Get ready to vote for Arizona Corporation Commissioners

The long-term viability of independently produced solar power could hinge on voters’ choices for state utility regulators.

Three of the five seats on the Arizona Corporation Commission are up for election on the November ballot. Three Republicans — Bob Burns, Boyd Dunn and Andy Tobin — and two Democrats, Bill Mundell and Tom Chabin, are running; each voter can choose three candidates.

The commission isn’t likely to rescind the decade-old mandate that electric companies get at least 15 percent of their power from renewable sources, including some solar, by 2025.

That would be politically unacceptable, not just to users but to the utilities, said former commissioner and current candidate Mundell. “They don’t want a headline that says, ‘Commission reduces it from 15 (percent) to 12, to 10,’ ” he said.

Instead, Mundell contends, the utilities are hoping to hobble the mandate — especially the part about getting power from rooftop solar.

“They’ve been doing it with their demand charges, with hookup fees, with looking at net metering,” all of which could make individual solar installation unaffordable, he said.

Some of this could be decided before the new commission takes office in January. The current all-Republican commission is tentatively set to review such issues next month.

But it will be the makeup of the commission starting in January that is more likely to determine long-term policies — starting with the question of what role government should play.

Tobin, an incumbent, said many questions of where utilities obtain their power will resolve themselves through the market, both from the perspective of lower costs for alternatives as well as consumer demand.

He said the government has had a heavy hand in the process, particularly at the federal level with the U.S. Environmental Protection Agency and its various pollution regulations.

“They put on such restrictions onto our coal producers that were going to cost hundreds of millions of dollars, mostly hurting the poor because those are our base rates,” Tobin said.

Chabin said market forces only go so far. “If the market says to dirty the sky and choke us all, I’m not for that,” he said.

He said he believes changes in technology will make cleaner sources of electricity more affordable. But he’s not sure that power companies are ready to go along.

“Are we going to have utilities that are going to obstruct it because it messes with their business model?” Chabin asked.

The utilities want changes in the regulations.

One deals with “net metering,” which is how much utilities have to pay customers who generate more power than they need. For most of the year, each extra kilowatt hour a homeowner produces becomes a credit against the next month’s bill. Once a year there has to be a reconciliation, with the utility paying the homeowner for excess power generated.

Utilities want a change in the rate they have to pay at the end of the year.

The utilities also want “demand charges.” Now, most residents pay a bill based on two components. The first is a flat fee for service. The second is based on usage, though the rate may vary on time of year and time of day.

A demand charge would be based on the highest peak usage at any one time, no matter how brief, such as the air conditioner kicking on while the electric dryer is working.

Demand charges would be paid by all customers. For solar users, they are an issue because they would reduce the savings on their electric bills through which they hope to recoup their initial installation costs over time.

The utilities contend the current system results in an unfair subsidy, with customers who cannot afford rooftop solar paying the lion’s share of maintaining the whole grid system, effectively subsidizing solar customers.

“That’s the talking point of utilities,” Mundell said. “But what they don’t tell you is the other side of the coin is if people put solar on their homes, the utilities don’t have to build infrastructure.”

The commission sets rates — and profits for utilities — based on a rate of return on their capital investment.

“If they build a fossil fuel plant ... they get to put that in rate base and raise everybody’s rates, solar and non-solar alike,” Mundell said. No construction, he said, means nothing to charge back to customers with a profit markup.

“So solar rooftop benefits the non-solar customers,” he said.

Dunn said he’s a fan of the current net metering rules.

“Because of net metering, Arizona is now ranked third in terms of rooftop solar,” said Dunn, a former Chandler mayor and Superior Court judge.

“We have brought in 10,000 jobs, 36,000 rooftops have that (solar), 450 different companies have been formed,” he said. “That’s the good news.”

Dunn said he won’t commit to anything, however, until he reviews the ACC staff report and hears from all parties.

“I think net metering could continue,” he said, but added it could be modified. “It can be whatever the vision of the Corporation Commission is of what that solar should be, weighing, again, the cost and the benefits and realizing that may have changed because of the success.”

Tobin agreed.

“We can’t advance new technology until we figure out what the value of these rooftop solar units are,” he said.

