Power struggle: Exploring the Corporation Commission race
NORTH VALLEY – Dark money, rate cases, solar – all recurring themes in the 2016 Arizona Corporation Commission election. Five candidates are campaigning for the three available seats on the Commission.
Candidates Tom Chabin, Bill Mundell, and Boyd Dunn shared their views on these issues in email interviews with The Foothills Focus. Candidates Andy Tobin and Bob Burns could not be reached for comment.
Chabin and Mundell both said in interviews that, if elected, they plan to exercise the constitutional power of the Commission to force commission-regulated utilities, including APS, to open their books and reveal election contributions.
“Dark money is having an immensely negative impact on our elections, and in particular on the election for Corporation Commissioners. The fact that utilities can secretly spend money on candidates who put utilities’ interests ahead of consumers is frightening,” Chabin said.
“A utility should not be able to buy elections in order to unduly influence the very elected Commissioners who are supposed to be regulating them,” Mundell concurred.
Candidate Dunn referenced the Citizens United Supreme Court decision when discussing dark money, noting that these contributions are constitutionally protected free speech.
While utilities have the right to contribute to campaigns, Dunn also said that independent expenditures should be disclosed.
“Such transparency is critical especially regarding the business of the Corporation Commission,” Dunn said.
At the heart of this debate is what contributions APS may have made to past Corporation Commission campaigns. Incumbent Commissioner Bob Burns has filed subpoenas for information detailing APS’ and parent company Pinnacle West’s campaign contributions; APS responded by filing suit against Burns, and Burns recently noted on his campaign Facebook page that he has retained counsel for this.
APS Communications Consultant Anna Stewart referenced the Pinnacle West Web site in response to an inquiry on APS’ involvement in political campaigns. Pinnacle West’s Political Participation Policy is comprehensive and may be read in its entirety at www.pinnaclewest.com (search ‘political activity’).
In section of 2.7. of ‘Policy Statements’, the policy states: “Our decision to support an organization may be guided by a shared view on a specific issue, or may reflect a more general agreement on public policy. Pinnacle West may not always agree with political positions taken by such organizations; however, on balance, the Company believes when it makes a contribution to such organizations that it receives more benefit than detriment.”
Pinnacle West announced on Monday that the company has created a political effort called the AZ Coalition for Reliable Electricity. Through this coalition, Pinnacle West will be supporting particular campaigns; their news release did not say which candidates the company would support. Multiple media outlets, including the Arizona Daily Sun and the Arizona Republic, reported that APS CEO Donald Brandt sent an email out that stated that candidates Tobin, Dunn, and Burns are preferred, despite the fact that APS currently has legal action against Burns.
“With SolarCity now putting a massive infusion of spending into the campaign, we are compelled to take action,” the Pinnacle West release states.
Per the Secretary of State, SolarCity is the main financial backer of the organization Energy Choice For America, which in turn funds Save Our AZ Solar, which spent about $700,000 in the primary election and will likely spend more in the general election. Save Our AZ Solar reports online that they support Mundell, Burns, Chabin, and Tobin; they have actively campaigned for the reelection of Burns, although the organization specifies it is not authorized by any candidate or candidate’s campaign committee.
APS rate case
The issue of APS/Pinnacle West’s involvement with Corporation Commission campaigns has garnered further attention since APS currently has a full rate case before the Commission, and APS is seeking a rate increase as part of that case. The requested rate hike would add an approximate $11 to the average customers’ monthly bill. APS notes that this increase will help fund infrastructure and keep services consistent. APS expects the rate case to be concluded next summer.
As potential Commissioners, candidates declined to reply on specifics of a rate case that they may end up overseeing, so they are not stating how they would vote on the APS case, specifically the rate increase portion. Candidate Chabin did note that, “APS has a burden of proof to show why the rate increase is justified.”
“I do find it highly concerning that a government created monopoly such as APS, with absolutely no competition in the marketplace, is asking for a massive rate increase while paying their Chairman more than $12 million per year – $2 million more than the CEO of Apple,” Chabin asserted.
