Page 12 - the NOISE March 2015

aCC whistleblOwer blOws the lid On aCC/aps COrruptiOn
stOry by Cindy COle
phOtO/illus by Omar viCtOr
Comm. Gary Pierce at a recent hearing
awhistleblower has come forward with accusations of improprieties against several mem- bers of the Arizona Corporation Commission (ACC). Charges include inappropriate con- tact between commissioners and Arizona Public Service Corporation (APs). The investiga- tion of these allegations could cause recent interactions between these two entities regarding APs general rate cases to be considered defective.
The ACC’s job is to regulate public utilities as well as policing bad brokers and enforcing transportation safety. “It doesn’t feel right, it doesn’t look good, it’s shocking,” Tim Hogan, for- mer attorney for the ACC, told Arizona’s 12 News regarding the whistleblower’s allegations. Mr. Hogan has spent the last 20 years arguing on behalf of citizens in appearances before the ACC.
Although the mainstream media has focused on accusations against former commission chair Gary Pierce, the whistleblower also implicates former commissioner Brenda Burns as well as current commissioner Bob Stump and ACC executive Director Jodi Jerich. He also names Don Brandt and Don Robinson, current and former CeOs of APs/Pinnacle west (Pinna- cle west is the parent corporation of APs). The whistleblower, whose name has been withheld, but whose identity was confirmed by 12 News, has worked for the ACC for more than six years and was Mr. Pierce’s executive Aide at the time some of the alleged improprieties occurred.
Political favors to Conservative Business League director and former ACC employee Ron Ludders formed a large part of the whistleblower’s letter addressed to Arizona Attorney Gen- eral Mark Brnovich, ACC Chairman Susan Bitter Smith and Ms. Jerich. The letter states re- sources at the ACC were repeatedly directed at helping Mr. Ludders expedite and complete corporate filings without following proper procedures or going through traditional channels. One such filing involved the Conservative Business League, LLC, which, the whistleblower says, was used to receive funds that may have paid for a “hit campaign” against Democratic Commis- sioners Sandra Kennedy and Paul Newman in 2012.
Allegations that APs had contributed “dark money” to commission campaigns had already been made prior to the whistleblower’s revelations. Previous investigations show a trail of contributions funneled through suspicious entities to influence the election of commissioners who would be favorable to recent APs rate increase requests. In 2014, Gary Pierce’s son Justin Pierce made an unsuccessful bid to become Arizona’s secretary of state. Accusations APs con- tributed to his campaign through “dark money” were leveled by media outlets across the state, and were not denied.
The whistleblower also claims he was given a promotion in an effort to keep him quiet about a ploy executed by Mr. Pierce, Ms. Jerich and Commissioner Brenda Burns to usurp the heads of the Corporations Division of the ACC.
“Commissioner Pierce indicated that if I did as I was told and if I kept secret the things that I knew I would be made deputy director of the Corporations Division,” states the whistleblower. “Commissioner Pierce told me an anecdote from his past about keeping secrets and the mis- fortunes that can befall people that do not keep secrets. I took this as a veiled threat.” This is
clearly in violation of laws that prevent government officials from trading gifts for favors. Among the most disturbing of the whistleblower’s accusations are those that allege secret meetings between Mr. Pierce and APs officials. The whistleblower says he was asked to arrange
several of these meetings and states he approached Commissioner stump, who was the com- mission chairman from 2013-14, with his concerns on september 3, 2014.
The following items with regard to Mr. Pierce were brought by the whistleblower to Mr. stump. His letter states:
They were: inappropriately using his personal staff to bring pressure to bear on state officials in the Corporations Division to form entities for Mr. Ludders; the filing for the con- servative Business League, LLC and the $186,000 in checks that Mr. Ludders had and how
it matched the dark money that funded the hit piece that was involved in his reelection; Mr. Johnson [former ACC Executive Director] was asked to leave so that Commissioner Pierce could orchestrate the hiring of Ms. Jerich.
This helped him obscure what happened in the 2012 election cycle and allow him to continue to coerce the Corporations Division to expedite forming entities for Mr. Ludders; that Commissioner Pierce’s involvement and employment with the political consulting firm Americopy and the fact that Americopy ran his reelection campaign and the cam- paigns of Commissioner Bitter Smith and Bob Burns; that Commissioner Pierce had been having secret meetings with the CEO of Pinnacle West and Arizona Public Service, Don Brandt and his predecessor Don Robinson.
