Regulators may question utilities about 'dark money,' AG rules

PHOENIX — State utility regulators have a legal right to question company executives about whether they secretly funneled money into political campaigns, Attorney General Mark Brnovich said today.

In a formal legal opinion, Brnovich sided with Corporation Commissioner Bob Burns, who has been trying for months to get Arizona Public Service to open its books to show political donations. When efforts to secure voluntary compliance failed, Burns made an official demand.

APS refused. And attorney Mary O’Grady, writing to Burns on behalf of utility investors, said the power of commissioners to inspect utilities’ books is limited. So Burns asked Brnovich to take a look.

An APS spokeswoman would say only that the utility is studying what Brnovich wrote.

Burns said the ruling backs his contention that individual commissioners have the authority to gather information about the utility’s political, lobbying and charitable expenditures.

“Importantly, the attorney general concluded that the First Amendment does not bar me from investigating the books and records of APS, an argument that APS and others have repeatedly made in response to block my efforts to get this information,” Burns said in a prepared statement.

There are allegations — not denied by APS — that APS contributed to the 2014 campaign for Arizona Corporation Commission through one of two “dark money” organizations that were spending heavily to influence the elections.

Campaign finance records show that Save Our Future Now and the Arizona Free Enterprise Club together spent more than $3 million on the campaign, first to help Tom Forese and Doug Little win the Republican nominations, then to ensure they won the general election.

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Both groups have refused to reveal their donors, saying they are organized under federal tax laws as “social welfare” organizations exempt from state financial disclosure laws.

“Compelled disclosure about political contributions that APS or its affiliates may have made out of shareholder profits would go beyond what is required of corporations under Arizona campaign finance law, and would impinge on APS’ First Amendment rights,” Don Brandt, the chief executive officer of APS, wrote to Burns.

Spokesman Alan Bunnell has said APS has been the subject of a “nonstop propaganda war” by the group Tell Utilities Solar Won’t Be Killed. TUSK, which spent $236,000 in the race, largely to defeat Little, is funded by companies that sell and lease rooftop solar units.

“It would be irresponsible for us not to defend our company,” Bunnell said.

Burns has said what APS spends to influence the election of those who set its rates should be a matter of public record.

Brnovich, in a 12-page opinion, said he reads Arizona law to allow individual commissioners and their employees to “at any time, inspect the accounts, books, papers and documents” of any utility. He said commissioners may examine utility company officers and employees under oath.

He said that includes political contributions, charitable contributions and lobbying expenses.

Still, Brnovich said the right of individual commissioners does not extend to affiliates. And it is possible that campaign donations were made not by APS but by Pinnacle West Capital Corp., its parent company.