from this point forward will be a slog as the 16-member Commission on Appellate Court Appointments will vet all 138 applicants with the aid of public comments and interviews and eventually narrow down the list to 10 Republicans, 10 Democrats and 5 independents.

Each legislative caucus leader in January 2021 will appoint one person from the narrowed list, and those four commissioners will choose the independent chair from the list of five.

FLASHBACK

A look back to 2010 shows the importance of the independent chair.

Governor Napolitano abandoned Arizona for a federal appointment one year before redistricting kicked off, leaving Governor Brewer to try to remedy as much of the process to sway in the favor of Republicans, but it appeared to be too-little-too-late.

So once the Commission on Appellate Court Appointments narrowed the list to 25 finalists, the Republican legislative leaders tried to send the vetting group back to the drawing board.

House Speaker Kirk Adams – Ducey’s eventual chief of staff – and Senate President Russell Pearce demanded two Republican finalists and one independent finalist pull out of consideration. The Republicans, Mark Schnepf and Steve Sossaman, agreed, but the independent, Paul Bender refused.

Critics at the time considered this a tactic to remove Bender given his liberal leanings even as an independent.

Former redistricting chairwoman Colleen Mathis (Photo by Evan Wyloge/Arizona Capitol Times)

The four partisan picks eventually named Colleen Mathis the chair and work was set to begin. After a series of decisions that did not favor Republicans, Brewer called for Mathis’ removal, which received the required two-thirds approval from the state Senate. At the time, Republicans controlled the chamber 21-9.

“I will not sit idly by while Arizona’s congressional and legislative boundaries are drawn in a fashion that is anything but constitutional and proper,” Brewer said at the time.

Brewer accused Mathis of improperly conducting commission business in violation of the state’s open meeting laws, and skewing the redistricting in favor of Democrats. Tom Horne, the attorney general at the time, launched an investigation into the allegation and Brewer subsequently began the successful attempt at impeaching Mathis.

The process to replace Mathis began, but the Arizona Supreme Court eventually reinstated her to the chair position in November of 2011. Arizona picked up a ninth congressional seat from the 2010 Census. It was considered a competitive seat that went to Sinema, a Democrat, who held the seat in every election until her run for U.S. Senate two years ago.

The only congressional seat to flip back and forth, since the ninth seat began in 2012, was the 2nd Congressional District in Pima County. The 2012 election had Democrat Ron Barber defeat Republican challenger Martha McSally by a hair. McSally then defeated Barber after a recount in 2014. She held it for two terms before Kirkpatrick won in 2018 over Republican Lea Marquez Peterson.

This year is the final election cycle of the 2010 redistricting, which could result in one or both chambers of the state Legislature in Democratic control and the possibility of a 6-3 congressional split if Democrat Hiral Tipirneni can unseat Republican Congressman David Schwerikert in Arizona’s 6th Congressional District.

Editor’s note: A previous version of this story erroneously reported that Gov. Doug Ducey has appointed four Republicans and a Libertarian to the Arizona Supreme Court. The governor has actually appointed no Libertarians, but he has appointed one independent.

New group pushes upbeat image of Arizona’s education system

A new nonprofit backed by business groups is running ads on television and online to put a positive spin on the state of Arizona’s education.

The Arizona Education Project, which is backed by the Arizona Chamber of Commerce and Industry, utility company Pinnacle West, among other contributors, wants to tell the “other side of the story” to counter the negative voices dominating the education debate in Arizona, the group’s spokesman, Matthew Benson, told the Arizona Capitol Times.

“Arizona schools aren’t perfect, but we’re making tremendous progress in the state,” Benson said.

In the first week, the group will spend six figures on local TV, cable and digital ads, and then gauge from there how much to spend more and where, he said.

The group has put up a website outlining positive points about Arizona’s K-12 system.

Spending on Arizona schools plummeted during the Great Recession, and the state has yet to return to the spending levels before the economy tanked. Arizona schools also rank among the lowest in the nation for teacher pay.

A television ad that ran Jan. 22 boasts about the state’s improvements in education spending and outcomes

An ad from the Arizona Education Project, a new nonprofit backed by business groups, notes the state's positive education news, like increased funding and academic achievements. (Screenshot from YouTube video) — An ad from the Arizona Education Project, a new nonprofit backed by business groups, notes the state’s positive education news, like increased funding and academic achievements. (Screenshot from YouTube video)

“What if I told you there’s a state that has increased education funding by nearly $1.5 billion in the last three years?” the ad says.

It touts Arizona’s math and reading scores, as well as the teacher’s academy that provides free college education to future teachers, so long as they teach in the state for a few years.

“This state is Arizona. There’s much more to do, but Arizona schools are making progress,” the ad concludes.

Joe Thomas, the head of the Arizona Education Association, the teachers union, said most of the negativity he hears around schools in Arizona is about the Legislature and the governor’s policies. Thomas said his group isn’t saying schools aren’t doing a good job, but rather that elected officials need to do better.

“I call that realism,” he said, adding that education funding statistics back him up.

Thomas admits his group reacts negatively to elected officials who aren’t supporting classrooms, and said they will continue to do so.

“If you ever feel (we’ve been) negative, it’s probably because we’re pointing the finger at you,” he said.

Benson said that, as a 501(c)3 nonprofit, the group has no connection with any candidate, campaign or legislative effort. Instead, it’s a public education campaign to tell Arizonans that their schools produce a lot to be proud of, including performance, improvements and school choice, Benson said.

It’s great that Arizona has some of the top schools in the nation, Thomas said, but all kids in the state should have access to a quality public education, regardless of where they live.

While knowing the money behind the ad campaign isn’t public dollars, Thomas said businesses could instead donate to struggling schools, rather than “propagandize a dire situation.” Teachers will see the ads and find them offensive, Thomas said.

“I hope a PR campaign isn’t all we’re going to do to stop teachers from googling teacher openings in Las Vegas,” he said.

Benson said the group has nothing to do with Gov. Doug Ducey’s re-election campaign because it’s a nonprofit. As for whether the ad, which echoes Ducey’s talking points on education, could boost the governor’s re-election bid this year, Benson said it isn’t for him to speculate.

He said the effort is led by Arizona moms and backed by Arizona businesses. The group’s filing with the Arizona Corporation Commission shows three women as its directors: Jessica Connelly, Amy Paul and Melissa Luzader.

Here’s the full list of donors to the Arizona Education Project:

· Arizona Chamber of Commerce & Industry

· Pinnacle West Capital Corp, the parent company of Arizona Public Service

· Tucson Hispanic Chamber of Commerce

· Douglas Hispanic Chamber of Commerce

· Sierra Vista Hispanic Chamber of Commerce

· Ambos Nogales Hispanic Chamber of Commerce

· Arizona Lodging & Tourism Association

· Services Group of America

Political fight brews on Corporation Commission

The lone Democrat on the Arizona Corporation Commission is accusing its newest member of “using her office to advance her election chances.”

In a filing at the commission, Sandra Kennedy said that Lea Marquez Peterson appears more interested in pleasing Gov. Doug Ducey, who appointed her, and Don Brandt, the chief executive of the parent company of Arizona Public Service, than in actually getting answers from APS about what led to the heat-related death of a customer last year.

The move comes as Kennedy is pushing to force Brandt and other top corporate executives to come to the commission to answer questions, under oath, about the company policies and practices, particularly as they relate to when customers are disconnected. She already has the support of Commission Chairman Bob Burns for that move.

But Peterson told Capitol Media Services she’s not sure that’s appropriate − at least not yet. She instead continues to promote an outside probe of what happened, including the actions of the commission staff.

Only then would she consider bringing in someone from APS or parent company Pinnacle West Capital Corp. And she’s not sure it has to be Brandt.

Kennedy, for her part, said Peterson is loath to take that step “because she is beholden to Mr. Brandt and Pinnacle West for campaign contributions,” a clear reference to the money donated to her ill-fated 2018 congressional campaign. And then there’s the fact that Peterson, tapped by Ducey to fill the vacancy created by the resignation of Andy Tobin, has to run in 2020 to keep her post.

“Perhaps Commissioner Marquez Peterson is worried about her own political future as a Republican without Don Brandt and Pinnacle West supporting her,” Kennedy said.