I told Stump that I knew this because I was asked to arrange most of the covert meet- ings; these meetings happened both during and outside of the exparte periods of APS’ general rate cases; that all the Commission’s actions with regard to APS during this period were potentially defective and subject to re-litigation; Pierce met with either Don Brandt or Don Robinson approximately 14 times privately for lunch or dinner away from the Commission. Seven of these were during exparte periods of APS’ general rate proceedings docket number E-01345A-11-0224 and E-01345A-08-0172.
The whistleblower closes his letter saying, “To my knowledge nothing has been done with the information I provided.”
According to a 12 News investigation, public records indicate more than a dozen meetings between Mr. Pierce and APs officials. six of those meetings occurred in the two years he was Chairman of the ACC and seven occurred during the rate cases indicated by the whistleblower. Tim Hogan told the media outlet that, “The fact that APs had this kind of access to at least one commissioner is troubling.” He said that such meetings taint ACC’s proceedings if commission- ers are getting information outside of public meetings. Mr. Pierce has been one of APs’ biggest advocates. He has been instrumental in cutting out incentives for solar power users, ending energy-saving programs and quashing any potential competitors to APs’ utility monopoly.
In the farewell speech Mr. Pierce made upon his retirement from the ACC he stated, “I have not been bashful in my positions ... If you do what is right, no thinking person will be suspi- cious of your motives.” It would appear, if the accusations of the whistleblower are substanti- ated, Mr. Pierce was not doing what was right which is why many have been suspicious of his actions and the ACC’s.
In an emailed response to the Arizona Republic, Mr. Pierce wrote, “The letter written by my former assistant is nothing more than scurrilous half-truths and fabrications. I am confident that any investigation will completely clear me of any wrongdoing.”
APs will not say publicly how much money it may have contributed to ACC election cam- paigns. In a written statement to 12 News, APs stated, “we meet regularly with the commission ... The conversations vary widely but typically include such topics as reliability, customer service [and] planning for future energy needs ... we are careful to respect the rules that govern these
communications.”
“I have been saying it for years, either the Arizona Corporation Commission (ACC) is corrupt or incompetent, or both. Incompetence is a certainty, and now it looks like corruption is too,” stat- ed Warren Woodward, local sedona ACC/APs watchdog in an email revealing the news about the whistleblower. “some years ago when I first suspected corruption at the ACC, I had a phone conversation about it with the Phoenix FBI. They listened patiently but said they could not act just on my suspicion. I thanked them for listening and told them to remember the conversation because at some point in the future it would all come out. The future has finally arrived.”
In California, a case is already underway where regulators from the California Public Utility Commission (CPUC) have been accused of illegal collusion with Pacific Gas & Electric (PG&e), the public utility company for most of northern and central California. several search warrants have been executed on the homes and offices of executives from both entities. The criminal investigation has revealed tens of thousands of emails and other correspondence that expose collusion and conspiracy between CPUC and PG&e to cover up the dangers associated with wireless smart Meters that have been installed throughout PG&e’s customer territory. One rev- elation is a conspiracy to delay public hearings on smart Meter installation until smart meters were already deployed.
Mr. woodward accused the ACC and APs of employing the same tactics over two years ago in documents he submitted to the ACC’s smart Meter docket. “Just as the ongoing corruption scandal in California has tainted decisions made by their CPUC, so this scandal should render as corrupted and invalid the decisions made under this corrupt (and incompetent) ACC,” states Mr. woodward.
Ironically, sending the whistleblower’s complaints to Arizona Attorney General Brnovich may just add to the controversy. According to IRs records, Pinnacle west contributed $425,000 to the independent campaign for Mr. Brnovich run by the Republican Attorneys General As- sociation last year.
Current ACC Chairwoman Bitter smith said, “we take these allegations seriously and we be- lieve an investigation into these matters is warranted. we are conferring with legal counsel about appropriate next steps.”
I guess we’ll have to wait and see what legal counsel she is referring to.
| Cindy Cole has her electric heater set on “low.” cindy@thenoise.us
12 • MARCH 2015 • the NOISE arts & news • thenoise.us
newsfeature