Since I practice in front of the Corporation Commission, I try not to blog about the ACC or ACC races. So I have remained on the sidelines while Arizona Public Service has escalated its bizarre and wholly inappropriate effort to affect the outcome of the ACC elections by funneling anonymous "Dark" Money into the race.
If you are looking for a little background, the Republic's Ryan Randazzo and Laurie Roberts as well as the Arizona Capitol Times have had excellent coverage.
It was bad enough that APS used some of its (essentially unlimited) corporate funds in order to push two candidates for the Corporation Commission. But here the company is funding a smear campaign against a specific candidate using anonymous* corporate money and relying on discredited charges and allegations in order to affect the election of the body that regulates them.
That's too much**.
When it became clear that APS was going to participate in the ACC election, people started asking me about the propriety of the company's actions. Many of these people are APS supporters who don't have a problem with the recent Supreme Court decisions. Here are some of those questions and my answers.
Yes, and I think the ads and signs are legal.
Don't other companies (for example solar companies) spend money in ACC elections?
Yes. But, APS is a monopoly and is 100% regulated by the ACC. APS doesn't make a dime that isn't approved by the ACC. Other entities are only marginally affected by the ACC and those contributions are similar to the contributions that APS makes in Legislative races. No one is going to say that APS can't make legislative or Gubernatorial contributions. They are affected by the outcome of those races, but not much more than other companies are affected by the outcome of Legislative races. Here however, APS is REGULATED by the ACC. The ACC sets the very rates that allow APS to survive. The company is using its massive corporate resources in order to hand pick the regulators who will set the company's rates.
There is also a scale issue. It looks like APS is going to spend more money than all of the other candidates combined.
But these contributions are "Shareholder" money...the company can do whatever it wants with "shareholder" money.
Believe me, I know the difference between "Ratepayer" and "Shareholder" funds. When the company has retained earnings, it can spend them on whatever it wants--like marketing at Sun's Games, charity events, or dividends. I'm fine with that and whenever regulators make a big deal out of these expenditures, I support the company.
However, what utility executives don't understand is that ratepayers are the SOURCE of all the money and all of that money comes into the company as result of Commission decisions. So what if the company donated several million dollars to the "Marriage is between one man and one woman campaign"? Or what if the company donated the money to a "Marriage Equality" initiative? Sure, it's the company's money, but since all of it originated from ratepayers, the general populace gets very upset if the company spends the money on controversial causes.
So when the company spends money to trash an ACC candidate, APS can't say that it's OK because it's "shareholder" money.
Yes, APS is taking extraordinary measures to influence the ACC, but its in the fight of its life with the solar companies. So isn't the company justified?
APS was in the fight of its life when it needed to get the Palo Verde Nuclear Plant into ratebase. It was in the fight of its life when its Savings and Loan collapsed. It was in the fight of its life when Suncor imploded. It was in the fight of its life when it built the Red Hawk plant at the top of the market. It was in the fight of its life when the ACC considered retail electric competition. So the fact that management thinks it's ok to spend corporate dollars to influence the ACC election because the company is "in the fight of its life" is an indication of the short sighted view and limited history of current management.
Aren't you just upset that APS's new management is more aggressive and plays a style of East Coast Hardball that you aren't used to?
Actually, Don Brandt and Mark Schiavoni won't survive this move, so it doesn't matter what I think of them.
Why is that?
Let's try a little game theory. Let's say that APS wins and that Forese and Little get elected while Parker and Mason get crushed. What happens during APS's next rate case? Everyone will be looking to see if APS gets favorable treatment. Forese and Little can't give APS a break or they will get recalled and forever branded as stooges. They will have to be HARDER on APS than they would have been if APS had stayed out of it. Frankly they will have to be much harder on the company in order to regain any credibility.
Now let's expand that game theory to the three sitting Republican Commissioners. Do you think that they can risk looking like they are giving APS favorable treatment? No, if they look like they are favoring the utility over ratepayers because they know that the utility can put big money into their future races then their career's are over. So they have to err on the side of being too hard on the company during its upcoming rate case.
And what if Parker actually wins? If you strike the king you have to kill him and I don't see how APS investors or the PNW Board can possibly keep Brandt and Schiavoni if Parker or Mason win. Even if Parker and Mason swear that all is forgiven and that they will uphold their Constitutional duty to be fair, the shareholders can't risk it.
So either way, APS will have new management by the time it's next rate case is filed in July of 2015.
Won't you be embarrassed if we find out that APS isn't behind this mailer?
Nope. Ryan Randazzo's work on this issue has been excellent. He has already made a good case that APS is playing in these races. Money is fungible and if APS has managed to triple launder the money so that they can claim that this specific piece was paid for by another entity, it wouldn't matter. APS is behind it or APS's efforts made it possible. And if they can make a credible claim that they are not involved, then they should have made that claim when Randazzo asked them the first dozen times.
Don't you give money in ACC races too?
Sure. I've helped nearly all the candidates of all parties (often at the same time) collect $5 contributions and I gave seed money to Parker and Mason when they made a credible case that APS was making it harder for them to get signatures. That's a matter of scale. If Don Brandt wants to write a $160 check to Doug Little, I have no problem with that.
*How can I say that it's APS money and also say that it's "anonymous"? Because I didn't think it was appropriate to use the word "Laundered". WE know that APS is behind the pieces, but they gave the money to a third party so that the VOTERS would have no idea who is paying for them.
** I hesitate to even mention the other reason why this piece goes too far. Sandra Kennedy is the only African American in Arizona to have been elected state wide. In fact, she was elected to the very office that Parker is seeking. Why do you think that Sandra Kennedy never put her pictures on her signs? Why didn't she submit a picture for the Clean Elections pamphlets? The answer is obvious. Yet Kennedy's path was through a Democratic Primary and then a General Election. Parker has to get through a Republican Primary and then a General Election. One of the goals of this piece is make sure that Republican voters know what Parker looks like and to feed stereotypes of corrupt black politicians.