Kennedy also suggested that Peterson was acting in “seeming coordination” with the governor who appointed her, noting that Ducey last month accused the commission of “mission creep,” getting into areas beyond its clear constitutional authority to set rates.

But Peterson denied that the governor discussed his claim of “mission creep” when he interviewed and appointed her to the commission.

Peterson also dismissed Kennedy’s overall comments, made both in a formal filing at the commission and to Capitol Media Services, as a “political response” to her calls for an outside probe.

“I’m just really focused on responding to the public and the media who requested additional information and how we come up with policies to protect Arizona’s ratepayers,” she said.

And Peterson suggested that there’s also politics behind Kennedy’s attack on her. She pointed out that Kennedy is campaign manager for Bill Mundell, one of the Democrats running for the three available slots on the commission on that 2020 ballot.

But Kennedy isn’t the only one questioning whether Peterson is playing politics and is loath to push too hard against APS.

“She was working with the state Chamber which has very strong ties to APS,” said Burns of Peterson, including backing the company’s successful effort to quash an initiative to force all utilities to generate more power from renewable sources. “The position she was in before she came to the commission would indicate that she has a connection with those folks.”

Now, said Burns, Peterson has a new position.

“And where you sit depends on where you stand,” he said. “So we need to know where she stands.”

Questions remain as to whether Brandt actually will be subpoenaed. And some of them are legal.

Last year Maricopa County Superior Court Judge Daniel Kiley concluded that Burns, as a member of the commission, has an individual right to issue a subpoena for the books of not only APS but also Pinnacle West. More to the point, the judge said that individual right of commissioners extends to the ability to subpoena corporate executives to testify.

But Kiley said none of that matters because, at least at that time and on that issue, the other four members of the commission refused to enforce the subpoenas. And the judge said he lacks the legal authority to overrule that.

That leaves the question of whether there is now a working majority to force Brandt to testify.

“I would support full disclosure as to the facts of the situation,” said Commissioner Boyd Dunn. But he said that doesn’t necessarily have to come from Brandt. And Dunn, a former judge, said a more logical first step might be for commissioners to subpoena any documents they want, review those, and only then call in corporate executives to question them.

That’s also the position of Justin Olson, the remaining commission member.

“It’s incumbent on the commission to do everything within our power to ensure that we have proper oversight of our utilities,” he said.

“That includes gaining all of the information that’s necessary to provide that oversight,” Olson said. “If we’re not getting the information that we need to provide that proper oversight and a subpoena is needed, then that’s the action the commission should take in order to get that information.”

Peterson, on the job now for only about a month, said she hasn’t researched the issue of subpoenas. But she’s not ready to go there — at least not now.

“I think the first reasonable step is further investigation,” Peterson said. “And if the commission as a whole decides to move forward, that’s something we can discuss at that point.”

But is she interested in hearing from Brandt?

“I’m interested in hearing from APS in terms of different questions that have been addressed to them,” Peterson said, saying responses could come from “the APS team.”

Prop 127 supporters target Brnovich for blitz of negative ads

Proponents of Proposition 127 are spending $3.6 million on commercials to urge voters not to reelect Attorney General Mark Brnovich, saying he "manipulated" a description of the initiative that will go on ballots. — Proponents of Proposition 127 are spending $3.6 million on commercials to urge voters not to reelect Attorney General Mark Brnovich, saying he “manipulated” a description of the initiative that will go on ballots.

Supporters of a renewable energy ballot measure have opened up a new front in their bid to get it approved: an expensive attack on Attorney General Mark Brnovich.

New reports obtained by Capitol Media Services show that Clean Energy for a Healthy Arizona is spending more than $3.6 million on television ads calling Brnovich “corrupt” and urging voters to turn him out of office — and support Proposition 127.

What’s behind all that is the move by Brnovich’s office to add some verbiage to the description of the initiative that will appear on the ballot to mandate that most electric utilities get at least 50 percent of their power from renewable sources by 2030.

Initiative proponents contend the move will save money in the long run. The opposition, funded by the parent company of Arizona Public Service, claims it could add up to $1,900 a year to an average electric bill.

State law requires the Secretary of State’s Office to come up with descriptions of all ballot measures, with the Attorney General’s Office given final review. But by the time Brnovich’s office was done, the wording was altered to say that the mandate, if approved, would apply “irrespective of cost to consumers.”

“It’s not something we wanted to do,” said campaign spokesman D. J. Quinlan of the commercials.

“Unfortunately, the attorney general made the unprecedented step of manipulating ballot language,” he continued. “We felt it was imperative for us to subsequently warn Arizona voters that the language they’re going to read on their ballot is not actually with this proposition.”

Brnovich defended the language, saying it is factually accurate. He said that the measure, which would amend the Arizona Constitution, moves away from existing requirements of how the Arizona Corporation Commission, which now has purview over issues like this, sets rates.

But state Elections Director Eric Spencer, who crafted the original explanation – the one without the additional wording – had his own thoughts.

“The Prop 127 language is certainly eyebrow-raising because it cites information exogenous to the ballot measure itself,” Spencer wrote to the AG’s office in an email, using a term to mean that the words in the explanation were not taken from the ballot language itself but from outside factors.

“But, I’m sure you’ve calculated the legal and political risks of adding that,” Spencer added.

What the new commercials seek to do is put a “why” behind the change. And that comes down to money.

It points out that in 2014, Pinnacle West gave $425,000 to the Republican Attorneys General Association which turned around and spent more than $1.8 million to defeat Felecia Rotellini, Brnovich’s Democrat foe. Pinnacle West has given another $50,000 to RAGA in this election cycle.

“So when Prop 127 threatened APS’ profits, Brnovich bailed them out,” the commercial says.

Brnovich told Capitol Media Services he is not concerned. In fact, the attorney general said he sees the commercial as an endorsement of sorts.

“I guess I must be doing something right,” he said.

“I’ve said before that you can judge a person by their opponent,” Brnovich continued. “And the fact that an out-of-state California billionaire is going to spend millions of dollars to sully my reputation, I think says more about him than it says about me.”

That reference is to Tom Steyer whose NextGen Climate political action committee has so far been the source of all the money raised by the pro-127 organization.

The pro-127 spending is not limited to Brnovich.

Those finance report also show an $83,000 expense to keep incumbent Gov. Doug Ducey from getting another term. Quinlan said this is to inform voters of the financial links between Pinnacle West and Ducey, including $100,000 given to the Republican Governors Association this election cycle and the maximum $10,200 donation from the company’s political action committee directly to Ducey’s campaign plus another $5,100 each from CEO Don Brandt and his wife Ginger.

“It’s important for Arizona voters to know what APS thinks it’s getting,” Quinlan said.

Aside from opposing Proposition 127, Ducey played a more direct role in the measure.

He signed legislation that, in effect, allows utility companies to ignore the renewable energy mandate even if voters approve. Instead, they could pay a fine of as little as $100.

The pro-127 committee also is spending money to attack three Republican candidates for state Senate who are running in legislative districts that could conceivably elect a Democrat.

There is an expense of nearly $55,000 to keep incumbent Kate Brophy McGee from gaining another term, with an identical amount spent against Sylvia Allen. And the campaign is spending another $55,000 to undermine the bid of current House Speaker J.D. Mesnard to get elected to the Senate.

Separately, the pro-127 committee has put $250,000 into a campaign to help elect Democrats Sandra Kennedy and Kiana Sears to the currently all-Republican Arizona Corporation Commission.

Prop 127 triggers record-setting spending

California billionaire Tom Steyer has spent more than $18 million so far in his bid to convince Arizonans to support a constitutional mandate that half of all electricity come from renewable sources by 2030.

And that doesn’t even count the nearly $4 million he has put into efforts to oust some Republicans from office, particularly Attorney General Mark Brnovich.

New campaign finance reports show that the fight over Proposition 127 is shaping up to be the most expensive in Arizona history.

It isn’t just what Steyer, through his NextGen Climate Action Committee, has put into getting the measure on the ballot and promoting it.

On the other side of the equation, the parent company of Arizona Public Service, the state’s largest electric utility, has poured $21.8 million into quashing the measure.

APS isn’t alone.

