APS political spending soared under Don Brandt. Will that change with a new CEO?

Over the last few months, some of the secrecy surrounding Arizona Public Service’s spending on political campaigns has been lifted. APS’ responses to Arizona Corporation Commissioner Sandra Kennedy’s subpoena have provided new details about how the company sought to influence its customers, regulators, elections, and politics in Arizona – as well as how much money APS spent in the process.

A review of APS filings in response to the subpoena shows that between 2013 and 2018, APS reported spending more than $182 million on lobbying, marketing, grants, and political spending. With 1.2 million customers, that amounts to $152 per customer. That figure doesn’t account for the full impact on ratepayers of APS’ spending, which helped the company to elect regulators who approved of rate increases.

APS reported spending more than $72 million on political campaigns, by giving money to a variety of 501(c)(3) and (4) groups, political action committees, and other organizations. That doesn’t include other political spending that was not included in APS’ responses to the subpoena, such as contributions to candidates for US Congress, and to state legislators and other elected officials in Arizona.

Will new CEO Jeff Guldner pursue a different approach?

The retirement of APS CEO Don Brandt has raised questions about whether incoming CEO John Guldner will change the company’s direction by embracing clean energy and ending its efforts to dominate Arizona politics. Opinions seem mixed on that question. Former Arizona Corporation Commissioner (ACC) Kris Mayes said: “I actually expect Jeff Guldner to stop the political spending and dramatically ramp up the amount of renewable energy that this utility does. He’s got an enormous mess to clean up.”

But responding to Phoenix New Times reporting that Guldner himself actively participated in APS’ political campaigns to influence Arizona Corporation Commission elections in 2014 and 2016, ACC Commissioner Sandra Kennedy asked: “Will Mr. Guldner continue on the same path that Don Brandt did? It’s in the back of my mind, trust me.”

And columnist Laurie Roberts encouraged Guldner and the APS board to ask themselves: “Is it appropriate for a regulated utility to secretly spend millions on political campaigns to elect its own regulators who then promptly grant the utility a rate hike?”

The chart below details APS spending by category, and shows how APS has shifted its methods of influencing political affairs in Arizona. It also shows how APS spending has increased during election years, and soared in 2018 as APS fought to defeat a ballot initiative that would have required APS and other utilities in Arizona to generate 50% of their power with renewable energy.

Background: Commissioner Kennedy’s subpoena revealed new information about APS’ political spending

In February, ACC Commissioner Sandra Kennedy directed Commission staff “to prepare subpoenas to Arizona Public Service and Pinnacle West Capital Corporation seeking the information listed below,” including details about the company’s spending on lobbying, marketing, political campaigns, and 501(c)(3) and (4) groups.

ACC Commissioners Bob Burns and Boyd Dunn also asked APS to provide information about its political spending, and made clear: “If there is no response, the Commissioners are prepared to issue the subpoena.”

In March, APS responded to the commissioners with some of the information Kennedy had requested, including overall spending on advertising and marketing by APS and its parent company Pinnacle West, overall spending on grants by APS and the APS Foundation, and some details about APS political spending from 2013 to 2017. In a later response, APS also provided some information about its political spending in 2018.

But as the Phoenix New Times reported, APS did not include key details requested by Commissioner Kennedy, such as which organizations received money from APS, and for what purposes. Commissioner Kennedy requested that APS provide those details in April, and again in early May.

On May 9, APS provided details about the organizations that received funding from APS, as well as from the APS Foundation. And on June 17, APS provided more details about its spending on outside lobbying and marketing and advertising, as well as spending by APS parent company Pinnacle West on 501(c)(3) and (4) groups, and a list of Pinnacle West’s marketing and advertising partners. Those later responses also revised some of the figures in APS’ earlier responses, such as the amount APS spent on outside lobbying and charitable donations.

Lobbying

Between 2013 and 2018, APS spent more than $4.5 million on outside lobbying and on payments to trade associations “used for lobbying-related activities.” That figure does not represent all of APS’ spending on lobbying. APS spending on “outside lobbying” refers to lobbying firms that APS hires, but does not include the salaries of APS employees that are involved in lobbying efforts. And trade associations like Edison Electric Institute often classify a small portion of their spending as lobbying, even though much of their spending aims to influence politics.