Burns, like Dunn and Tobin, said he wants to study the recommendations further. And Burns, as an incumbent, said he does not want to be accused of prejudging the matter.

Burns said there’s more to the issue of charges allowed on customers with solar power than questions of who might be subsidizing whom. And one is water.

“We are in a situation where a water shortage is about to be declared on the Colorado River,” said Burns, a former state senator who also had served on the board of the Central Arizona Project. “If that shortage is declared, Arizona’s the first one that has to take the cut.”

What makes that important, he said, is that generating power from coal, natural gas or even nuclear “uses a lot of water,” in each case creating steam to drive turbines.

“Solar, wind, fuel cells, a number of renewables don’t use water,” Burns said. “Those are the kind of things that go beyond the net metering viability question in my mind.”

Chabin said there’s another thing people need to keep in mind when looking at the question of net metering.

When a utility pays a homeowner for excess power generated, it pays a wholesale rate, Chabin said. “And when I produce the kilowatt hour that’s extra in that total, where does it go? It goes to my next-door neighbor,” he said. The utility gets the check — at the retail rate.

PHOENIX — The head of the state’s largest electric utility is suing Bob Burns . But he wants to keep Burns as a member of the Arizona Corporation Commission for another four years.

In an email letter to employees of Arizona Public Service obtained by Capitol Media Services, Don Brandt acknowledged he has “disagreements” with Burns.

But Brandt wrote that he still prefers Burns — along with his fellow Republican candidates Andy Tobin and Boyd Dunn — to the Democrat contenders. Three seats are available in the election.

Burns has been outspoken in his demand that APS and parent company Pinnacle West divulge whether either was the source of $3.2 million in anonymous donations to groups working to elect two other Republicans to the commission in 2012. He said the funding — the company won’t deny it was the source of the money — taints the commission’s reputation and causes the public to question its decisions.

When company officials balked, Burns issued a subpoena; the two firms responded by filing suit to block the move.

Brandt wrote of Burns, Tobin and Dunn, “These three candidates would be far better for Arizona, for electricity customers, and for our ability to provide safe, reliable and affordable service while running our business well and earning a fair rate of return for our shareholders.”

And what of Democrats Bill Mundell and Tom Chabin?

“Based on the steady flow of vicious, misleading, anti-APS rhetoric from the other candidates in the ACC race, it’s difficult to believe they could regulate any utility impartially,” Brandt wrote.

That drew an angry reaction from Chabin.

“I promise to be fair,” Chabin said — but not by simply giving APS or any other utility what it wants, he added. “A corporation commissioner should be a skeptic. I think that’s what the constitution calls us to be.”

Chabin said the proper skepticism includes finding out whether APS or its parent put more than $3 million into the earlier race.

He said it also includes monitoring the salaries paid to company officials. The most recent corporate filings show that Brandt, as chairman of the board, president and chief executive of both Pinnacle West and APS, had total compensation for 2015 of more than $9.3 million.

“Now, if all that is necessary to deliver electricity to someone’s home, all right,” Chabin said. “I think a commissioner should be a skeptic and question every cent that’s paid.”

Burns, for his part, said he doesn’t know what to think of Brandt’s endorsement. Nor is he willing to speculate whether being backed by the head of the companies he has attacked will undermine his appeal to voters.

A recent poll showed Burns with more backing than any of the other four contenders, though more than half of the voters questioned had yet to make up their minds on the race.

The race also presents an unusual situation: People can vote for up to three contenders, the number of seats to be filled, but there are only two Democrats in the contest. Mundell and Chabin are running as a ticket.

SolarCity, involved in its own fight with APS over charges for customers who generate their own power, already has put $140,000 into mailers supporting Burns and Mundell. That’s on top of nearly $700,000 it spent on Burns’ behalf to get him through the five-way Republican primary.

Burns said while Brandt may want an all-Republican commission, he’s not sure that’s in his own best interests. “I’ve got pretty strong support from the Democrats on one issue,” he said — meaning the subpoena.

The four other Republicans now serving on the ACC have not been supportive of Burns’ subpoena. But Mundell and Chabin have promised to provide Burns the necessary votes if they get elected.