Rural electric cooperatives have put another $417,000 into their own campaign to convince their voters and ratepayers to reject the initiative. And UniSource Energy Corp., parent of Tucson Electric Power, has a separate $50,000 campaign against Proposition 127.

All that eclipses the record set in 2002 when Native American tribes put $21.1 million into a successful initiative campaign to give them the exclusive right to operate casino-style gaming in Arizona in exchange for the state getting a share.

That same election the Colorado River Indian Tribes spent $10.3 million in their failed effort to get voters to adopt a different measure that would have provided for more types of gambling and less revenue sharing with the state. And the horse and dog track owners spent $7.7 million supporting their own proposal which would have allowed them to have slot machines as well.

The massive spending on renewable energy comes as each side hopes to convince voters — and ratepayers in particular — of the financial implications of Proposition 127.

APS in particular is relying on a study it commissioned at Arizona State University. There, economists, working with assumptions provided with the utility, said that by 2030 customers could see up to another $1,900 added to their annual utility bills if the mandate is approved.

Prop 127 supporters got their own report from the National Resource Defense Council which predicts that the lower cost of solar would mean residential bills would go down about $360 a year by 2030.

Renewable energy isn’t the only thing commanding a lot of campaign cash.

The Arizona Association of Realtors and its national organization reported it had built up a fund of $8 million in its support of Proposition 126.

That measure seeks to alter the state constitution to make new sales taxes on services permanently off limits. Proponents, operating under the banner of Citizens for Fair Tax Policy, have run extensive commercials arguing that “politicians are looking for more money” and that, without a constitutional ban, “they’re going to do it by taxing veterinary services, health care, every service they can find.”

A newly formed No on Proposition 126 committee had not collected or spent anything as of the end of the campaign filing period.

The other hot-button issue on the ballot has to date not gathered anywhere near the dollars of the first two.

Save Our Schools has so far spent $426,000 on its bid to get Arizonans to vote “no” on Proposition 305.

This measure is a referendum of 2017 legislation which would expand who is eligible to get vouchers of state dollars to send their children to private and parochial schools.

Until now, those vouchers, formally known as empowerment scholarship accounts, have been limited to students with special needs, foster children, children living on reservations and those attending public schools rated D or F.

The Republican-controlled Legislature voted to remove all those preconditions, a measure signed — and supported — by Gov. Doug Ducey. But in a political compromise, they agreed to cap the number of vouchers at about 30,000 by 2022.

Foes of expansion gathered enough signatures to block the change from taking effect until voters get to ratify or reject it at the ballot this year.

A group called Yes for Ed AZ has spent about $26,000 so far to convince people to vote “yes” and allow the law to take effect. It is being financed largely by the Center for Arizona Policy and the Goldwater Institute.

Much of the money for the Save Our Schools campaign committee comes from a similarly named group set up as a “social welfare” organization which can take individual and corporate donations without disclosing donors.

There was no immediate response to a request for a list of major donors to that organization.

Proposition 306, by comparison with the others, has gathered relatively little publicity — and relatively few dollars.

One provision would bar candidates who get public funding from using those dollars to buy services from political parties. But the potentially more far-reaching part of the measure would subject the rules adopted by the bipartisan Citizens Clean Elections Commission to oversight by the Governor’s Regulatory Review Council. And that panel consists of people appointed by Doug Ducey, who has been a beneficiary of the kind of anonymous donations that the commission has adopted rules to force donors into the open.

Proponents have collected $10,500, most of that from the Arizona Free Enterprise Club, an organization that has provided financial help to elect candidates of its choice but has refused to disclose its donors.

Foes have organized under the name of Arizona Advocacy Network Against the Dark Money Lobbyist Power Grab. They have collected slightly more than $4,900, with more than half of that coming from Tom Collins, the executive director of the Clean Elections Commission.

Public health advocates campaign for Prop 127

Dr. Bob England, former director of the Maricopa County Health Department, explains Tuesday why he believes air quality will be better if voters approve Proposition 127. (Capitol Media Services photo by Howard Fischer)

Public health advocates urged voters Tuesday to support a renewable energy mandate on the November ballot even though not one of them could say how much of a difference it actually would make in ground-level air pollution.

And a state utility regulator urged a vote against Proposition 127 even though he conceded that his colleagues, who already have the power to mandate more renewable energy, have yet to do much of anything about it.

JoAnna Strother, regional director for public policy for the American Lung Association, said Phoenix is one of the 10 worst areas in the country for ozone pollution.

“There are compelling health reasons why Proposition 127 makes sense from the public health perspective,” said Mary Ellen Cunningham, president of the Arizona Public Health Association.

“The bottom line is, burning fossil fuel, including natural gas, creates air emissions,” she continued. “That’s oxides of nitrogen and volatile organic compounds. And that’s ozone.”

But standing outside the office of the Lung Association, near a busy Phoenix intersection, no one could say what percentage of pollution being inhaled was due to power plants versus vehicle traffic.

“As much as it would be desirable to have exact precise forecast numbers on every issue, sometimes you just can’t answer the question,” said Dr. Bob England, the former Maricopa County health director.

But England said that instinctively the air would be better if Proposition 127 is approved than if it is not and utilities remain free to go ahead with plans to build more gas-fired power plants to meet future needs.

“I can’t give you a number how much is going to happen 20 years from now,” he said, saying variables include the kind of transportation available and what’s being used to fuel vehicles.

“Some things you just can’t answer,” England said. “But common sense says you don’t want to go the other direction.”

Proposition 127 if approved by voters would constitutionally require most utilities to generate at least 50 percent of their power from renewable sources by 2030.

What is known is that utilities are looking at additional gas-fired plants in that time frame, plants that Dylan Sullivan of the Natural Resources Defense Council said would not be needed if utilities were forced instead to get more of their power from renewable sources. And Sullivan cited figures which predict a 51 percent reduction in nitrogen oxides, a precursor of ozone, by 2030.

But that is a reduction in what comes from power plants and does not reflect various other – and larger – sources of pollution. And there is some data to suggest that the pollution from gas-fired power plants is a very small portion of what affects most urban dwellers.

In Pima County, for example, 46 percent of nitrogen oxides come from on-road vehicle use. By contrast 20 percent is from “point sources,” of which Pima County records show more than half is from the CalPortland cement plant at Rillito and 34 percent of that 20 percent – or less than 7 percent – comes from the gas-fired Irvington power plant.

Joe Barrios of Tucson Electric Power said there is a plan to build one new higher-efficiency gas-fired power plant. But he said most of the future needs will be met with solar and wind, to the point where his utility could get to 30 percent renewable by 2030.

Arizona Public Service has plans to build what could amount to an additional 12 gas-fired power plants between now and 2030, presumably in the Phoenix urban area.

But Jeff Burke, the company’s resource manager, said that’s not certain.

“When solar with a battery is competitive, we’ll take it,” he said, saying the key is meeting future energy needs in the most efficient way possible. “We’re trying to do an all-of-the-above approach.”

Also Tuesday, Andy Tobin, one of the state’s five utility regulators, came out against Proposition 127. Tobin said questions of what are appropriate resources should be left to him and his colleagues on the Arizona Corporation Commission. And he said having standards set by the commission provide more flexibility as needs – and costs – change, versus a constitutional mandate for 50 percent renewables.

He conceded, though, the five-member, all-Republican commission to date has done very little to convince the public that it is really interested in pursuing more renewable energy. In fact, the current standard for utilities of 15 percent renewable energy by 2025 has not been changed since 2006.

“They don’t want to pull the trigger,” he said of his colleagues. “I’m very frustrated.”

That, Tobin said, could lead voters to decide that the only real way to get any meaningful action is by approving Proposition 127.

Tobin crafted his own plan nearly a year ago for an 80 percent “clean” energy standard. But utilities would not need to reach that goal until 2050. And they could meet some of that with nuclear power.

What’s particularly annoying, Tobin said, is that his plan was on the table months before there even was a Proposition 127, much less the more than $8.2 million in funding for it from California billionaire Tom Steyer.

And he even got the commission to approve a moratorium on new gas-fired power plants – the ones the utilities say in their long-term resource plans they intend to build – until the end of the year. The premise, Tobin said, is that would give the regulators a chance to review, adjust and finally adopt his plan before utilities start construction.

