Ethics have become a central issue in the race for two seats on the Arizona Corporation Commission, amid controversies including bribery charges against a past chairman and charges that the state’s biggest power company is unduly influencing elections.
In the primary, Republicans will have a choice of five candidates, including two incumbents; three Democrats are running, including two former commissioners. Voters in each party will pick two candidates to advance to the general election to vie for four-year commission terms.
The five-member Arizona Corporation Commission is responsible for setting utility rates and regulating power, water and wastewater utilities in the state, as well as regulating the state’s corporations and securities dealers and overseeing pipeline and railroad safety.
The Republican primary includes incumbent commissioner Justin Olson, a Mesa tax analyst and three-term legislator who was appointed to the commission in October 2017 to fill a vacancy left when Doug Little resigned to join the U.S. Department of Energy.
Current commission Chairman Tom Forese also is running for re-election, after bowing out of an initial run at state treasurer in April.
The three challengers are Rodney Glassman, an attorney, University of Arizona grad and former Tucson City Council member who now lives in Scottsdale; James O’Connor, a Scottsdale retiree with 42 years of experience in the securities industry; and Eric Sloan, a party activist and Scotts-dale resident who runs a lobbying and public-affairs firm.
On the Democratic side, the candidates are former Corporation Commission members Sandra Kennedy and Bill Mundell, and Kiana Sears, a former utilities consultant for the commission.
In a debate among four of the five Republicans in late June, the candidates listed improving ethics or “restoring integrity” at the commission among their top priorities.
Former Commission Chairman Gary Pierce and his wife were charged with bribery involving payments allegedly made through a Pinal County water utility that later received a rate increase and other favorable treatment from the commission.
The federal criminal trial against Pierce, his wife, Johnson Utilities owner George Johnson and lobbyist Jim Norton ended in a hung jury and mistrial in July. It is not clear if it will be retried.
The influence of the Arizona Public Service Co. on the commission also has been under scrutiny since it came to light that APS parent Pinnacle West Capital Corp. contributed $4 million to groups backing GOP candidates, including Forese, for seats on the commission in 2016.
APS has refused to confirm or deny that it was the source of $3.2 million from anonymous donors spent by an independent campaign spending group in 2014 to secure the election of Forese and Little.
Largely in response to the Pierce case, the commission adopted its own code of ethics in March.
Glassman, who is a major and judge advocate general in the Air Force Reserve, said the new ethics policy is weak and the commission should adopt the Arizona Judicial Code of Conduct.
“Commissioners should have to recuse themselves if they receive those kinds of contributions,” Glassman said at the debate, noting that he has pledged to refuse any contributions from state-regulated utilities.
Sloan said he wants to “bring integrity back to the commission,” contending that the panel has failed to protect ratepayers by approving large rate increases for APS and small water companies.
“We need to negotiate lower rates on behalf of all ratepayers in Arizona,” he said, adding that he would also work to eliminate a state tax on telecommunications services.
Olson said he arrived when the commission was in turmoil and he’s worked to reform the panel, noting that he proposed amendments to toughen the ethics standard, but the other commissioners dissented.
“I’ve been actively working to improve the public confidence and enact reforms that will improve accountability and transparency at the commission,” said Olson.
For his part, O’Connor said he didn’t have enough information to comment about the commission’s recent scandals.
But he touted his experience in securities, “the most regulated industry in the world,” and said he would support Commissioner Bob Burns’ effort to issue subpoenas to discover APS’ campaign spending.
Forese, who did not attend the debate, did not respond to a request for comment.
All four GOP candidates at the debate said environmental concerns like global warming should not guide the commission’s policies.
“Solar has become competitive when the sun is shining, but we should minimize the mandates that drive up costs,” Olson said.
Sloan said he backs a mix a diverse mix of energy sources and said APS’ Palo Verde Nuclear Generating Station should remain an important component as a “carbon-free” resource.
The winners of the Democratic primary will have an uphill battle to win a seat on a commission that has been dominated by Republicans for years, but two candidates have been there before.
Kennedy, a former Phoenix legislator and former restaurant owner who now works as a consultant, served on the commission from 2009 through 2012.
She’s running on the Democratic ticket with Mundell, a Paradise Valley attorney who served on the commission as a Republican from 1999 through 2008, after stints as a legislator.
The third Democratic contender, Sears, is a nonprofit agency executive from Mesa who worked at the Corporation Commission as an executive utility regulatory consultant for more than six years until August 2014.
All three candidates have railed against corruption at the commission and promised to reduce the influence of APS and other utilities.
“It is time to change, it is time to clean up the commission,” Kennedy said at a primary election debate in June.
Mundell, who also served as a Municipal Court judge in Chandler and spent six years heading the Arizona Registrar of Contractors, called the commission’s new ethics policy “a joke.”
“There are so many loopholes you can drive a Mack truck — or I should say a rate increase — through,” he said, citing provisions allowing commissioners to accept free meals.
Sears said she decided to run for the commission after working there and seeing ratepayers get a raw deal.
“I was so tired of seeing citizens and ratepayers of Arizona not being represented and protected by our commissioners,” she said.
All three Democrats said utilities shouldn’t contribute to the campaigns of commission candidates.
“The biggest problem is the lack of transparency,” Sears said.
Mundell said there is little the commission can do to affect federal campaign-finance laws, but said he believes the panel has the power to require utilities to disclose their campaign contributions.
“For 100 years, APS and Pinnacle West did not get involved in commission races,” Mundell said.
“They knew it was unseemly and inappropriate to (help) elect the commissioners who are going to decide your rates and profits.”
All three Democrats support a ballot initiative requiring Arizona utilities to generate 50 percent of their electricity from renewable sources by 2030.
The current Arizona mandate, set by the Corporation Commission in 2006, is to reach 15 percent renewable energy by 2025.
The current commission is considering a proposal by member Andy Tobin to require that 80 percent of the state’s power come from “clean” sources, which includes nuclear, along with solar and wind.
“I wish we weren’t amending the (state) constitution, but with the makeup of the commission and the influence of APS, it’s the only way to get there,” Mundell said of the ballot measure.
Kennedy and Mundell scoffed at assertions by APS and other critics of the renewable-energy initiative that the measure would raise rates and prompt the closure of Palo Verde because the influx of renewable energy would create more power than needed.
Kennedy said the higher renewables standard would create 10,000 new jobs, citing a study by the Natural Resources Defense Council that found the measure would save ratepayers some $4 billion over 20 years and wouldn’t force the closure of Palo Verde.
Both Mundell and Kennedy said they oppose Tobin’s plan because it counts nuclear energy as “clean,” though they said they see Palo Verde in the energy mix for the foreseeable future.
Sears said she doesn’t support Tobin’s plan, though her website says she supports an 80 percent standard, “should voters choose to encode this goal into law.”