TAGG Community Forum & Tutorials

AZ Corporation Commission Forum January 2018

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Presentations by
BRUCE PLENK and TOM CHABIN

BRUCE PLENK

Solar consultant and public interest lawyer based in Tucson. He was the Solar Energy Coordinator for the City of Tucson for 6 years. He has appeared before the Arizona Corporation Commission many times as a public witness and as an attorney, primarily on utility rate cases and solar issues. He has also appeared before the Utah Public Service Commission.

  1. The Arizona Corporation Commission (ACC) is like the Public Utilities Commission in other states. It regulates monopoly gas, electric, and water companies.
    • The ACC regulates TEP, APS and Arizona’s many small electric coops, but not Salt River Project, a big Phoenix utility as well as lots of small water companies.
    • The ACC decides on all utility rates, so what you pay is set by the ACC. The utility company asks the ACC for a rate increase (and occasionally a rate decrease like now after the decrease in the tax rate). It’s up to the Commission to decide if the companies deserve any rate increase at all! That’s why it is important to have commissioners who want to protect consumers.

THE ACC AND SOLAR ENERGY

  1. Arizona’s requirement for solar, called the Renewable Energy Standard Tariff or REST) is 15% of electric sales for each utility by 2025, and was set by the ACC in 2006. It is far short of what we now need and far less than other states’ targets. For example, CA now has a 50% renewables by 2030 standard and may go for 100% renewables.
    1. The ACC has been helpful in promoting solar in Arizona, through the 2006 REST (Renewable Energy Standard and Tariff) program, which requires all utilities to produce at least 15% of their electricity from renewable sources by 2025. Other states are way ahead of Arizona now, so the ACC is far behind!
    2. For several years, the regulated utilities paid incentives to homeowners and businesses to go solar because the ACC required it. Not any more!
    3. Now the market is the driving force, as solar costs have dropped 70% in the past 5 years.
    4. ACC policy is still important for solar and net metering is the most important aspect-if you have solar and you send power to TEP, you get credit for it
    5. BUT, in Jan 2017, the ACC decided that FUTURE solar customers will no longer get full credit, but a lower value set by the ACC. TEP value is awaiting decision, likely in Feb or March. New customers after that decision will get the new rate
  2. The current ACC is reducing the amount that future solar customers get paid for power they send to the utility company (netmetering). This change will make rooftop solar less attractive to homeowners. We are now waiting for an ACC decision on TEP’s netmetering case. SO, IF YOU ARE THINKING OF GETTING SOLAR, DO IT NOW!!!
  3. Arizona utilities are generally supportive of solar…so long as they own it! They are not supportive of individual homeowners or businesses owning their own solar.

WHAT ELSE DOES THE ACC DO?

  1. Fines and regulates securities (stock) sales and puts fraudulent sellers out of business
  2. Regulates lots of small water companies to assure clean water

WHAT SHOULD YOU LOOK FOR IN THE 2018 ELECTION FOR ACC MEMBERS?

  1. 2 seats are up for election and so far there are 6 Democrats and 6 Republicans running
  2. We should elect commissioners who are not beholden to the utility companies, but truly look out for the average citizen and who support solar by individuals and more energy conservation
  3. There is now no diversity on the ACC. All of the Commissioners are white Republican men from the Phoenix area. Several of the candidates are women and/or people of color, but that doesn’t mean that they are necessarily pro-consumer or pro utility.
  4. It’s important to ask candidates where they stand on dark money in ACC elections and where they stand on solar policy.

THE ACC AND OTHER UTILITY ISSUES

  1. The ACC has been good in requiring the utilities to do energy conservation, 22% of their electric production by 2020. They have not been consistent about TEP programs however.
  2. The ACC must decide if demand charges are OK for residential customers (so far so good-no demand charges!) This would be an extra charge based on your highest usage during the month, in addition to paying for what you use!
  3. The ACC is finally considering a Code of Ethics, but nothing has been adopted yet. Conflicts of interest and improper contact with the utility companies have plagued the Commission for years.