But Tobin has yet to get the votes to actually advance his plan. Still, he said, voters should have faith that the commission eventually will act on his plan, or some variation of it, and reject Proposition 127.

Campaign spokesman D.J. Quinlan acknowledged that the commission could increase the current renewable energy standard, including adopting the Tobin plan. But he questioned whether the commission, at least as currently constituted, would pursue anything that Arizona Public Service, the state’s largest utility – and source of $11 million in funds so far to fight the initiative – does not support.

“I think there’s a reason why APS spent millions of dollars electing their hand-picked corporation commissioners,” he said.

That refers to $4.2 million that Pinnacle West Capital Corp., APS’ parent, admitted spending in 2016 to defeat Democrat candidates for the commission. And Pinnacle West will neither admit nor deny it was the source of $3.2 million spent to elect Republicans in 2014.

But Quinlan dodged repeated questions about why California billionaire Tom Steyer has put in more than $8.2 million from his own political action committee to convince Arizonans to adopt the constitutional change envisioned in Prop 127.

Rejecting utility contributions protects democracy, environment

At every level of government, elected officials represent the voices of the constituents they serve. They should be accountable to no one but the people.

Unfortunately for us, monopoly utilities like Arizona Public Service are corroding this most fundamental democratic agreement, spending in our elections like never before. So far this year APS parent company Pinnacle West has invested $22 million in efforts to fight the clean energy ballot initiative voters are set to decide on this November.

In 2016, APS reported outside elections spending of more than $10 million. And in 2014, it’s widely believed (though APS won’t confirm) that the utility spent $3.2 million to influence races for the Arizona Corporation Commission – the regulators who oversee and decide how much we pay for our energy.

There’s plenty of financial incentive for them to do so. APS made $488 million in profits last year alone, and is currently pursuing their second consumer rate increase before the commission in the past 14 months. These profits come from the pockets of the 1.2 million ratepayers in Arizona who have no choice but to pay APS every month to keep the lights on. Trying to influence the elections of the regulators who oversee rate-setting and energy policy represents a serious conflict of interest that should concern every Arizonan.

Beyond outside political spending, APS donates directly to candidates, too. They’ve spent handsomely on Gov. Doug Ducey, Attorney General Mark Brnovich, and candidates and state legislators on both sides of the aisle. To a far lesser extent, Salt River Project and Tucson Electric Power have done the same. Many of these elected officials have taken actions and public positions in the past several months to shore up fossil fuel interests, advance tax breaks for coal, and undercut renewable energy.

We, as customers, don’t have a choice as to who provides our electric power. But we can decide who represents us. We need decision-makers to oversee these utilities in an independent and unbiased fashion. We need leaders to act with integrity and demonstrate their commitment to shaping energy policy in the best interests of our future, not the highest bidder. This means rejecting monopoly utility contributions – to demonstrate autonomy and restore the public trust.

Candidates and elected officials must recognize that accepting political contributions from monopoly utilities damages public confidence in our institutions. It’s why Chispa Arizona, a program of the League of Conservation Voters, has asked candidates to take a pledge to reject these contributions. Refusing to accept utility money serves as a clear sign to voters that the people’s interests come first.

This year has shown us that APS and Pinnacle West have become far more brazen when it comes to influencing our elections. This massive investment sends a clear signal: they are unabashed in their approach, they understand the power of their political spending, and they are not afraid to leverage ratepayer dollars to advance their corporate interests.

Arizonans deserve strong leaders and candidates who are explicit and unbiased in their representation of our communities and our ratepayers in the face of big utility spending. This is what a government of the people, by the people, for the people should be.

— Laura Dent is executive director of Chispa Arizona.

___________________________________________________________

The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.

Steyer: APS using “dishonest tactics” against clean energy initiative

Billionaire Democratic mega-donor Tom Steyer criticized the state’s largest electric company and the biggest competitor of his clean energy ballot initiative Friday for using shady tactics to block a public vote of the renewable energy measure in November.

Steyer also hypothesized Arizona Public Service might be willing to make a deal to boost its renewable energy production if the Clean Energy for a Healthy Arizona ballot initiative makes it on the ballot.

The California environmentalist and founder of NextGen Climate Action, which is pushing the ballot initiative to mandate half of all electricity produced in Arizona come from renewable energy sources, sat down with the Arizona Capitol Times Friday.

The clean energy initiative will be tied up in court starting Monday as attorneys representing Arizonans for Affordable Electricity — an opposition group funded by APS — work to knock the measure off the ballot. The group has done everything possible to keep the ballot initiative from qualifying by first employing an extensive PR campaign to prevent people from signing the ballot petitions to now challenging the initiative in court in a trial that could take up to five days.

“They’ve been making up lies,” Steyer said. “If I were them, I would be embarrassed to have come up with these extremely flimsy and dishonest tactics.”

The clean energy campaign turned in about 480,000 signatures and need 225,963 valid signatures to qualify for the ballot.

Attorneys allege a huge chunk of the signatures are in invalid because they belong to people who are not registered to vote in Arizona, were collected by convicted felons — who are not allowed to collect signatures — or are simply fraudulent signatures, among a host of other objections to the collected signatures. Attorneys for Arizonans for Affordable Energy also charge the clean energy initiative knowingly submitted invalid signatures.

Arizonans for Affordable Electricity spokesman Matthew Benson fired back at Steyer, saying the clean energy campaign is built around fraud and deception.

“We believe Arizonans should set Arizona energy policies, not California billionaires,” he said in a statement. “We also believe Arizona families will reject Prop 127 once they learn it will double their electricity bills.”

The secretary of state’s office said this week that barring a legal upset in court next week, the clean energy initiative submitted enough valid signatures to qualify for the ballot as Proposition 127.

Steyer praised news of the initiative’s certification, taking it as a likely sign voters will get to decide on the renewable energy measure this fall.

The all-out fight APS has put up against the initiative is unlike any Steyer has seen before. He is pushing the same initiative in Nevada, where the state’s utility has taken a neutral stance. He also pushed a clean energy measure in Michigan this year, but in May, the state’s dominant utilities committed to increase their renewable energy output to 25 percent by 2030 in exchange for Steyer ending his ballot drive.

Steyer said he could see a similar outcome in Arizona, though he was skeptical APS would be willing to make a deal.

“From our standpoint, we would think that at some point, APS is going to realize they’re on the wrong side of history and they’re on the wrong side of this argument and they’re going to want to work out something sensible that the people of Arizona will like,” he said.

Benson did not comment when asked if APS would be willing to compromise on renewable energy issues. Steyer would not say how much money NextGen will pour into defending the ballot initiative if APS doesn’t try to settle.

APS and Republican politicians have tried to frame Steyer as a boogeyman-type who is meddling in Arizona politics. Steyer brushed off the attacks as “scare tactics.”

“I’m not dictating policy, we’re just trying to give Arizonans a say,” he said.

The most recent round of campaign finance reports showed Pinnacle West Corp., the parent company of APS poured $7.53 million into its fight against the clean energy measure. In comparison, Steyer’s group had put in $4.5 million.

Steyer was in the Valley on Friday for an event at Arizona State University, one of the 25 Arizona campuses where his NextGen Rising youth vote program is working to boost voter registration among young Arizonans. While Steyer has conducted his youth vote program in other states before, this is the first year he has rolled out such an initiative in Arizona — spending $3 million in the process.

NextGen has registered more than 9,000 new young Arizona voters so far this year, according to the group.

Despite creating the largest youth vote mobilization effort in America, most young voters don’t recognize Steyer.

“I think they think I’m an overdressed elderly gentleman,” said Steyer, 61.

Steyer, who is seen as a possible Democratic contender for president in 2020, has also fronted a push to impeach President Donald Trump.

The Breakdown, Episode 8: Collateral damage

Collateral damage isn’t uncommon in the world of politics.

As scandal erupted in the Republican special primary election in Arizona’s 8th Congressional District, a Senate staffer was revealed to have exchanged suggestive text messages with former state Sen. Steve Montenegro – and the way in which the messages were first obtained may have been an act of revenge porn.

