Eisert: Recent history screams for ACC reform

By Greg Eisert

Since at least 2010, allegations of Arizona corporation commissioner corruption, impropriety, unscrupulous behavior and relationships have run rampant causing an air of distrust among ratepayers and taxpayers statewide.

We have certainly experienced inept decisions, broken and ignored campaign promises, a perceived disdain for protecting the ratepayer over the power and profits of utility monopolies to the chagrin and shrunken ratepayer and taxpayer checkbooks.

Greg Eisert

A couple of recent examples:

• The 2018 election campaign produced candidate Sandra Kennedy, who pledged to be the savior against what she characterized as the current corrupt commissioners. She also promised to be an advocate on behalf of ratepayers under the purview of the commission. However, Commissioner Kennedy’s first order of business was to recuse herself in the very case upon which she featured to be the ratepayer watchdog. Instead, the newly elected commissioner sat on the sidelines. So much for campaign promises.

Candidate Kennedy had made lofty campaign promises in favor of ratepayers. Because there had been widespread dissatisfaction with the reigning commissioners for quite some time, Candidate Kennedy was elected to a seat on the commission by a highly bipartisan voter turnout. Unfortunately, Commissioner Kennedy has failed to live up to expectations. Hopefully, this will change.

As written by Commissioner Tobin: “Commissioner Sandra Kennedy recused herself from the Underlying Rate Case but participated in the EPCOR interim rates vote, Docket No. 19-0011 (the Interim Rate Case), where the evidentiary support for the second vote was based on the same issues and judicial record in which the commissioner had originally recused herself.”

The prior Commission Chairman, Mr. Tom Forese, alienated himself from the ratepayers and voters across the state to the point that he failed to prevail in three races — all in one year (state treasurer, corporation commissioner and Maricopa County supervisor). Hopefully the voters are saying enough is enough and are beginning to push back with their votes. Time will tell.

• Another example was the recent bizarre outcome of an EPCOR Water Co. rate case decision. EPCOR is the largest regulated water monopoly in Arizona and is wholly owned by a foreign municipality, Edmonton, Alberta, Canada. The company had annual revenues of $107.98 million before the commission’s recent interim rate approval.

Actually, the commissioners decided not to decide. After two years of preparation, receiving huge amounts of public comment, evidence, examination, cross-examination, a full-blown hearing, the administrative law judge’s recommendation and order, Commissioner Kennedy’s recusal and hundreds of thousands of dollars spent (actually well into six-figure territory), the commissioners’ vote resulted in a 2-2 tie. Watching the faces of the commissioners was akin to looking at a herd of deer frozen by bright headlights.. Amazingly, a clear dodge of commission responsibility in favor of a cop-out by those vested with huge powers by our State Constitution.

As a result, Chairman Bob Burns ordered EPCOR to file for interim rates, which, if approved, would set the stage for EPCOR to file a new rate case ASAP. That, of course, would begin a duplicate spending of another six figures, unnecessarily re-hashing what has already been prepared, examined and adjudicated.

To the exasperation of the parties in the room, the commissioners showed their true colors with a final decision to allow EPCOR interim rates (higher than EPCOR had even asked for), file a new rate case and initiate new costs that should never happen.

It is absolutely imperative that all taxpayers/voters across the state understand that they pay for these appalling misjudged decisions, not just the ratepayers under the wing of the commission. All taxpayers must pay attention!

It must be noted that commissioners Justin Olson and Andy Tobin argued tirelessly for the commissioners to perform their duty and revisit their erred decision in the original case. Only Olson and Tobin seemed to understand the inexcusable burden to be placed on the taxpayers across the state. Mr. Burns closed the door and commissioners Boyd Dunn and Kennedy blindly followed Mr. Burns down that very dark hallway.

All residents are strongly encouraged to open the commission docket to case WS-01303A-19-0011 and read the powerful dissents of commissioners Olson and Tobin. They are most insightful in revealing the unfortunate decision handed down by commissioners Burns, Kennedy and Dunn.

The Corporation Commissioners are elected by Arizona voters, with the expectation that they will, at a minimum, perform in the residents’ best interest. Unfortunately, recent history has proven many have been inadequately prepared for the job at hand, on numerous levels. One is left to suspect that the commission staff has much more input in the final decisions of the commission than the elected officials themselves do.

It is past time to take a serious look at changing the way these commissioners are vetted and seated.

The corporation commissioners should be appointed. Why? The need for stronger professional qualifications for Arizona Corporation commissioners has significantly increased over time due to the increasing complexity of the regulated monopoly utility industries and their markets.

Technological developments have driven the re-structuring of the telecom industry and electric utility industries both in Arizona as well as nationwide. Both industries have seen fundamental changes in all aspects of the supply chain, from product generation through transmission and distribution, as well as consumption. The public and the utility companies that serve them deserve to have commissioners with meaningful understanding and expertise when they begin working as commissioners. That means graduate level education plus significant industry or regulatory experience. Commissioners should be experts at the outset, not political rookies.

An ACC commissioner’s job is quasi-judicial, rooted in law and its complexities. A selection process similar to that used for judges would be a bulwark against corruption, assuming the vetting process is rigorous. Commissioners’ independence from undue gubernatorial influence could be achieved by limiting the governor’s removal authority to acts of malfeasance, nonfeasance or neglect of duty.

Commissioners should serve at-large and not by districts, which forces each commissioner to wear a representative hat as well as a judicial one. With constituencies by districts comes the expectation that commissioners will place their district’s interests above the state’s, contrary to their duty to serve the general public interest.

We need commissioners whose decisions we can rely on to put the interest of all Arizona residents first, taking into account and addressing regional and local implications, but with a focused eye on the big picture of benefits and detriments for our state as a whole. It’s time for this integrative approach — recent history screams for reform!

It’s time for the governor and the legislature to initiate a voter referendum amending the State Constitution to repair this broken agency.

Editor’s Note: Greg Eisert is a former Sun City Home Owners Association board member and Governmental Affairs Committee chairman.

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