TOM CHABIN

Tom Chabin served on the Coconino County Planning and Zoning Commission for 5 years, the Tuba City School Board for 3 years, the Coconino County Board of Supervisors for 8 years and in the Arizona House of Representatives from 2007 to 2012 where he was the Ranking Democrat of three Committees: Rules, Ways and Means and Higher Education.

The Arizona Corporation Commission was created as the 4th branch of government to regulate monopolies. At present, utilities are monopolies regulated by the Corporation Commission

  • Created as the 4th branch of Government in Arizona — Executive (Governor), Legislative (Az. Legislature) and Judicial (Arizona Supreme Court, Az. Court of Appeals, Superior Courts, Justice of the Peace and City Courts)
  • As a 4th branch, it was created to regulate monopolies — in 1912, the biggest monopolies were railroads.
  • Regulating a monopoly means that the Commission has the power to set the rates you pay as a customer of a monopoly.
  • Today, utilities are the monopolies regulated by the Commission.
  • Tucson Electric and Power, Trico Electric, Southwest Gas and Quest (land phone lines) are monopolies. You can not take your power lines to your home and purchase electricity from any one else

Corruption of the Commission

  • During the 2012 election, Arizona’s largest utility Arizona Public Service (service in Phoenix, Douglas, Bisbee, most of Pinal County, Flagstaff, Yavapai County) spent large sums of dark money in all state wide races
  • APS’s largest expenditure was in the Arizona Corporation Commission Race
  • APS spent money against Republicans Lucy Mason and Vernon Parker
  • APS spent money against Democrat then Commissioner Sandra Kennedy
  • APS spent money for and elected Tom Forese and Doug Little
  • Those secret campaign expenditures has led to an investigation by the FBI and records subpoenaed by a federal grand jury
  • Gary Pearce, his wife Sherry and a lobbyist was indicted on fixing water rates for Johnson Utilities in Pinal County
  • It is speculated that Pierce may have voted in favor of an APS rate case so that APS would invest $700,000 in dark money in his son, Justin Pierce’s efforts to win his race for Sec. of State. APS did make that $700,000 investment but lost in the primary
  • APS invested large sums of money into the races for the House and Senate Legislative races and state wide races for Attorney General, Secretary of State and Governor
  • In 2016, APS formed an Independent Expenditure Committee and reported that they spent
  • $4 million in favor of Republicans Bob Burns, Andy Tobin and Boyd Dunn. Democrat Bill Mundell lost by less than 1% and Tom Chabin by 1.5%.

Commissioner Bob Burns

  • Burns seeks, through subpoena, the records of APS on their dark money spending in 2012
  • APS sued him personally
  • Tobin, Forese Little and Dunn have tried to quash Burns subpoenas and withdrawn his bud- get for hiring legal Council to pursue the subpoenas
  • Burns believes that as a regulated monopoly APS can not hide these expenditures .These issues are before the Courts today

APS Rate Case

  • Virtually all electric utilities in Arizona applied four and increase of their electrical rates at the approximate same time last year
  • All of the rate cases were very similar in nature
  • Prior to hearing a rate case, the Commission receives recommendations by the ACC staff and a residential consumer advocacy group
  • The ACC staff stated that APS should not receive any increase in rates
  • The Residential Utility Consumer Office, (the residential consumer advocacy agency) recommended that APS rates be reduced by $20 million a year
  • The Arizona Corporation Commission approved a $95 million increase in rates, only Commissioner Bob Burns voted no
  • TEP and Trico also got rate increases

** Commissioner Doug Little recently resigned from the Corporation Commission to take a job with the Trump administration. Gov. Ducey appointed Justin Olsen to replace Little. Ducey was asked if he consulted APS before he made the Appointment and refused to answer the question. Olsen had worked for the Arizona Tax Research Assoc. for many years, heavily fund- ed by utilities.

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