Meanwhile, progressives believe the power of the people may be the target of bills that simultaneously seem to be strengthening the will of lawmakers. And you can expect a bunch of cash to be pumped into the fight for the Clean Energy for a Healthy Arizona ballot measure. The measure may have a California billionaire behind it, but Pinnacle West is already leading the charge against it.

At least we have Jelani Sample to bring the tension down a notch.

Don’t forget to subscribe to The Breakdown on iTunes.

Music in this episode included “Little Idea” and “House” by Bensound.

Ties run deep, many between APS and Republican candidates for utility regulator

With three seats open and five Republicans already filed to run who have ties to Arizona Public Service, the Arizona Corporation Commission is shaping up for a big election in 2020.

Kim Owens, the latest Republican candidate to jump into the race, currently works as a senior account executive for Gordon C. James Public Relations and is the executive director of Dodie Londen Excellence in Public Service Series, both of which have connections to the biggest utility in the state. APS, the largest utility in the state, is regulated by the commission.

APS is one of Gordon C. James’ clients, (the first one listed on the firm’s website), but Owens at first denied any connection she may have.

“I don’t work on the APS file. They are not one of my clients,” she said.

However, Owens later acknowledged that while she doesn’t currently work with APS, she has done some work on behalf of Pinnacle West, the APS parent company, in the past, including web development for Trans Canyon, a Pinnacle West subsidiary, and communications work for a consortium of nuclear power plants, of which Pinnacle West was a member.

Owens joins Sen. David Farnsworth, who terms out of his senate seat in 2020; Eric Sloan, who unsuccessfully ran for the commission in 2018; Commissioner Boyd Dunn, who is up for re-election; and Lea Marquez Peterson, who was appointed to replace Andy Tobin in May though she has not filed to run, yet all signs point to that being likely.

At a minimum those four candidates have received contributions from APS or its parent company in previous elections, but some connections run deeper, including Owens who has a second connection to APS in addition to her PR firm.

Her position as head of the Dodie Londen program, a nonprofit which seeks to train Republican women to win elected office, received $100,000 in contributions from Pinnacle West, since 2014, according to Open Secrets.

Dodie Londen’s only expenditure in 2018 was for Owens’ $30,000 salary. But Owens said APS already had a relationship established with Dodie Londen long before she joined them.

“They’ve also given money to Emerge,” she said, noting that Democratic Secretary of State Katie Hobbs was the director of Emerge, which is the Democratic equivalent of Dodie London.

Hobbs isn’t running for an office that regulates APS, however, but Owens said that APS spends money on a lot of professional development groups and political causes.

“That’s just part of their operating procedure,” she said.

She said people shouldn’t assume that because she has some peripheral ties to the energy giant that she will be in their pocket as a regulator, and that voters should instead look to her service as a longtime school board member and member of the Salt River Project Council.

Since SRP is not a monopoly, it is not regulated by the commission; instead it is regulated by its council.

Owens said her services there proves she understands energy policy, and shows that she has been a “watchdog” for the ratepayer.

The commission has been plagued with controversy after APS and its parent company covertly attempted to choose its own regulators in the 2014 commission election, on top of recent headlines regarding the power shut off of a 72-year-old woman in Sun City who later died due to heat-related factors.

Owens did not want to comment on the latter saying if she wins the race, it could be among the cases she is asked to weigh in on.

She did weigh in on her campaign Facebook page suggestions, which included implementing protocols about cutoffs during extreme weather conditions, additional notifications for at-risk customers and a public information campaign about financial assistance options.

“Much is being said and written about the tragic death of Stephanie Pullman. My first thoughts on learning of this was of her personal suffering and that of her family. Simply said, this cannot happen again. Ever,” she wrote on Facebook.

Owens is only the latest candidate to file, but the others running have ties to APS.

Farnsworth, during his re-election bid for the senate, received just more than $13,000 in contributions and $2,500 of that was from Pinnacle West PAC. He is vying for one of the three open seats in 2020 that are currently occupied by Dunn, Marquez Peterson and Chairman Bob Burns, who terms out.

Sloan, who ran in 2018, received $10,000 from Arizona Coalition for Reliable Electricity, the Pinnacle West-funded independent expenditure group that also supported Burns, Dunn and Tobin in 2016.

Documents that APS submitted to the commission showed that Sloan’s consulting firm, Sloan Lyons, worked for ACRE and received the money in October 2016. Sloan had chaired ACRE, which got $4 million from Pinnacle West and spent the money to help elect Burns, Dunn and Tobin. ACRE disclosed two payments to Sloan Lyons – one for $10,000 and another for $717.05 – later in 2016.

The APS document details the company’s campaign strategy to help the three Republicans get elected in 2016.

An email exchange among Doug Goodyear, the CEO of the consulting firm DCI Group, Jessica Pacheco of APS (who also sits on the Board of Governors at Dodie Londen) and Sara Mueller of SM Strategies in October 2016 mentioned Sloan.

In the email, Mueller asked Goodyear and Pacheco for permission to go ahead with a digital ad for ACRE.

“All the ad campaigns are built out on the back end so we are ready to ‘press play’ to target GOP voters upon creative approval,” Mueller said.

Pacheco replied, “I’m good.”

Goodyear also said he’s good with the ad.

“Proceed, and then work with Eric Sloan, Ashley Ragan, et al for the disclosure and communications with candidates,” Goodyear said.

The commission’s newest member, Marquez Peterson, also took money from APS/Pinnacle West in her 2018 bid for Congress.

Campaign finance data shows Pinnacle West contributed $2,500 to Marquez Peterson’s 2018 CD2 race, while David Hutchens, CEO of Tucson Electric Power, gave her $5,000.

Marquez Peterson now is in charge of regulating both APS and Tucson Electric Power.

Utility files suit to halt renewable energy ballot measure

The parent company of the state’s largest electric utility filed suit Thursday in a bid to block voters from deciding if they want to impose new renewable energy mandates on power companies.

In a 48-page complaint, attorneys hired by Arizonans for Affordable Energy, funded by Pinnacle West Capital Corp., claim a series of legal flaws with the petitions submitted by Clean Energy for a Healthy Arizona seeking to amend the Arizona Constitution to require 50 percent of electricity generated by most power companies in Arizona come from renewable sources by 2030.

Initiative backers submitted more than 480,000 signatures. They need for 225,963 to be found valid to get the issue on the November ballot.

But attorney Brett Johnson, in the legal papers filed in Maricopa Couny Stuperior Court, claims more than 195,000 of the names are from people who are not registered to vote in Arizona, and that nearly 75,000 signatures were submitted on petitions where there was a missing or improper notarization, something required by law.

Other issues include signatures that do not match and petitions that were circulated before initiative backers got the proper registration number from the Secretary of State’s Office.

“There are a laundry list of issues,” said Matt Benson, spokesman for the utility-financed effort to quash the initiative. “But the point is, even all of those issues aside, obvious blatant deficiencies account for more than 300,000 signatures and push them well below the minimum threshold.”

Pinnacle West and its wholly owned Arizona Public Service subsidiary, however, are not counting solely on trying to disqualify some signatures in their bid to show that there are not enough valid names left to put the issue to voters. Johnson has a laundry list of reasons that he says would entitle asking Judge Daniel Kiley to void the entire petition drive, arguing that signers did not know what they were supporting.

For example, he noted that the measure is titled the “Clean Energy for a Healthy Arizona Amendment.” But Johnson pointed out that the mandate for 50 percent renewable energy by 2030 specifically excludes nuclear energy, a particular issue for Arizona Public Service, which is the major owner of the Palo Verde Nuclear Generating Station west of Phoenix. He said that fails to acknowledge that nuclear energy generates about 20 percent of power in the United States with zero greenhouse gas emissions.

And Johnson said the wording fails to inform people that the initiative would apply only to investor-owned utilities and cooperatives — and not to Salt River Project which is a “municipal corporation” and the second largest electric company in the state.

Rod McLeod, spokesman for the initiative, acknowledged that not every signature submitted ultimately will be found valid.

“The reason we handed in more than double the required amount is because we understand … that you’re going to have a certain number of them that come up wrong,” he said. “There’s always going to be mistakes,” McLeod continued.

That, he said, is the purpose behind the “cushion.”

“We are confident we have more valid signatures than the law requires and regard this lawsuit as foolish,” McLeod said. He called it “a desperate attempt to deny choice on what kind of energy we want to have in the future.”