Brandt has a different focus. He wants to reduce the amount of money APS has to pay to purchase excess power generated by homeowners from their rooftop solar units, as well as impose a “demand charge” that would determine a customer’s bill by not just the amount of energy used overall but how much was used at any one time. That is based on contentions by APS and other utilities that solar customers are being subsidized by other ratepayers who cannot afford to install rooftop generators.

Mundell and Chabin have scheduled a news conference for Monday, Oct. 17, to blast Brandt for trying to influence the election by sending out the email to APS employees.

PHOENIX — A major provider of rooftop solar units is putting $140,000 into the effort to re-elect Republican Bob Burns and to elect Democrat Bill Mundell to the Arizona Corporation Commission.

The disclosure Tuesday came as the five candidates for the three available seats on the commission, which sets utility rates, debated whether to force Arizona Public Service to disclose what it spent in 2014 to help elect two other Republicans.

Burns has issued a subpoena for records of APS and its parent company, Pinnacle West Capital Corp. But state Attorney General Mark Brnovich has said Burns’ ability to get into Pinnacle West’s books will require a majority vote of the five-member commission, and to date the other four Republicans currently on the panel have balked.

Mundell and fellow Democrat Tom Chabin have promised that if elected, they will provide Burns with the necessary votes.

Save Our State Now and the Arizona Free Enterprise Club funneled $3.2 million into the 2014 campaign to secure the election of Republicans Tom Forese and Doug Little. (Forese and Little are not up for re-election this year; ACC elections are staggered by year.)

Both groups are classified under federal tax law as “social welfare” organizations, which they contend exempts them from having to divulge their donors.

While the question of APS influence in electing commissioners is dominating much of this year’s race, it was disclosed Tuesday that a group funded by SolarCity is doing to a certain extent this year what APS is accused of doing two years ago.

It has put $140,000 into an independent campaign to help elect Mundell and secure another four-year term for Burns.

SolarCity, like APS, has an interest in the makeup of the commission. The panel will decide as early as next year how to structure rates for utility customers who generate some of their own power through solar. Any decision on those charges, as well as how much utilities have to pay customers for the power they’re now forced to buy from homeowners, could determine whether rooftop solar remains affordable.

But SolarCity lobbyist Kris Mayes said there’s a significant difference. She said SolarCity, which supplies and installs rooftop solar units, is disclosing its spending; the refusal of APS to say what it did or did not spend in the past or might spend in the future leaves voters in the dark.

Burns said he personally wishes SolarCity wasn’t spending money to help his re-election. But he pointed out that Arizona law precludes him from having any say in what is spent independent of his campaign.

“I wish everyone would stay out of the race,” Mundell agreed. “The difference is one word: disclosure.”

All five contenders appear to agree that, ethical issues aside, APS probably has a legal right to spend as much as it wants to influence elections.

“What we’re talking about is transparency,” said Republican Boyd Dunn.

“The constitutional right is to spend it, but not to hide it,” Burns said, arguing that it isn’t just an academic issue. “When a regulated utility spends at the rate that APS is perceived to have spent in 2014, integrity’s at risk.”

Burns quickly added that he’s not saying that either Forese or Little was aware of the actual source of the money being spent.

“The voters and the ratepayers are the critical ones that did not know for sure where the money was coming from,” Burns said, adding it’s a “slippery slope if it’s allowed to continue.”

What’s worse, Chabin said, is that customers are the ones footing the bill so that the utilities can elect people hey believe are more likely to approve their rate-hike requests.

“Every time you paid your bill, APS took a little bit of that money, put it into a ‘dark money’ campaign to invest over $3 million to elect the commission they wanted,” Chabin said.

While Mundell and Chabin cite the $3.2 million spent by Save Our State Now and the Arizona Free Enterprise Club as fact, that has never been proven.

An APS spokesman will neither confirm nor deny any political spending in the election. APS executives have said that if the company did spend any money that way, it came out of shareholder profits, not customer bills.

The issue of Burns’ subpoena has put incumbent Republican Andy Tobin on the defensive. While Tobin said he supports disclosure, he also voted to undermine a contract Burns made with a consultant to analyze any information APS and Pinnacle West provide.

