State's largest utility won't disclose campaign donations

In a letter to Commissioner Bob Burns, Arizona Public Service CEO Don Brandt said any political donations made come not from what the company charges its customers but instead out of “shareholder profits.” What that means, he said, is the commission, which regulates utility rates, has no right to the information.

But Burns, who made the request a month ago, said Thursday that this isn’t the end of his bid to get APS to come clean about its political involvement in electing utility regulators. Burns said he will meet with the commission’s legal staff to determine his next move.

He contends the commission does have the right to have the information — and to make it public.

“And if it takes a subpoena to get there, that’s the path we’ll end up taking,” Burns said.

That paves the way for what could be an extensive and expensive court fight.

Central to the issue is the contention — not denied by APS — that it funneled money into the 2014 campaign through one of two “dark money” organizations, which were spending heavily to influence the election.

Campaign finance records show that Save Our Future Now and the Arizona Free Enterprise Club together spent more than $3 million on the campaign, first to help Tom Forese and Doug Little win the Republican nominations and then to ensure they won the general election. But both groups have refused to reveal their donors, saying they are organized under federal tax laws as “social welfare” organizations, exempt from state financial disclosure laws.

Arizona Public Service’s Brandt is making similar claims.

“Compelled disclosure about political contributions that APS or its affiliates may have made out of shareholder profits would go beyond what is required of corporations under Arizona campaign finance law, and would impinge on APS’s First Amendment rights,” he wrote to Burns.

Burns, however, contends the commission’s role in regulating investor-owned utilities like APS gives it the right to examine its books.

To this point, the company has been cagey about its role in the campaign.

Company spokesman Alan Bunnell has said APS has been the subject of a “non-stop propaganda war” by the group Tell Utilities Solar Won’t Be Killed. TUSK, which spent $236,000 in the race, largely to defeat Little, is funded by companies in the business of selling and leasing rooftop solar units that enable people to cut their electric bills.

Bunnell said foes have “misrepresented important Arizona energy issues” to further their own interests.

“It would be irresponsible for us not to defend our company,” Bunnell said, adding that “no one disputes our right to participate in the political process.”

Commissioner Burns has not disputed that contention.

“It is not my intention to interfere with the exercise of those rights,” Burns told Brandt in making the original request. Burns said he understands APS wants to support candidates who agree with its views.

But he said what APS spends to influence the election of those who set its rates should be a matter of public record.

“In my opinion, your support for any particular candidate should be open and transparent,” Burns wrote.

The question of what right the commission has to the information already has produced conflicting legal memos from those with an interest in the issue.

Attorney Mary O’Grady, writing on behalf of an organization of utility shareholders, acknowledged that the state constitution allows the commission to “inspect and investigate the property, books, papers, business, methods and affairs” of any corporation that sells stock in Arizona, as well as any commission-regulated utility.

But O’Grady, retained by the Arizona Investment Council, said those powers are limited to what the commission needs to do its job.

“There is no basis to allow the commission to use its investigative power to inquire into the political speech of a particular entity,” O’Grady said in her memo.

She said the only excuse for commissioners to demand the information would be to determine whether a utility’s request for higher rates was designed to help cover the cost of election expenses. But O’Grady said there is no such request currently before the panel.

But former Supreme Court Justice Thomas Zlaket came to a contrary conclusion.

Zlaket was retained by the Alliance for Solar Choice. Its members are the manufacturers and installers who have been at odds with APS over its efforts to force homeowners with solar panels to pay more to the utility for the fixed costs of maintaining the electrical grid.

Zlaket said commissioners have a “compelling interest” in knowing the role utilities played in an election “because such information reveals the potential bias of commissioners who may have received support from these entities.”

Both Forese and Little have consistently said they have no knowledge of whether APS helped them win through any funding to outside groups. They also have rejected a separate request by two former commissioners that they recuse themselves from participating in any upcoming hearings on APS’ request for more money from solar customers.