McLeod also took a jab at Benson who had issued press releases and posted claims on social media that the campaign had hired “men with felony convictions for kidnapping, domestic violence, aggravated vehicular homicide, burglary, forgery and more” and had these circulators on street corners, in front of public libraries and other places where “violent felons” should not be hanging out.

Despite all that publicity, it turns out that even after the review of petitions by the utility-financed campaign, it was able to identify just 168 signatures on sheets circulated by what the lawsuit claims were 85 felons, or fewer than two signatures gathered per alleged felon.

“The people making this claim have no credibility whatsoever,” McLeod said.

One issue that could ultimately affect whether the initiative gets on the ballot is what Arizona courts rule is the proper standard for determining if they comply with the law.

Until last year courts have interpreted the Arizona Constitution to allow voter-proposed laws and constitutional amendments to proceed if there is “substantial compliance” with the statutes. But the Republican-controlled Legislature, at the behest of business interests, enacted a provision requiring “strict compliance.”

That could prove crucial as some of the errors cited by the utility and its lawyers involve things like the date that the initiative effort, financed by California billionaire Tom Steyer, first hired paid circulators and whether that was too early. There also is a claim of “inconsistent circulator signatures” and petition sheets which had an “incorrect, incomplete, or misplaced serial number.”

In a separate lawsuit, a trial judge threw out a challenge to the strict compliance standard, ruling the plaintiffs in that case did not have standing because they did not have an actual ballot measure whose future was threatened by the new law. This case could provide that legal standing.

On paper, the lawsuit is not being brought in the name of either Pinnacle West nor APS. Instead, the plaintiffs include several supporters of the utility, including Rep. Vince Leach, R-Tucson, and Sen. John Kavanagh, R-Scottsdale, who tried on behalf of the utility earlier this year to put a competing measure on the November ballot.

Also listed as plaintiffs are Gilbert Mayor Jenn Daniels, Buckeye Mayor Jackie Meck and Mesa Mayor John Giles.

Kiley has scheduled a hearing on the issue for this coming week.

Utility regulator seeks outside probe of heat death

Lea Marquez Peterson at the inauguration of Gov. Doug Ducey on Jan. 7, 2019.

The newest state utility regulator wants an outside investigation of the heat-related death of an Arizona Public Service customer and the policies of the Arizona Corporation Commission and the actions of its staff that may have contributed to that.

Lea Marquez Peterson told Capitol Media Services Monday that the “accountability and answers” about what caused or contributed to the death of Stephanie Pullman of Sun City West last year have to come from APS.

But Peterson, named to the commission just a month ago, said the response she got from the agency’s own staff was “lacking a lot of information.”

Potentially more significant, Peterson said there is the possibility of a connection between the rate hike granted by the commission to APS in 2017 — a deal in which the commission’s own staff was one of the parties who agreed to the deal — and Pullman’s death.

More to the point, Peterson questions whether she and the public can rely on the answers provided so far by the staff to her and other commissioners about the whole incident. That also includes answers that are yet to be provided to what happened — and recommendations for how to alter the rules to prevent similar situations in the future.

“I think an independent group that wasn’t involved in the rate case, a third party, would be the best ones to address these different questions,” Peterson said.

Peterson acknowledged she’s “new to this process.”

“But from my perspective there’s always been such a cloud over APS and the different issues that come before it,” she explained.

“To truly be transparent it should be a third party that answers and investigates what the processes are, what are best practices and submits a report back to the commission,” she said. “We need to understand what the existing process is and what we can do to make it better to protect consumers.”

Commission Chairman Bob Burns said Monday he agrees with the goal but isn’t sure that having an outsider review the practices of the commission staff to this point is useful.

“What are we going to gain by that?” he told Capitol Media Services. “I mean, hindsight is pretty good stuff.”

And Burns said he fears that any outside probe of the commission staff itself will divert attention.

“The real problem is APS,” he said, saying the power company has been “reaching in” to the commission “with all the money they’ve spent on elections.’

“They’re the ones on offense,” Burns said.

One of the outstanding issues is why it took a year — and an inquiry by New Times — to make public that the 72-year-old Pullman died in her home of heat-related complications after the utility cut her power after she paid just $125 of her $176 bill.

“This is simply unacceptable,” Peterson wrote in her request for the outside probe.

“We must work to change the culture here and restore public trust,” she continued. “Initiating a full investigation into the circumstances surrounding Ms. Pullman’s death, as they relate to the commission, would be a strong first step in the right direction.”

Peterson specifically wants to know who on the commission staff knew about the death last year and who else that staffer told.

“If other staffers were notified, was there ever consideration that commissioners may also want to be notified?” she asked in her formal request for an outside inquiry.

There’s more.

Peterson wants to know whether commission staffers or APS were aware of any other instances where a customer whose power had been shut off was subject to hospitalization, injury, failure of a medical device or other related incident.

And she wants to know how the rules appear to say that utilities can disconnect service only in conjunction with “a personal visit to the premises by an authorized representative of the utility” yet it appears what happened in Pullman’s case was that an outside contractor of APS hung a notice on the door.

“Does a ‘personal visit’ mean an attempted contact at the premises, or does an actual contact and interaction have to take place to satisfy the requirement?” Peterson asked. “Has the commission ever considered resolving these questions.”

Burns, for his part, said Peterson, in calling for an outside investigation to answer her questions, is ignoring the obvious.

“Maybe she needs to have a conversation with Mr. Brandt about why we didn’t get notice from the company when it happened,” he said, referring to Don Brandt, the chief executive of Pinnacle West Capital Corp., the parent of APS.

And Burns appeared defensive at questions of whether the commission’s own rules may have played a role in the incident.

“The commission didn’t shut the power off,” he said.

“So I can’t see where the rules are at fault,” Burns continued. “They may be insufficient. Maybe there needs to be a more stringent rule.”

That, said Burns, is what the commission has directed staff to review.

“We want to get this thing straightened out so it obviously doesn’t happen again,” he said.

Peterson, however, said she is not happy with the response she and other commissioners have gotten so far to their questions.

“I’m concerned with which of the staff actually conducted the investigation,” she said, suggesting maybe they just lack staff or resources.

Utility regulators vote to keep 2017 APS rate hike

APS customer Stacey Champion tells state utility regulators on Wednesday they acted improperly in approving a rate hike for the company and urged them to roll back the charges. (Capitol Media Services photo by Howard Fischer)

State utility regulators on July 10 rejected a last-ditch plea by an Arizona Public Service customer to undo the rate hike they approved for the state’s largest electric company in 2017.

The 4-1 vote came despite comments from Stacey Champion to members of the Arizona Corporation Commission, alternately arguing that the increase is unjustified while also attacking the regulators for voting for the plan in the first place.

“Who the hell is running this place?” she asked. “Is it staff? Is it APS? Is it staff and APS together?”

Champion, who filed the paperwork to overturn the higher rates was unimpressed that the commission ordered APS to start a new rate review, particularly as it allows the utility to keep collecting the higher rates, at least for the time being. She said that provides little comfort to those who will have to continue to pay more for the next 12 to 18 months.

“You have a tool that you can use and have the cojones and ovaries to frickin’ stand up to this Goliath that appears to run you,” Champion said.

At the heart of the issue is that 2017 vote by the commission — only two of the current members were on the panel now — to allow the utility to collect another $95 million a year from customers. APS promoted the change as an average 4.54 percent increase, or $6 a month.

But regulators also allowed the company to institute a series of new rate schedules, moving customers into what APS said would be the closest to their current plan.

There were, however, some significant changes in many of the terms like for things like the time-of-day rate plus charges based on peak demand. And Champion said that about a third of customers ended up with bills sharply higher than that promised $6.

APS has not denied the numbers but said the 4.54 percent was an average. And company officials said some customers actually are paying less now.

But there’s something else.

Champion charges that in shifting customers to new rate plans that did not necessarily mean the most cost-efficient. And she said that APS is earning far more than the $95 million extra it was promised.

But Commissioner Justin Olson said he was hesitant to roll back rates to where they were, even if with a 4.54 percent across-the-board increase, what the company claimed was the average.