Tobin defended his vote, saying the consultant was not acceptable to others. And he pointed out that he did vote to allow Burns to hire an outside lawyer.

PHOENIX — The publicity and attention Commissioner Bob Burns is getting in his high-profile fight with Arizona Public Service is apparently paying off politically.

A new statewide poll suggests the one-term Republican leads the five-way race to fill three seats on the Arizona Corporation Commission, which regulates the rates that investor-owned electric, gas, telephone, water and sewer companies can charge their customers. More than 23 percent of voters questioned in the poll said they intend to vote for Burns in November.

Republican incumbent Andy Tobin, appointed to the commission earlier this year by Gov. Doug Ducey, polled at No. 2, being listed by 22.2 percent.

But despite Republicans having a huge edge in voter registration, the third slot for the moment belongs to Democrat Tom Chabin, according to the poll. Chabin, a former state legislator from Flagstaff who now lives in Tucson, was named by 20 percent of the people who responded.

Still, it could be anyone’s race.

Consultant and lobbyist Paul Walker said the survey he commissioned showed that more than half of the 600 people questioned in live phone interviews said they were not sure for whom they will vote. Early ballots for the Nov. 8 general election go out this coming Wednesday.

Burns is in the middle of a legal battle with APS and its parent company, Pinnacle West Capital Corp., to get access to the books of both entities. He specifically wants to find out whether either was the source of some or all of the $3.2 million put into the 2014 commission race on behalf of Republicans Tom Forese and Doug Little.

The two groups that made the expenditure, Save Our State Now and the Arizona Free Enterprise Club, have refused to divulge where they got their money, contending their status as “social welfare” organizations exempts them from such disclosure. And an APS spokesman has refused to deny that his company was the source of the dollars.

APS and Pinnacle West have sued to quash the subpoena that Burns has issued.

Outside funding has been the hot-button issue of the campaign.

Chabin and fellow Democrat Bill Mundell have vowed to back Burns in his legal fight. Yet, in Walker’s poll, Mundell polled last among the five contenders for the three seats.

Republican candidate Boyd Dunn, a former Chandler mayor, polled fourth in the survey.

Walker said what may be working against Mundell is his party history: He was a Republican when he served as a state legislator and later as a commissioner.

As to Tobin, Walker said he has fairly high name identification from his unsuccessful race two years ago for Congress in Congressional District 1.

The real unknown, said Walker, is what happens to the approximately 55 percent of people who said they have yet to make a decision.

Walker said the survey was conducted on Wednesday and has a 4 percent potential margin of error. He said it included only people who voted in three of the last four elections.

Walker’s interest in the race stems from the fact that he represents private water companies with issues before the commission.

A former state gaming director, he also has done past work for APS.

PHOENIX — State utility regulators will vote Thursday, Sept. 15, on whether to hire an attorney to defend Commissioner Bob Burns from a lawsuit filed against him by Arizona Public Service and its parent company.

The state's largest electric utility is asking Maricopa County Superior Court Judge David Gass to quash the subpoenas Burns issued demanding records of any political spending from both APS and Pinnacle West Capital Corp. Utility officials have said the subpoenas are "evidence of Commissioner Burns' intent to harass.''

Burns needs the support of at least two other members of the Arizona Corporation Commission because, having issued the subpoena himself and not with the consent of the full panel, the commission's own legal staff cannot defend him in the lawsuit.

Whether he will have the votes remains unclear. Commission members Andy Tobin, Tom Forese (who announced Wednesday he will run for state treasurer in 2018), Bob Stump and Doug Little all said Wednesday they are reserving judgment on the matter until the hearing.

But the issue is spilling over into this year's race for the three seats available on the commission.

At a debate Wednesday, Republican candidate Boyd Dunn said the commission not only needs to defend Burns and his subpoena but also to pay for it.

Dunn said Burns is providing an opportunity to try to find out who put $3.2 million into the 2014 race to secure the election of Republicans Forese and Little, and also to set the rules for future disclosure. 

Dunn noted that the Republican-controlled Arizona Legislature voted earlier this year to alter existing laws to allow some "dark money'' groups to hide their donors from public disclosure.

