Arizona Captured Regulators Controversy Grows

Arizona Captured Regulators Controversy GrowsThe Arizona Republic published on Sunday, May 3, 2015, a lengthy  front-page article by Reporter Ryan Randazzo that examines continuing questions of impropriety by the Arizona Corporation Commission, including allegations by whistleblower Antonio Gill.

Among the claims by Gill are that former Commission Chairman Gary Pierce took part in approximately 14 secret meetings, which Gill arranged as his assistant, with Donald E. Brandt chairman of the board, president and chief executive officer of Pinnacle West and Arizona Public Service (APS). Gill alleges some of these conversations broke rules on ex-parte or unauthorized communications during rate review cases.

Explosive Charge

The second half of the article contains what is perhaps the most explosive charge. In September 2013, Pierce successfully advocated for APS’ position that the commission should stop exploring retail competition for electricity. One month later, APS’ top lobbyist, Jessica Pachecho, reserved a room at Phoenix Country Club for a fundraiser for Justin Pierce, Gary’s son, who was running for secretary of state. Justin Pierce lost and opponents claim about $465,000 was funneled through dark money groups to support Justin Pierce by APS – an allegation the utility has not responded to.

Additional Information

Arizona Captured Regulators Controversy GrowsIn our Captured Regulators Initiative, Checks and Balances Project is looking at former Chairman and current Arizona Corporation Commissioner Bob Stump. During his chairmanship, Arizona became the first state to establish a monthly fee payable to a utility by consumers who want low-cost rooftop solar. It was a high-stakes fight for APS, the state’s dominant utility, and one the utility badly wanted to win.

The Randazzo article details four meetings by Stump with APS CEO Don Brant and one with former President Don Robinson over eight years.

Supplemental information derived from our records requests show that the estimate in the Arizona Republic’s article of APS’s lobbying force working the commission is quite conservative.

Arizona Captured Regulators Controversy GrowsIn just the 17 month period from July 12, 2013 through March 10, 2015, Commissioner Stump met with APS’ Don Brandt, Chief Operating Officer Mark Schiavoni, Senior Vice President Jeff Guldner, or Manager Stacy Aguayo at least 12 times. All are registered with the Arizona Secretary of State as APS lobbyists.  Were we able to total up meetings over eight years with all commissioners, we expect the numbers would be much higher.

Other meetings with APS representatives who are not registered lobbyists but involved in specific projects are not included in this total. They include meetings with no specific person indicated, such as a Sept. 3, 2014 entry, “APS meeting re: Supplemental Application (Utility-owned DG) in the RE…”; a meeting with Barry Aarons, a former registered APS lobbyist, who met with the Commissioner on Sept. 11, 2014, to discuss “APS filing solar panels”; and meetings with APS’ Barbara Lockwood, General Manager for Regulatory Policy and Compliance, who met with Stump 13 times since March 2014.

Hidden Meetings

The number of meetings on Commissioner Stump’s public calendar that have been hidden or “redacted” from public view is quite large. For example, in the two month period after Don Brandt met with Commissioner Stump on July 30, 2014, there are 172 meetings on the commissioner’s calendar. Yet 50 meetings or 29% of the total are blacked out or redacted.

Under Arizona Records Law, if you are a public official, you have an obligation to respond fully to records requests. This is a fundamental legal right of the public, and it needs to be enforced.

In many states, commissioners have been lured to ally themselves with the industries they are charged with regulating over public interest. There is a term for this, created by Nobel Prize winning Economist George J. Stigler over 50 years ago: “Regulatory capture.”

Is this what has happened in Arizona? In the days and weeks ahead, we hope to find out.

 

Scott Peterson is executive director of the Checks and Balances Project, a national watchdog that seeks to hold government officials, lobbyists and corporate management accountable to the public. Funding for C&BP comes from pro-clean energy philanthropies and donors.

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