Exposure Taking Toll on Arizona Utility Monopolies

APS MonopolyFor years we have trusted the Arizona Corporation Commission (ACC) to properly regulate our utility monopolies. This, after all, is what we have elected these officials to do on our behalf. But it’s no easy task.

Our utilities do everything they can, hopefully within the constraints of the law, to influence policies which will further their business interests. This is a pretty commonplace practice and makes perfect business sense. But the real question becomes whether or not everything going on is legitimate and truly in the best interest of the people these bodies represent.

Our state’s largest utility, APS, began taking heat when it proposed slashing the benefits of customer-owned residential rooftop solar [link], claiming that rooftop solar punishes non-solar customers with increased rates. In an attempt to conceal the fact that rooftop solar coincidentally means decreased APS revenue and profits, the utility vowed to protect their non-solar customers from the ravenous effects of the rooftop solar cost shift, a shift they value at $18 million per year.

Not surprisingly, two conservative non-profit organizations, 60-Plus and Prosper, backed by pro-fossil-fuel interests saturated the airwaves with anti-solar advertisements also claiming to protect helpless customers debilitated by their solar-loving neighbors. Considering the extreme costs involved with broadcasting the ads, it seemed perfectly fair to question APS directly as to their involvement with the non-profits. When APS spokesman Jim McDonald was asked point blank whether or not his company funded these anti-solar campaigns, he responded, “No, we are not”.

The ads continued, as did several propaganda ads from APS [link, link] that painted them as staunch solar advocates, the true pioneers of the industry, as if their claims would sway the hearts of the same solar adopters they set out to penalize with their proposals.

The APS heat continued when the Arizona Republic exposed the company’s hiring of lobbyists that had proposed corrupt tactics to sway the ACC in the monopoly’s favor [PDF]. The tactics included funding non-profits posing as national organizations whose sole purpose was to sway public interest in Arizona.

Though APS reportedly refused involvement in any such lobbying activities, they have since admitted to funding the campaigns that they succinctly denied back in July [PDF]. McDonald said, “It goes through our consultant, but APS money does ultimately fund 60-Plus and Prosper.” Referencing his prior statement denying involvement, McDonald continued, “I know what I told you. That was my understanding at the time,” as if to justify his 180 degree turn. McDonald simply ignored the fact that as APS spokesman he represents the entire corporation, and though he may have been given false information by the executives, that action does not justify a blatant lie by APS.

Shortly after the lie was exposed, “concerned” and “troubled” ACC commissioner Bob Burns demanded a detailed account outlining how many APS dollars and employee hours (paid by rate payers) were spent on the campaigns against solar [PDF]. Though the utility has still not formally responded, the Arizona Capitol Times reported that as of September 30th APS has spent $9 million on campaigns against both solar and utility deregulation [PDF]. It’s important to note that this dollar amount is half of the $18 million APS claims solar is shifting to non-solar customers each year.

Alan Bunnell, spokesman for APS’ parent company, Pinnacle West, claimed that the expenses came directly out of shareholder profits rather than APS customer bills. Following the trend of APS’ spokesman-ship, Bunnell seemed also to ignore the fact that regardless of where the money comes from, APS customers pay for profits through their energy bills. Though the $9 million did not perhaps require a rate hike, consider the rate decrease afforded to their customers had they put this money back in the pockets of those they are so concerned with protecting to begin with.

Bunnells’ announcement also begs to question whether or not the corporation has previously used its profit dollars to protect other defenseless customers from cost shifts and whether they intend to continue this Robin Hood approach in the future. And if so, will the new approach only apply to cost shifts that simultaneously result in lost APS revenues like the solar debate before us?

Another approach-change within APS that came to light today was their recent funding of ACC commissioner election campaigns [PDF]. Though the company maintains a policy actively prohibiting commissioner campaign contributions, it didn’t appear to be enough to stop the unavoidable. Spokesman McDonald proclaimed, “We are going to find out why this happened, and we are going to take strong steps to make sure it doesn’t happen again. We would have prevented it if we could have prevented it.” Perhaps this was just another innocent attempt to protect customers by swaying the Commission. After all, according to the Republic, “Utility officials said it is improper to support commission candidates because, unlike other elected state and federal offices, the Corporation Commission deals directly with the utilities and decides how much each is allowed to charge customers.”

Finally, APS spokesman McDonald conjectured, “APS is a company that has a reputation for dealing with everybody in a very upfront and open way. We have a reputation in this community that has been built over a hundred years,” he said. “We’re not going to do anything to jeopardize that reputation.” If everything was based on words, our utility monopolies would be a pretty righteous body of corporations. Unfortunately for all of us, the equation requires the consideration of their actions as well.


  • Roger Williams

    Great post Dillon! You have summed up nicely exactly what APS has been up to. This is pretty ridiculous stuff for a “Pro Business” state like Arizona.

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