He said even if there are many customers who are paying sharply higher bills under the new rates there are “hundreds of thousands” of APS customers who actually are paying less now than they were before the rate case was approved, Olson said it would not be fair to deny those customers a break while the commission takes another look at the APS rates.

“This is the best way to move forward for all ratepayers,” he said.

The other question weighing on regulators is the question of whether APS would have grounds to sue the commission for taking away the higher rates.

Champion said that should not be a fear “if you’re doing that to protect the public.” And she said the record in this case provides more than enough justification for the commissioners to revisit their 2017 decision.

“The public was lied to,” she said.

Commissioner Boyd Dunn, however, said it’s not that simple.

“I have no concern about being sued,” he said.

But Dunn, an attorney said any review would require that APS get “due process” protections to ensure that it is not overturned by a court. And he said that probably would take the same 12 to 18 months that would be needed to review a new APS rate request.

Wednesday’s commission decision is not, strictly speaking, the end of the matter.

First is the question of whether APS actually is generating more than the $95 million a year in new revenues that the company was permitted to collect.

That relates to the question of whether customers got — and understood — that the commission not only allowed APS to implement new rates but automatically put customers into what the utility decided were the most similar plans, plans that were not necessarily the most economical.

In fact, Olson said half of APS customers are not currently on the cheapest possible rate plan for them based on their habits and use.

That, in turn, raises the question of whether customers, lacking information on which of the new plans would be best, ended up enrolled in more expensive plans, effectively boosting the utility’s bottom line by more than that $95 million approved by the commission.

One thing Wednesday’s order does require is for APS to give ratepayers a new chance to switch rate plans. That is of particular concern because some customers were switched automatically, a situation that did result in some sharp bill increases.

It also mandates that APS must identify ratepayers whose bills went up more than 10 percent, as well as those who are not on the most economical rate plan. More to the point, the company must provide customers with “targeted educational materials” to help them lower their electric bills and explain how they can switch to a more economical plan.

And the commission has ordered the company to provide quarterly reports of its revenues between now and the time new rates are approved.

Commissioner Sandra Kennedy voted against dismissing Champion’s bill to roll back the rates.

Kennedy, who was not on the commission at the time of the 2017 rate case, questioned that decision.

She pointed out that the staff at that time actually said initially that APS was earning too much. But the staff ultimately agreed to sign off on that $95 million deal agreed to with the utility.

Editor’s note: This story has been revised from its original publication to include the final vote and debate on the issue. The headline was also corrected grammatically.

Utility regulators, APS boss spend all day in a verbal joust

After more than five years as one of the most influential behind-the-scenes players in Arizona politics, Don Brandt took center stage at the Arizona Corporation Commission on September 4 to answer questions about shut offs and political spending, among other topics.

The five commissioners took turns asking the APS and Pinnacle West CEO questions about the death of Stephanie Pullman and APS’s involvement with her disconnections, the company’s political spending dating back to 2013, and follow-up questions based on answers Brandt provided in writing before his hearing.

Things kicked off pretty quickly with Corporation Commission general counsel Robin Mitchell asking to avoid using Pullman’s name as a request from her family, so her case was further referred to as “the incident.”

Brandt answered some questions in a room filled with media, staff, lawyers, and a handful of protesters; and deferred some questions to his underlings. Following are summaries of some of the collateral subjects that were part of the daylong hearing.

Door Hangers

One of only a handful of topics all five commissioners agreed on was the company’s reasoning for not having any personal connection with customers during the process of delivering a door hanger to warn of a potential shut off.

Spearheaded by Commissioner Boyd Dunn’s questioning of Brandt, which was then deferred to Daniel Froetscher, APS’s executive vice president of operation, of why APS did not have any in-person contact with customers when delivering a door hanger on the premise.

Dunn was visibly annoyed by Froetscher’s responses, who acknowledged that nobody made contact with Pullman when delivering her door hanger. Froetscher said the reason for this is because of incidents that he said occurred while he did the job of contacting customers 35 years ago.

Now a third party contracting firm is in charge of delivering the door hangers without knocking or ringing the doorbell to confirm the message was received.

“A lot of us in the summer are not using the front door,” Dunn said, pointing out during the hot months of the year some opt to use the garage instead.

Froetscher said there are no attempts to post notices on garages or other doors in addition to the front door.

Froetscher said delivering the message is “not always well-received” and he personally had dogs unleashed on him, he was verbally threatened and one time someone pulled a weapon on him while delivering hangers.

Dunn wasn’t impressed.

“Really, in Sun City West you have that concern?” Dunn said, referring to the community where Pullman lived.

Froestcher said it’s a system-wide policy, with APS serving customers in 11 of the state’s 15 counties.

Other commissioners have previously spoken out on not liking Brandt’s answer to not having any personal contact, but Sandra Kennedy was the only other commissioner to reiterate that concern.

She asked Brandt how delivering a door hanger can be considered personal contact without any actual personal contact. Brandt deflected at first, then began to raise his voice at the commissioner saying he never said it was personal contact before eventually rolling his eyes at her line of questioning.

FBI

Bill Maledon, APS and Brandt’s attorney, dropped a bombshell when he told commissioners, in response to Kennedy’s questions, that the FBI investigation into APS’s 2014 political spending is ongoing, but the company expects it to wrap up soon.

The investigation, commonly referred to as “Operation High Grid,” contributed to the indictment of former-Commissioner Gary Pierce, his wife Sherry, lobbyist Jim Norton and utility owner George Johnson in an alleged bribery scheme with the moniker of “Operation Ghost Lobby.”

Gary Pierce confirmed to Capitol Media Services in a 2016 interview that FBI agents questioned him about the 2014 election, a race in which his son, Justin, was running for secretary of state.

After 14 days of trial spread across five weeks in the Ghost Lobby case, there was a hung jury and the case was eventually dropped by federal prosecutors.

Still, the ongoing investigation is not going to necessarily stop the company from spending on campaigns in the future.

Burns asked incoming CEO Jeff Guldner if he would promise that political spending on utility regulators would come to an end. Guldner said he is not currently CEO, and that he could not make that promise. He did promise to come back when he is CEO to answer questions.

That’s a far cry from what Guldner said in 2013, when he claimed to The Arizona Republic that the company did not meddle in any effort to get commissioners elected, which was proven to be untrue.

“We don’t tell employees who to vote for or try to influence elections. If you do that and are wrong, you have to live with it for four to eight years,” he said at the time.

Dunn also expressed his distaste of independent expenditures, including the ones that contributed to his 2016 election. He said that while the commission does not have any control over corporate spending, there’s nothing illegal about corporations spending money how they want, even to elect regulators.

“Because it is legal it does not make it right,” he said.

No Answers

Brandt spent roughly as much time in silence as he did speaking, but even when he responded to commissioners he often deferred to other executives or refused to answer on the advice of his attorney.

This mostly came about when Kennedy was asking him – and only him – questions. She made it very clear she did not want to hear from anyone but Brandt.

On several occasions Brandt claimed to not know the answers to questions and tried to defer to other APS employees or his attorney. But Kennedy was relentless in saying she only wants to hear from Brandt.

“That’s why you’re here,” she said numerous times.

Burns opened up the questioning, but none were directed at Brandt. Dunn followed suit, but Brandt deferred all answers, so when it was Kennedy’s turn it had been more than an hour before the outgoing CEO had spoken.

Brandt’s attorney, Bill Maledon, claimed he thought Kennedy’s questions crossed the line, were unfair, or they did not have to legally respond; and in one instance directed responses at Burns, who is chairman of the commission, to complain about Kennedy.

Burns put his full support behind his colleague, reminding the lawyers that regulators are entitled to ask questions and saying he wouldn’t force Kennedy to limit the scope of her questions.

Kennedy and Brandt bickered over customer deaths, with Brandt denying any “direct ties” to the deaths.

They also bickered over company lobbyist Jessica Pacheco’s involvement in political spending and subsequent promotions, but Brandt’s attorney said they aren’t required to answer those questions, and political spending to defeat Prop 127, a ballot measure to make use of renewable energy stricter. Brandt said lots of utilities, and even some regulators, opposed it.

Unsatisfied

Kennedy and Brandt also got into it over APS’s poor J.D. Power customer satisfaction ratings, though Brandt claims he sees “overwhelmingly positive” feedback.