Chabin has spoken of this compensation before, including at a September candidate forum in Anthem. When asked for a source for the information, Chabin referenced ‘Profits pave way to record CEO pay in Arizona’, a June 2016 Arizona Republic article, which listed Donald Brandt of Pinnacle West Capital Corp earning $12,265,140 as adjusted 2015 compensation. APS media relations declined to comment on this.
APS is also requesting the implementation of demand rates.
“For demand-based rates, the demand charge is based on the one hour during on-peak hours that your home uses the highest amount of energy (over the course of the month),” wrote APS Communications Consultant Stewart in an email interview. “The demand charge will be averaged over that one hour. A one-hour average measurement gives customers flexibility and helps avoid costs for short spikes in energy use.”
Stewart noted most APS customers have automated meters, saying that these meters are the most technologically advanced meters available and have been proven accurate.
None of the three candidates interviewed by The Foothills Focus expressed support for demand charges, and all three concurred that no other state requires customers to pay demand charges.
“Even though I can’t specifically discuss factors of pending cases, I have stated significant concern for the adoption of demand charges,” Dunn said. “A demand charge is not the same as time based rates presently used by utility customers, including SRP. It is far different. A demand charge would charge customers based on how much electricity they consume during the time period of highest use. Demand charges have been historically used by industry yet they would be extremely difficult for residential customers because of the difficulty of managing their multiple uses of power during the day.”
Solar infrastructure is another major issue in this campaign. Included in APS’ request to the Commission is a solar proposal that would give new solar customers modified net metering. If the proposal goes through, APS will pay solar customers who connect after July 2017 3 cents per kilowatt hour for the extra energy they produce, instead of the current rate of 14 cents per kilowatt hour.
“For the last few years, we have sought changes in our rate structure to make pricing more fair for all customers,” Stewart said, detailing the APS proposal. “The rooftop solar leasing industry has argued that the best place for any change to happen is in the rate review process. Now that we have filed our rate review, many of those same groups are trying to delay action and kick the can down the road to prevent any change from occurring.”
APS representatives have called the current state of solar unsustainable, saying that solar subsidies are creating a cost burden for other customers.
“Unfortunately, 96 percent of our customers are currently paying more than they should because of rooftop solar subsidies, which is the legacy of outdated rate design. If the current rate structure is not fixed soon, the problem will continue to grow. We are hoping to make progress on rate design in our current rate review,” Stewart noted.
Dunn, Chabin, and Mundell agree that some modifications may be needed in the solar issue, but that solar needs to be able to continue to grow as an energy option.
“The solar industry is becoming more and more viable across the nation. Are there adjustments needed to move forward? Most likely,” Chabin said. “But as technology improves we must ensure consumers have the freedom to choose how they want to produce and consume power. Consumers should not be penalized for taking advantage of new technologies even though it may not be of benefit to the outdated traditional grid model to which we are accustomed. Bottom line: we need a balance of energy sources and options for consumers, and I will do everything in my power to provide those options to Arizonans.”
Finding common ground
The Corporation Commission is a partisan office. Tobin, Burns, and Dunn are running as Republicans, and Mundell and Chabin are running as Democrats. The Foothills Focus asked interviewees for opinions on the partisanship of the office.
Dunn said this is his first partisan race, having previously run in eight non-partisan elections. He didn’t comment on whether he felt the Commission being partisan is appropriate but said he has received endorsements from both sides of the aisle and is asking for the votes of voters of all parties.
“I do feel that the Republican candidates for the Arizona Corporation Commission share similar values including being fiscal conservatives and desiring to have the ACC run more effectively in order to attract to Arizona quality jobs and industry,” Dunn said.
Chabin and Mundell both noted that consumers are their top priority: “no matter where they live, what political Party they are affiliated with, or how much money they make.”
No matter the outcome of the election, the Commission will retain a Republican majority. Asked if they’d endorse a particular Republican candidate, both Chabin and Mundell said that the choice is up to the voters.
“All I can say is that myself, Tom Chabin and Republican Bob Burns are the only candidates who have sworn to force APS to open its books in order to fight the dark money plague that has compromised the integrity of the Commission,” Mundell stated.
“As Bill Mundell and I both say, it’s unfortunate it’s a partisan office, as electricity bills don’t care whether you’re a Republican, Democrat, Independent, or any other Party affiliation,” Chabin said. “We all pay electric bills.”