Lobbying	2013	2014	2015	2016	2017	2018	Totals
APS outside lobbying spending	$704,204	$718,406	$558,085	$800,807	$515,871	$380,789	$3,678,162
APS spending on trade associations, for lobbying	not provided	not provided	$279,057	$170,073	$213,116	$209,830	$872,076
Totals	$704,204	$718,406	$837,142	$970,880	$728,987	$590,619	$4,550,238

Source for APS outside lobbying spending: APS June 17 response (which revised the March 29 figures).

Source for APS payments to trade associations used for lobbying: APS March 29 response for 2015, 2016, and 2017, and APS April 24 response for 2018.

Marketing and Advertising

Between 2013 and 2018, APS and Pinnacle West spent more than $59 million on marketing and advertising, with significantly higher amounts in 2014 and 2018 than in other years.

	2013	2014	2015	2016	2017	2018	Totals
APS marketing	$5,251,189	$8,907,475	$3,999,925	$3,816,198	$3,739,082	$8,891,357	$34,605,226
Pinnacle West marketing	$3,677,013	$3,723,946	$3,896,234	$3,981,946	$4,004,028	$5,137,983	$24,421,150
Totals	$8,928,202	$12,631,421	$7,896,159	$7,798,144	$7,743,110	$14,029,340	$59,026,376

Source: APS March 29 response.

Grants and corporate giving

Between 2013 and 2018, APS Foundation spent over $15 million on grants, while APS itself spent nearly twice that amount, over $30 million, for a combined total of more than $46 million. While the organizations that received money from APS Foundation had been disclosed in 990 forms filed with the IRS, the larger amounts that APS itself gave had not been made public until APS’ responses to the subpoena.

	2013	2014	2015	2016	2017	2018	Totals
APS corporate giving	$4,845,597	$5,662,943	$5,104,161	$5,452,990	$4,896,260	$4,903,191	$30,865,142
APS Foundation grants	$3,023,685	$2,583,840	$2,921,300	$1,648,100	$2,780,700	$2,946,495	$15,904,120
Totals	$7,869,282	$8,246,783	$8,025,461	$7,101,090	$7,676,960	$7,849,686	$46,769,262

Source for APS Foundation grants: APS March 29 response.

Source for APS corporate giving: APS May 9 response (which revised the March 29 figures)

APS’ May 9 response also listed the organizations that received money from APS, which had not previously been disclosed. A spreadsheet of that data, sorted by organization, is available here. 

A spreadsheet of APS Foundation grants, also sorted by organization, is available here.

Political campaigns

APS responses to Commissioner Kennedy’s subpoena reveal a variety of ways that APS and Pinnacle West have sought to influence elections and political affairs in Arizona. Most prominently, the disclosures revealed what had long been suspected – that in 2014, APS had secretly funded groups to help elect its own regulators. APS reported that it gave $10.7 million to three organizations that participated in the 2014 ACC elections, including Arizona Free Enterprise Club, Save Our Future Now, and the Arizona Cattle Feeders Association, as well as $4.2 million to the Arizona Coalition for Reliable Electricity, which participated in the 2016 ACC elections.

Political campaigns	2013	2014	2015	2016	2017	2018	Totals
527 groups	not provided	$723,500	$290,000	$728,500	$155,500	$262,500	$2,160,000
501 (c) (3) and (4) groups	$513,250	$11,680,500	$1,332,500	$5,253,000	$900,000	$410,350	$20,089,600
Independent political expenditures	not provided	$471,700	$48,550	$4,749,500	$4,357,500	$40,305,300	$49,932,550
Totals	$513,250.00	$12,875,700	$1,671,050	$10,731,000	$5,413,000	$40,978,150	$72,182,150

Sources for 2013-2017: APS March 29 response 

Direct links:

2013

2014

2015

2016: 527 groups, 501 (c) groups, independent political expenditures

2017: 527 groups, 501 (c) groups, independent political expenditures

Source for 2018: APS April 24 response

Direct links: 527 groups, 501 (c) groups, independent political expenditures