Arizona utility regulators seek legal advice on dark money

Utility regulators at the Arizona Corporation Commission asked Tuesday for a legal opinion from their staff about dark-money political contributions that utilities could be making toward the campaigns of candidates who, if elected, will set their rates.

Susan Bitter Smith and Bob Burns are trying to encourage utilities and other entities such as rooftop-solar groups from funding independent political groups that advertise for and against candidates for the commission. But they said they need more information on whether they can force utilities to disclose such spending.

Former commissioners and various media outlets have suggested the regulators can force utilities to disclose such spending, but the regulators want the opinion from their own staff.

"There is no definitive legal opinion from the commission," Bitter Smith said. "There is uncertainty regarding the role of the commission."

Three of the sitting commissioners, Bitter Smith, Burns and Bob Stump, were elected in 2012 with the help of the Arizona Chamber of Commerce and Industry with money from Arizona Public Service Co. and Southwest Gas Corp., both of which are regulated by the commissioners.

The other two commissioners, Tom Forese and Doug Little, were elected last year with the help of $3.2 million in independent political campaigns widely believed to be financed with so-called dark-money from APS.

APS and chamber officials said the 2012 funds that went to the commission race were an accident. At the time, APS and Southwest Gas said their policy was to abstain from participating in regulatory races.

APS no longer takes that position. APS doesn’t deny funding the 2014 political groups that helped Forese and Little and will say only that it is politically active. The political groups don’t have to disclose their donors.

Bitter Smith and Burns, both facing re-election next year, opened a new docket at the commission last month and proposed a letter for the regulators to sign that asks utilities and unregulated entities with business at the commission, such as rooftop-solar companies, to “voluntarily refrain from making campaign contributions in support of or in opposition to Corporation Commission candidates.”

The two regulators’ draft letter said that it is “unacceptable and inappropriate” for utilities and unregulated businesses to finance campaigns for or against corporation commissioners.

Forese and Little, as well as the Arizona Chamber of Commerce and Industry and other business groups, oppose the measure, citing First Amendment freedom of speech issues and conflicting campaign-finance rules.

“It is well beyond the Commission’s constitutional and statutory mandate to coerce these entities to forego their rights or face public scrutiny of their private financial records,” said the Chamber letter, also signed by Greater Phoenix Chamber of Commerce, Greater Phoenix Leadership, Greater Flagstaff Chamber of Commerce, Arizona Business Coalition, Arizona Small Business Association and the Arizona Cattlemen’s Association.

“Instead, we encourage the commission to work collaboratively with the Secretary of State and the Legislature to propose true election reforms where they are needed to protect all Arizonans’ rights and privileges,” it continued.

Burns said he was interested in accessing information from APS about its participation in elections, and he and Bitter Smith requested the commission legal staff offer an opinion on whether the commission or any individual commissioner has that authority.

Little didn’t think the staff opinion mattered.

“I don’t think it addresses the larger issue,” he said.

“In my personal view, more political speech, whether it comes from corporations, unions, associations, self-appointed ‘watchdog’ groups or individuals is a good thing because the ability to engage in robust discussion about the qualifications of candidates in an election is a good thing,” Little said in a letter he read aloud during Tuesday's meeting.

Forese reiterated a point he made during his 2014 election when questioned about the possibility of APS supporting independent political groups advertising on his behalf. He said that it is unlawful to coordinate with such independent campaigns, and that he was not coordinating with them. He said that asking them not to spend money on his behalf would be just as much of a violation as coordinating how they spend money.

The Alliance for Solar Choice, or TASC, which represents leasing companies such as SolarCity Corp., said before Tuesday's meeting it would honor the request of Bitter Smith and Burns.

"In making this commitment, TASC and its member companies pledge that this guarantee extends to any and all direct or indirect expenditures in support of or opposition to candidates for the Corporation Commission," attorney Court Rich wrote. "This means that TASC and its member companies commit that they not only will not directly spend money, but that they will not cause expenditures to be routed through third parties resulting in anonymous advocacy in support of or opposition to candidates for the Arizona Corporation Commission."

TASC and its member companies are "inviting" other regulated and unregulated entities to make the same pledge.

Rooftop-solar companies supported two Republican candidates in the 2014 election who faced opposition advertising funded by dark-money. Both lost in the primary to Forese and Little.