"The key is whether that affects the Corporation Commission,'' said Dunn, a former Superior Court judge. "The opportunity here, especially with the commissioner being sued himself, is to take the opportunity and get these issues before a court, get clarification as to what the commission can and cannot do, especially with disclosure.''

The other alternative, he said, would be for all Arizona utilities to agree to stay out of future elections.

Burns himself, up for reelection, obviously supports his request for an attorney. And Bill Mundell and Tom Chabin, the two Democrats in the race, also are supportive of the subpoena and getting APS and Pinnacle West to disclose the records.

Chabin said he discounts the changes made in Arizona law by the Legislature shielding some groups from disclosure. "Look at the (state) constitution,'' he said. "It's quite clear the Corporation Commission is a separate branch of government. It's unique in the nation.''

Chabin said there's a good reason for commission-regulated utilities to be required to disclose their political spending.

"You can't buy your electricity from anybody else,'' he noted, as each company holds a monopoly over customers in its own service territory, subject only to charging no more than the commission determines is a fair rate of return. "So aren't you interested in what they spent in an election to elect a commission to set your rates?''

Chabin said Burns is also correct in demanding the books of not just APS but its parent company, saying it could be that company and not the utility that has been spending money to influence races.

Thursday's meeting comes on the heels of Forese announcing Wednesday he does not intend to run for reelection when his term ends in 2018. Instead, he intends to run for treasurer; incumbent Jeff DeWit announced earlier this year he doesn't intend to see another four-year term.

"I have a track record,'' said Forese, who previously was a state legislator. He said his decision not to run for reelection to the commission is unrelated to the turmoil that has surrounded the five-member panel.

"It's been crazy,'' he said. "But I've got blinders on with a focus on making Arizona a better place to do business.''

PHOENIX — The showdown between Arizona Public Service and state utility regulator Bob Burns has been put off while he shops for an attorney.

Burns said Thursday he reached a deal of sorts with the power company to give it and its parent, Pinnacle West Capital Corp., more time to produce all the documents he subpoenaed.

That also puts off Burns’ demand that Don Brandt, the chief executive of both companies, submit to questioning under oath next month about political donations and other financial matters.

But Burns said he is getting something out of the deal, too: time to find and hire an attorney.

Burns had thought when he issued the subpoena last month he would have legal help in deciphering the documents he demanded. But his fellow members on the Arizona Corporation Commission vetoed his plans to hire outside counsel.

It was only last week — after APS and Pinnacle West sued to quash the subpoena — that the other regulators reversed course and agreed to let Burns bring on legal help to defend that lawsuit.

Finding a lawyer has been harder than he expected, Burns said. The attorney cannot work for a firm that handles legal matters for either APS or Pinnacle West. Also, the full commission could pull the plug on the attorney’s funding at any time.

The other regulators have said they did not want the fight with the state’s largest electric utility over its books to become a financial drain.

Commission Chairman Doug Little said the utility has suggested it would go all the way to the U.S. Supreme Court to defend what it says is its First Amendment right not to disclose its political donations. He worries the state could be on the hook for a seven-digit fee for its own attorney and the cost of the APS legal team if the utility won.

Burns is focusing on APS and Pinnacle West after a spokesman refused to deny that either was the source of some of the $3.2 million in anonymous donations that went into the 2014 commission election.

PHOENIX — State utility regulators voted Thursday to hire legal counsel so one of their own can pursue his subpoena of records of Arizona Public Service and Pinnacle West Capital Corp.

But how far they are willing to let Commissioner Bob Burns go with his legal battle to find out what the utility is spending to influence elections — and how much they’re willing to spend — remains undecided.

Officially, the 4-1 vote has no limit on what would come out of the budget of the Arizona Corporation Commission.

Commissioner Tom Forese had proposed an initial cap of $100,000, with a promise to revisit the issue when that money ran out. Commission Chair Doug Little said that made sense. He did not want a blank check, saying APS has indicated it would take its fight to shield its political donations from commission and public eyes as far as it needs.

“I don’t think it is prudent or appropriate to simply write a blank check to put us potentially on the hook for legal fees that might extend up to and including a Supreme Court deal,” Little said. And he said if Burns lost his legal battle, the state could end up having to pick up the tab for the utility’s attorneys, too.

