APS refuses request to disclose political contributions

Arizona Public Service Co. officials told utility regulator Robert Burns on Wednesday that the company has no obligation to disclose what it or its parent company spends on political campaigns, denying his request for the company to report such expenses.

APS did not deny such spending in a written response to Burns but said singling out the utility for disclosure would be unfair.

“Compelled disclosure about political contributions that APS or its affiliates may have made out of shareholder profits would go beyond what is required of all corporations under Arizona campaign-finance law, and would impinge on APS’ First Amendment rights,” wrote Don Brandt, president and CEO of APS and its parent company, Pinnacle West Capital Corp.

Brandt was responding to a Nov. 30 request from Burns to disclose direct and indirect contributions to political candidates in the 2014 elections. He gave APS 30 days to respond.

Burns’ move followed a request he and Corporation Commission Chairwoman Susan Bitter Smith made for companies with business at the commission to voluntarily refrain from funding commissioner elections.

APS is widely believed to have contributed to the $3.2 million spent by independent political groups supporting Republicans Tom Forese and Doug Little, who won election to the utility-regulating commission last year.

The U.S. Supreme Court's 2010 Citizens United ruling allows corporations and unions to spend unlimited funds on elections as long as they are independent of individual candidates or parties. That means a company such as APS can contribute to independent groups such as those that supported Forese and Little, and the groups don't have to disclose the donors.

APS does not deny making such donations but also has not confirmed its involvement.

Burns said he and his staff were considering their next move.

"The bottom line is we want to get the information, and we will use whatever tools we have to get it," he said Thursday.

The electricity rates the commissioners set for APS are based on the cost to serve customers plus profit.

“If APS were to make a political contribution, these expenses would be paid for out of the money that the commission has authorized as a return on shareholder capital — a return that must be offered so that investors are willing to invest money in Arizona’s infrastructure,” Brandt wrote.

In other words, the money would come from profits that otherwise would go to people who own stock in the Pinnacle West.

Burns' Nov. 30 letter to Brandt said the rumored spending cast suspicion upon the elected commissioners.

"At the present time, the public appears to look upon the Commission with suspicion and mistrust because of your alleged campaign contributions," Burns wrote. "This current state of affairs is not in the Commission's best interests, nor is it in your best interests."

There has been intense debate at the commission over whether the regulators can or should force utilities to disclose political spending.

Forese and Little wrote strongly worded letters suggesting it is beyond their scope as regulators to force disclosure. Commissioner Bob Stump said forcing disclosure is impractical because other companies with business at the commission are not technically regulated and therefore don’t have to comply.

The Alliance for Solar Choice (TASC) filed a letter to the commission written by retired Arizona Chief Supreme Court Justice Thomas Zlaket, who said the state Constitution and statutes “clearly empower” the commission to request or subpoena information from APS and Pinnacle West.

“In addition, I do not believe that requiring such disclosure violates the free-speech rights provided by the First Amendment to the Unites States Constitution,” Zlaket wrote.

The Arizona Investment Council, which often defends APS in rate-hike requests, in turn hired law firm Osborn Maledon to write a summary counter to the position of the solar group.

“A careful analysis of the Arizona and federal law shows that neither individual commissioners acting on their own nor the commission as a whole may use the commission’s compulsory investigative powers as suggested in the TASC letter,” Mary O’Grady wrote for Osborn Maledon.

Former Republican Commissioner William Mundell, who is considering a run as a Democrat, said the information should be made public.

“Normally, I would expect a utility to disclose what is requested by a commissioner,” Mundell said Wednesday.

He said Burns’ request didn’t go far enough because it didn’t request spending by Pinnacle West.

“The public has a right to know how much APS and Pinnacle West have spent to elect the very commissioners who decide our electricity rates,” he said.

He said that if the company refuses to disclose its spending, Burns should issue a subpoena. It’s likely APS would fight such an action, and then it would be up to the court to decide whether to compel disclosure.

Other utilities have promised to refrain from commission elections, including Tucson Electric Power Co., UNS Electric Inc. and UNS Gas Inc.

“The companies do not plan to deviate from their longstanding practice of refraining from making campaign contributions in support of or in opposition to Arizona Corporation Commission candidates,” Jo Smith, vice president of public policy, wrote for the companies.

Smith also said the political action committee funded by employees prohibits donations to Corporation Commission candidates or other groups advocating for or against such candidates.

“Historically, (Southwest Gas Corp.) has not financially contributed to campaigns concerning Arizona Corporation Commission candidates, and it does not intend to deviate from this practice,” said Justin Lee Brown, that company’s vice president of regulation and public affairs, in a response to the commissioners.