Page 11 - the Noise October 2016

NEWSbriefS
by cindy cole
arizona corporation commissioner bob burns
Since an Arizona Corporation Commission whistleblower revealed his knowledge of ongoing private communications between commissioners and officials from Arizona Public Service in early 2015, the relationship between the two entities has gone from bad to worse — at least for Commissioner Bob Burns. Investigations of the questionable con- nections between regulators and the electric company also revealed “dark money” transac- tions that allegedly have funneled campaign contributions to ACC candidates favorable to APS and its parent company Pinnacle West. But getting to the bottom of this issue seems to be an insurmountable abyss.
In an effort to investigate the dark money allegations, Commissioner Burns has demand- ed that APS & Pinnacle West President & CEO Don Brandt turn over the companies’ books. The Arizona Constitution states that the Corporation Commission and its members “shall have the power to inspect and investigate the property, books, papers, business, methods, and affairs of any corporation whose stock shall be offered for sale to the public, and of any Public Service Corporation doing business within the state.” And additionally state law says that commissioners “may, at any time, inspect the accounts, books, papers and documents of any Public Service Corporation.”
After Mr. Brandt denied multiple requests to see company records, Mr. Burns asked Ari- zona Attorney General Mark Brnovich to intervene. Mr. Brnovich confirmed the ACC and its commissioners have “broad constitutional authority related to reporting requirements and inspection of any public service corporation and its affiliates.”
The debate over the release of the requested information reached a fever pitch in the last few weeks when Mr. Burns formally subpoenaed APS, in spite of a 3-1 commission vote against his continued probe. In the cover letter attached to the subpoena dated August 25 and signed by Mr. Burns, he wrote: “For nearly two years now, APS has refused to voluntarily answer my questions about any political expenditures that APS/Pinnacle West may have made. Consequently, it is necessary for me to proceed in a more direct way. I now seek to continue my investigation to determine whether APS has used ratepayer funds for political, charitable or other expenditures. This includes all expenditures made by APS, Pinnacle West and under APS’s brand name for any purpose.” The subpoena goes on to “command” that Mr. Brandt et al produce documentation on his companies’ charitable and political contribu- tions and lobbying expenses dating back to 2011.
The primary focus of the dark money accusations are the 2014 elections of current ACC Chairman Doug Little and Commissioner Tom Forese. Allegations are that more than $3 million was indirectly contributed to their campaigns through third-party political organi- zations in order to guarantee favorable results for APS at the commission. In addition, Gov- ernor Doug Ducey received at least $55,000 and Mr. Brnovich received a reported $450,000 from Pinnacle West in their winning 2014 campaigns. One of the dark money groups — the Arizona Free Enterprise Club — also contributed money to the failed Secretary of State bid of Justin Pierce, the son of then-Commissioner Gary Pierce.
Over the summer, the FBI began investigations of both the ACC and APS. Pinnacle West has received two additional grand jury subpoenas from the office of the US Attorney for the district of Arizona. Mr. Brandt has maintained his companies’ rights to contribute to
photos by wilson ring & lisa rathke
arizona public service & pinnacle west president & chief executive officer
donald brandt
elections under the First Amendment. He upholds that any contributions to political cam- paigns were made out of company profits, not expenses that are charged back to ratepay- ers. He says that his company has been cooperating with the FBI but his dealings with the ACC “haven’t been as friendly.” Mr. Brandt has continually refused to divulge any informa- tion to commissioners. Not that any except Mr. Burns have pushed the matter.
In early August, Mr. Burns enlisted the help of an outside attorney to investigate the dark money issue and provide an outside perspective on the dispute. Not surprisingly, the ACC voted shortly afterwards to nix his contract with Georgetown Law professor and state utility expert Scott Hempling. A heated debate prior to the vote included accusations by Chair- man Little and Commissioner Andy Tobin that the entire inquiry was “a waste of money.” The chairman berated Mr. Burns for questioning his integrity, to which Mr. Burns replied that it is APS’ integrity that is on the line. Messrs. Little and Tobin joined Bob Stump in voting to kill Mr. Burns’ contract with the legal expert, but told him he could “go ahead and pursue a subpoena” on his own. Mr. Forese was not present for the final vote.
“This is just a disguised action to deny me the opportunity to do my constitutional duty of protecting the ratepayers in this case from undue influence by utility overspending and over participating, if you will, in the election of Corporation Commissioners,” said Mr. Burns. He continued his inquiry and issued the subpoena in late August demanding that APS and Pinnacle West produce requested information by September 15, and that Mr. Brandt appear before the commission on October 6.
On September 9, APS sued Mr. Burns. In spite of the earlier opinion of Attorney General Brnov- ich, APS and Pinnacle West contend there is no legal basis for the subpoena and the companies are “not obligated” to divulge how they spend their profits {which many contend are directly linked to ratepayers’ bills each month}. In a letter to Mr. Burns, Mary O’Grady, an attorney representing both companies, backed Mr. Brandt’s earlier statements that the companies have a “First Amend- ment Right to keep how they spend profits a secret” {even though the stautory definition of “Public Service Corporation” in the Arizona Constitution includes a requirement to fully disclose its revenue and expenditures to the ACC upon request.} Yet Ms. O’ Grady contends any monies her clients con- tributed to political campaigns “do not result in higher rates for utility customers.”
In a separate letter, APS Vice President Barbara Lockwood accused Mr. Burns of harass- ment. “The subpoena is unlawful under the First Amendment and Arizona law,” she stated, “which prohibits officials from using their official positions to harass and retaliate against companies because of perceived political speech. There is no greater evidence of Commis- sioner Burns’ intent to harass than the fact that he targeted only APS and PNW and his fur- ther declaration that he will make all of the information public — a threat that can only be intended to infringe on our First Amendment rights.” She also suggested his motives for pur- suing the subpoena are purely political. “Commissioner Burns is clearly campaigning on the disclosure issue,” she wrote, “with references on his election website to ‘my battle with APS.’”
In a reverse of its previous position, the ACC has voted to hire an attorney to represent Mr. Burns in the lawsuit. In the meantime, the commissioner has agreed to postpone any meetings with APS officials on the issue. “We said we would stay the subpoena action until later if they would extend the time for us to find an attorney,” Mr. Burns said.
the Nöísẽ | the best of arizona | OCTOBER 2016 {www.thenoise.us} • 11