But Burns argued that any pre-determined figure would effectively tie his hands and assure he would lose the lawsuit, as the state’s largest utility company and its parent have deep pockets and could simply drag the case on until funding for his own lawyer ran out.

Commissioner Andy Tobin sided with Burns in pushing authorization to hire an attorney without a pre-set cap.

Tobin noted the commission has previously hired outside counsel for individual commissioners.

That includes a $90,000 bill to let Susan Bitter Smith try to fight charges she was holding office illegally, and $130,000 to help Bob Stump stave off efforts by an outside group to get access to the texts from his cell phone.

And in both cases, there was no pre-set cap.

But Tobin said Thursday’s vote is not the kind of “blank check” that Little and Forese oppose. He said if the litigation appears to be going nowhere or a trial judge rules against Burns, the commission can decide at that time to cut its losses.

With that condition, Forese and Little agreed to go along; Stump did not.

The quest for the attorney stems from a subpoena Burns issued to have APS and Pinnacle West provide him with various documents.

He’s particularly interested in learning what they have spent on past political races and whether they are the source of any of the $3.2 million in “dark money” anonymous donations used by outside groups to help elect Forese and Little.

An attorney for APS questioned Burns’ authority to seek much of what he wants and refused to turn over some documents.

The company then filed suit in Maricopa County Superior Court asking a judge to quash the subpoena.

A hearing is set for next month.

The commission’s own legal staff cannot represent Burns because his interests in getting the documents are at odds with his colleagues, who have questioned both the need for the information as well as the legal authority.

Burns said since he issued the subpoena as an elected official, the commission is obligated to find him an outside counsel to defend his action.

PHOENIX — The state’s largest power company filed suit late Friday asking a judge to quash subpoenas a utility regulator issued for some of its records.

Arizona Public Service and Pinnacle West Capital Corp., its parent company, say there’s no legal basis for the demand by state Corporation Commissioner Bob Burns for documents showing what the company has spent on political donations, charitable contributions and lobbying expenses.

An attorney for the companies, Mary O’Grady, also said there is no reason the Arizona Corporation Commission needs the information, because money used for those expenses is not passed on to APS customers in the form of higher rates.

She also claims a constitutional right of her clients to keep the information secret. O’Grady said the First Amendment not only protects free speech but also includes the right of individuals and corporations to make political or charitable donations.

In a separate filing Friday with the commission, Barbara Lockwood, an APS vice president, said the fact that Burns is targeting only APS and Pinnacle West in demanding the information is discriminatory. She said this is “evidence of Commissioner Burns’ intent to harass.”

Burns has focused on the companies because their spokesman has repeatedly refused to confirm or deny that APS or Pinnacle West were the source of any of the $3.2 million in anonymous donations poured into the 2014 commission race to help elect Republicans Tom Forese and Doug Little. Other utilities have said they stayed out of that race.

The lawsuit comes less than a week before the Sept. 15 deadline that Burns set for the documents to be delivered to the commission, and less than a month before Burns’ demand that Don Brandt, the chief executive of both firms, answer commission questions under oath.

O’Grady, in a separate letter to Burns, said APS — but not Pinnacle West — will deliver “a significant amount of documents identified in the subpoenas” by the Thursday deadline. And she said those deemed confidential also will be furnished, subject to “execution of an appropriate confidentiality agreement.”

She emphasized, however, that this does not mean the company is waiving its legal right to challenge the subpoenas.

Burns, in a brief statement late Friday, said he is studying the companies’ lawsuit and its response to his subpoenas before deciding what to do next.

The legal battle stems from the questions Burns raised about the role of APS and Pinnacle West in a “dark money” campaign in the 2014 race. Both the Free Enterprise Club and Save Our State contend they are “social welfare” organizations, free to help elect or defeat candidates but exempt from state campaign finance laws that require disclosure of donors.

So Burns is instead trying to use his authority over the utility.

Lockwood, in her letter, suggested Burns’ motive is political.

He is running for another four-year term this year on the commission. The deadline he set to interview Brandt comes just a week before early voting begins for the general election, Lockwood noted.

“Commission Burns is clearly campaigning on the disclosure issue with references on his election website to ‘my battle with APS,’” Lockwood wrote.