House panel votes to change ACC conflict-of-interest rules

PHOENIX — A House panel voted 8-4 late Wednesday to change state law to ensure that the newest state utility regulator can vote on requests by electric companies to hike rates on their customers who have solar power.

Attorneys for the Arizona Corporation Commission have told new member Andy Tobin he has a conflict of interest because his son-in-law works for SolarCity.

SolarCity has opposed efforts by Arizona Public Service and other utilities to impose peak demand charges on customers who generate their own electricity. The utilities contend that customers without solar are effectively subsidizing the cost of operating the grid that delivers power to all homes. If utilities get what they want, that could force SolarCity to stop doing new installations and to lay off people — potentially including Tobin’s son-in-law, who is an inventory control specialist for the company. That’s what happened with SolarCity in Nevada.

Commission attorneys told Tobin he cannot vote on such matters. They even questioned whether he was eligible to be appointed last month by Gov. Doug Ducey in the first place. (The seat was open because Susan Bitter Smith resigned after Attorney General Mark Brnovich said her outside jobs and lobbying created an illegal conflict of interest.)

Rep. John Allen, R-Scottsdale, said he crafted HB 2123 simply to clarify the law. It spells out that it is not a legal conflict if a relative is employed by a company that might have some interest in a matter before the commission, as long as the company had at least 25 employees in the state and the relative “does not assert control or decision-making authority over the entity’s management or budget decisions.”

Tobin, a former House speaker, told the House Appropriations Committee that following the logic of the commission attorneys would create absurd results. “Most people would not agree that your sister’s husband, who is a receptionist for APS, would exclude you from voting,” Tobin told his former legislative colleagues.

But Rep. Charlene Fernandez, D-Yuma, pointed out that when she was a school board member she purposely abstained from voting when the time came to renew the teaching contract of her son. “Why should the rules be different for you?” she asked him. Fernandez called this “special legislation.”

Allen disagreed, saying Tobin is still subject to other ethics rules that preclude him from voting on issues where he has a substantial conflict of interest. Legislators are allowed to vote on matters that can affect relatives, he added.

But attorney Tom Ryan said there’s a reason utility regulators are held to a higher standard. He pointed out the commission is charged with regulating the rates of companies that have been granted monopolies.

“The idea that (Tobin) is down here (at the Legislature) testifying on this bill should shock all of you. It should be stunning to you,” Ryan said. “He should be 100 miles away from this bill. It indicates to me that Commissioner Tobin has a difficulty understanding his own conflict of interest.”