“The kudos thrown at me is embarrassing,” he said, which Kennedy found hard to believe.

“In my circle, that’s not what I hear,” she said.

The 2019 J.D. Power ranking listed APS dead last among the 13 biggest utility providers in the West region. Arizona’s Salt River Project, which is not regulated by the commission, was ranked at the top.

When the day was wrapping up and the final commissioner, Lea Marquez Peterson, began her questioning, she wanted to clarify from Brandt and APS why they opt not to use J.D. Power as its source for customer satisfaction.

Brandt said it was because APS uses its own system it created, which cannot be compared to any other utility because no other utility uses this system.

Howard Fischer of Capitol Media Services contributed to this report.

Utility’s parent company spends millions to sway elections

The state’s largest electric utility already has set aside close to $11 million to make elections this year come out the way it wants.

New campaign finance reports show Pinnacle West Capital Corp., the parent company of Arizona Public Service, has put $7.53 million in its bid to keep voters from approving a ballot measure which would require half of all power generated in the state come from renewable sources by 2030. That compares with nearly $4.5 million put into the issue by California billionaire Tom Steyer who is pushing the change.

Matt Benson, spokesman for Arizonans for Affordable Electricity, the campaign committee set up by Pinnacle West, said it makes sense for the company, whose income is generated by ratepayers, to spend that kind of money. He said the effort is to tell voters that what Steyer wants would lead to sharply higher energy costs.

But much of what Pinnacle West has spent so far has nothing to do with voter education but to keep the issue off the ballot entirely. It has paid $5.9 million to Arizona Petition Partners, part of what Benson said is an effort to go through the signatures submitted by Steyer’s group and see how many can be disqualified.

That $7.53 million to quash the ballot measure is only part of what Pinnacle West has set aside for this year’s election. It already has a war chest of another $3.2 million for “independent expenditures” on political races, essentially commercials it will run on behalf of candidates it favors and against those it does not want elected.

And that’s aside from what the company’s own political action committee contributes directly to candidates, like the $10,200 it already gave to help incumbent Gov. Doug Ducey win another term.

Pinnacle West is no stranger to putting big money into political issues.

Two years ago the company spent $4.2 million to ensure that Republicans Andy Tobin, Boyd Dunn and Bob Burns won seats on the five-member commission.

The utility also has refused to confirm or deny that it was the source of $3.2 million from anonymous donors spent in 2014 to secure the election of Republicans Tom Forese and Doug Little.

Little has since quit to take a job in the Trump administration. He was replaced by Justin Olson who according to campaign finance records already has raised $60,259.

But that pales in comparison with the $591,306 that Forese lists in contributions directly to his campaign to keep his seat for another four years.

Not far behind is Democrat-turned-Republican Rodney Glassman whose $514,684 includes $100,000 of his own money.

Eric Sloan has raised $23,025 in his bid to be one of two Republican nominees, with Jim O’Connor hoping to get public funds for his campaign.

All three Democrats in the hunt already have obtained sufficient $5 donations to qualify for the $108,779 in public dollars.

Benson defended the spending by Pinnacle West, particularly in its bid to quash the renewable energy initiative.

Current commission rules require utilities to generate 15 percent of their power from renewable sources by 2025. Company officials have contended that a requirement to have 50 percent mandate by 2030 makes no sense, saying it will lead to costlier power as the utility could end up with the expense of the Palo Verde Nuclear Generating Station but an inability to use all of its power.

“Every dime we’ve spent this last six months is aimed at defeating this ballot measure before it increases electricity rates,” Benson said.

It starts with all the money spent on a company that normally circulates petitions.

“It’s not cheap exposing the initiative’s use of felon petition circulators and uncovering their rampant fraud,” Benson said.

Arizona law prohibits convicted felons circulating petitions. And if a review of the petitions actually finds them, any signatures they gathered will be thrown out.

But it is less clear whether that prohibition applies to felons who have had their civil rights restored.

There also are allegations that at least some of the petitions contain obviously forged signatures, something else that would be caught in the screening process by state and county election officials.

Anyway, Benson said, that $7.53 million that Pinnacle West has spent so far needs to be put in context with the $4.46 million spent by NextGen Climate Action, the political action committee formed by Steyer to put the measure on the ballot.

“We’re up against a California billionaire who’s indicated he’ll spend any amount to cram this initiative down the throats of Arizona families,” he said.

The initiative has the backing of not only solar advocates but also some public health groups who say Arizona needs to move away from fossil fuels like coal and natural gas. And they say that while nuclear power emits no carbon pollutants, there are health effects from mining coal plus the need for water to drive the turbines and cool the fuel rods.

By contrast, a wide variety of business and community groups have come out in opposition amid concerns that power costs will go up.

Vetting panel chooses 5 finalists for IRC chair

The most powerful, unpaid political figure in Arizona for the next decade will either be a teacher, a businessman, an attorney for a public utility, a gun store owner or a psychologist-turned-life coach.

After the first of two days of interviews for the Arizona Independent Redistricting Commission, the Commission on Appellate Court Appointments narrowed its list of 11 semi-finalists for the IRC chair down to the final five: Nicole Cullen, a Gilbert teacher; Thomas Loquvam, an EPCOR attorney who used to work for Pinnacle West; Erika Neuberg, a former psychologist who has contributed to several campaigns of both Republicans and Democrats; Gregory Teesdale, a businessman in the tech industry; and Robert Wilson, a gun store owner who held a rally for President Donald Trump in his parking lot in August.

After a thorough discussion about the independent candidates, the Commission immediately approved Cullen, Loquvam, Neuberg and Teesdale, but had to hold a runoff vote to break a tie for the fifth slot. That was between Wilson and Megan Carollo, a small business owner with an economics background in Scottsdale. Wilson won the run-off with nine votes to Carollo’s four. Neuberg received the most votes overall with 14.

Wilson seemingly received the advantage since he brought geographic diversity due to living in Coconino County. He and Teesdale, Pima County, are the only finalists outside of Maricopa County.

Wilson also received the most letters in opposition, something he appeared to take pride in during his roughly 10-minute interview via Zoom.

“I take a little pride in the fact that I set myself apart from my peers already by being the number one negative letter getter,” Wilson said about the 149 letters the Commission received.

He was the last candidate to move into the interview round when the commission met in September and was considered a “backup” of sorts due to one independent candidate, Mignonne Hollis, potentially being considered a paid lobbyist, which would be grounds for disqualification under the rules of the IRC.

Hollis was viewed by several members of the commission to be a top candidate given how much overwhelming support she received from letters and calls –– and has ties to both Republicans and Democrats, is a Black woman and lives in Cochise County. She claimed to not be a lobbyist, but had to register as one as part of her job.

Ultimately, the Attorney General’s Office determined her job to qualify as a paid lobbyist and she was disqualified from consideration before her allotted interview. Ken Strobeck, the Republican former executive director of the League of Arizona Cities and Towns, was also disqualified for the same reason.

One Democrat, Mumtaza Rahi-Loo, later got the axe for serving as a pro tem justice of the peace, which qualifies as a public office – also not allowed on the IRC. But today’s interviews were only for the independents. The 40 partisan candidates will interview on October 9.

Commissioners asked all candidates how they would deal with hostility or disagreement within the commission, what competitive districts and communities of interest meant for the IRC and how they would handle public scrutiny. Some candidates received a fourth question –– either something tailored to what the commissioners found in their due diligence report (a thorough vetting of each candidate) or why they felt they were qualified for the position.

Christopher Bavasi, an independent former mayor of Flagstaff, likely removed himself from consideration due to his answer to that fourth question.

“I’m not sure I’m any more qualified than any of your other candidates,” he said. Bavasi was one of the top vote getters moving him into the interview round last month with 12 votes out of 14, but after his interview only received two.

And Nick Dranias, a former Goldwater Institute lawyer, who received a lot of negative comments for a variety of reasons days leading up to the interviews and from Democratic lawmakers this morning also did not make the cut.

On Oct. 9, 19 Republicans and 19 Democrats will interview with the Commission, which will winnow both down to 10 a piece. Eventually each legislative leader will name a partisan pick to serve for the next decade, and those people will then choose from the group of five independents.