NewsPhoenix Metro NewsCentral Phoenix News


Utility regulators grill Arizona Public Service executives

Arizona Utilities Politics APS
Posted at 3:38 PM, Sep 04, 2019
and last updated 2019-09-05 10:33:40-04

PHOENIX — State utility regulators lit into top executives from Arizona Public Service Wednesday at the start of a hearing on power disconnection rules and political spending by the state's largest electric company.

Arizona Corporation Commission Chairman Bob Burns, a Republican, said APS orchestrated a wide-ranging plan to take control of the commission by influencing voters and sow discord among commissioners and staff. He said the plan was outlined in a "playbook" written by Jessica Pacheco, who then worked for a political consulting firm and is now the utility's vice president of external affairs.

He pressed Jeff Guldner, who takes over in November as chief executive of APS parent company Pinnacle West Capital Corp., to commit to never getting involved in corporation commission campaigns during his tenure.

"To me the root cause of all of this is the high amounts of money that was spent by APS in an attempt, in my belief, to capture the commission," Burns said.

Guldner demurred, saying he'll come back to the commission after he takes over the top job.

"I'm not in the role yet, Mr. Chairman, so I'm not in a position today to answer that question," Guldner told Burns.

Earlier this year, APS detailed millions of dollars of political spending to help elect its favored regulators in 2014 and 2016 and to defeat a 2018 ballot measure. The spending was a break from a decades-long practice by the state's utilities of not meddling in political races involving its regulators.

APS acknowledged giving money to groups that spent $3.2 million in the 2014 commission races, even though it had refused for four years to confirm or deny its participation in the election.

The utility also spent $4.1 million to influence its regulators' 2016 election and nearly $40 million to defeat a citizens' initiative last year that would have required that it get much more of its power from solar and other renewable sources. APS had previously acknowledged those contributions.

In 2017, with a majority of the commission elected with the help of APS funding, commissioners approved a rate increase for the utility. The rate hike has been intensely criticized after many customers saw their bills increase significantly more than the advertised average of 4.5 percent.

Democratic Commissioner Sandra Kennedy was especially tough in her questioning, saying APS and Pinnacle West CEO Don Brandt's behaved like "a kingpin who operates a company to mainly benefit himself."

"You have, in essence, created a machine to purchase every and any elected official and defeat anyone in your way," Kennedy told Brandt.

Brandt said APS' political and lobbying activity is standard for a company like APS

APS attorney Bill Maledon revealed that a federal criminal investigation into political spending is still active. Maledon said APS officials expect it will wrap up soon. He did not elaborate, saying the company is prohibited from discussing details of the probe because of grand jury secrecy rules and agreements with investigators.

The FBI and U.S. Attorney's Office in Phoenix are investigating spending in the 2014 elections for secretary of state and corporation commission, and APS has disclosed that it received subpoenas in connection with the probe.

"The company is cooperating with the US Attorney's Office with that investigation," Maledon said. "They're not stonewalling it in any way."

Commissioners demanded Brandt and other APS executives appear before them and answer questions after it was revealed that 72-year-old Stephanie Pullman of Sun City West died days after her power was disconnected in a 107-degree day. In response to written questions last week, Brandt revealed that APS disconnects power only when customers owe at least $50. Pullman owed $51.84.

"How do you feel knowing one of your customers died for just $1?" Democratic Commissioner Sandra Kennedy asked Brandt.

Brandt said he's confident that APS customer service officials would have worked with Ullman to avoid shutting off her power if she had called. APS is not in the business of disconnecting customers, he said.

"It was a tragedy that anyone, including that customer, lost their life," Brandt said.