PHOENIX — The incoming chief executive of Pinnacle West Capital Corp. declined Wednesday to promise that the company won’t spend money in the future to elect utility regulators of its choosing.
Jeff Guldner told the Arizona Corporation Commission that he wasn’t saying there definitely would be a repeat performance of 2014 and 2016, when the company put a combined $15 million into campaigns to elect commission members. Pinnacle West is the parent company of Arizona Public Service, the state’s largest electric utility.
But Guldner, who now serves as APS president, said he cannot give a firm answer because he does not take over from Don Brandt, the current Pinnacle West CEO who is retiring, 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. Burns suggested 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,” he said.
Burns also contended the political spending is part of a larger plan by Pinnacle West to “capture” the commission to ensure decisions the company wants on issues like requests for higher rates.
Burns wasn’t the only commissioner with sharp comments about Pinnacle West — and specifically the way Brandt has run the company for the past dozen years.
“Your behavior is that of a kingpin who operates the company to mainly benefit himself,” said Sandra Kennedy. “You have, in essence, created a machine to purchase any and every elected official and defeat anyone in your way.”
The daylong hearing was called in the wake of the discovery that a Sun City West woman, Stephanie Pullman, died last year of heat-related conditions after APS disconnected her power on a 107-degree day after she failed to pay $51 of a $176 bill.
There were several pointed questions about what commissioners saw as a failure to provide Pullman with adequate notice.
Daniel Froestcher, an APS vice president, acknowledged that no one made personal contact with Pullman, instead leaving a notice on her front door.
But much of the discussion centered around the policies of Pinnacle West in spending money on elections.
In 2014, 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 seeking commission seats. The company opposed them because they were supportive of requiring utilities to get more of their power from solar and other renewable sources.
All told, 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 remains 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, like Burns, acknowledged 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 does not make it right,” he told Brandt.
Commissioner Justin Olson agreed. “Our utilities should not spend money electing their regulators,” he said.
