Keriann Conroy The Republican primary candidates running for three seats on the Arizona Corporation Commission (ACC) are aligning themselves with the work of the current Republican majority commission, including green-lighting utility rate hikes and slashing renewable-energy rules.
The Commission’s scrutiny on utilities shifted after the 2022 election, when incumbent Democrat Sandra Kennedy lost her seat and Republicans gained a 4-1 control of the regulatory body, which determines the rates that monopoly utilities are allowed to charge customers and how much profit the companies can earn. Since then, the ACC has approved three major rate case increases and canceled renewable energy and energy efficiency policies.
In a primary debate on April 5, 2024, the GOP candidates challenging for two of three open seats on the Commission said they’d continue the ACC’s current trajectory, and incumbent Lea Marquez Peterson defended the votes and policy decisions.
Candidates prepare to fill three seats at the Arizona Corporation Commission
Six candidates – three Republicans and three Democrats – are vying for the three ACC seats that are currently held by Republicans Lea Marquez Peterson and Jim O’Connor, and Democrat Anna Tovar. O’Connor and Tovar are not seeking reelection.
Arizonans participating in early voting or heading to the polls on July 30th for the primary election will see candidates running uncontested primary races. Republicans initially had four candidates running for the three slots, and consequently held a debate in April, which allowed voters to get an early glimpse of their positions and views. Candidate Christy Kelly withdrew from the race in mid-April;shortly after, the Secretary of State’s Office included Kelly in a list of candidates that allegedly committed petition signature fraud.
Of the six Democrats and Republicans, the three candidates who receive the highest vote totals in the general election will win the three seats. The other two seats are held by Republicans Nick Myers and Kevin Thompson, who won elections in 2022 and swung the regulatory environment heavily in the utilities’ favor when they ousted Democrat Sandra Kennedy, a vocal proponent of renewable energy and enforcing stricter transparency rules for utility political spending.
The three Democratic candidates have maintained a platform focused on clean energy. Joshua Polacheck, a former U.S. foreign service officer, cites concerns about fossil-fuel dependency threatening U.S. safety. Ylenia Aguilar, a development manager for a water-analytics company, advocates for renewable energy in addition to increased action concerning transparency, accountability, and affordable rates at the ACC. Jonathan Hill, a former aerospace engineer, touts his technical background among his strengths as a candidate, and says he would prioritize water protection and threats to cybersecurity. Polachek pointed to the current ACC’s stance on renewable energy as motivation for running, stating, “We had a bipartisan plan that was passed in 2004, one of the most forward-thinking in the country…Over the last 14 months, the Republican majority on the Corporation Commission has systematically dismantled that plan.” He is critical of the rate hikes approved by the ACC, saying that after a cold winter in Arizona and because of some of the rate increases, “some folks were seeing some pretty massive bills for their natural gas for their heating.”
Republican candidates praise current Commission despite harmful voting record
During April’s debate, incumbent Lea Marquez Peterson and candidates Rene Lopez and Rachel Walden propagated falsehoods regarding renewable energy and federal energy policy, touted endorsements from utility-affiliated organizations, and commended the current ACC’s utility-friendly voting record despite criticisms from across the political spectrum. The president of Conservatives for Responsible Stewardship recently called the ACC “Rate Hikes ‘R’ Us.” Christy Kelly, the candidate no longer on the Republican primary ballot, broke ranks from Marquez Peterson, Lopez and Walden, saying in her opening statement that the ACC has been “too heavily on the side of the utilities.”
Marquez Peterson insisted at the debate that the Commission’s role was to ensure ratepayers have a voice and are heard, saying the Commission comes from “a ratepayer perspective,” and serves as a “liaison” between customers and utilities. She defended ACC actions taken over the last year in which regulators had consistently voted against recommendations of the Residential Utility Consumer Office (RUCO), the state agency representing consumer interests at the ACC. Several of the votes by the Commission resulted in utilities raising base rates, receiving reimbursement for higher fuel costs, or increasing utility profits, directly raising customers’ bills.
The voting trend against Arizona ratepayers continued this year when the Commission approved a $460 million rate hike for the state’s largest investor-owned utility, Arizona Public Service (APS), an average increase of $10 – $12 per month for residential customers. In that rate case, the Commission also added a new fixed fee on rooftop solar customers that no party in the case had requested or filed evidence to support. The Commission also halted a utility-run rooftop solar program for low-income customers, and introduced a murky new fee that would allow APS to charge customers additional money, outside of what the Commission approves in rate cases, for generating electricity, including from coal.
The ACC granted the Arizona Attorney General’s Office, RUCO and several clean energy and consumer advocates their request for a limited rehearing of the rate case, solely in regard to the additional charge that the ACC approved on rooftop solar customers.
Marquez Peterson stood by her decision to approve the APS rate case, claiming she was “not considering how the markets respond but looking at ratepayer impact in the state of Arizona.” Lopez agreed that he also would have approved the rate increase. And when asked if she would have approved APS’s recent rate hike, Walden said, “I would have had to approve, by the Arizona Constitution, I don’t know by how much,” and continued, “I absolutely approve, they [the ACC] cut $200 million of programs out of the rates, we should not have any subsidies, we should not have any special interest programs.”
One of the programs cut from APS’s rate proposal by the Commission was funding to support communities impacted by the closure of the Navajo Generating Coal Plant. There were a large number of comments in opposition to the rate increase, but also a sizable number of consumer comments in support of the Coal Community Transition (CCT) proposal. Of the $200 million Marquez Peterson and Walden praised the Commission for cutting during the debate, $106 million of that was allocated to APS’s CCT proposal. Marquez Peterson said she voted against the proposal because she “did not feel comfortable writing a check for those communities to somehow make them whole.” Lopez said it is “federal government policies that are killing coal,” and that lawsuits from the EPA are forcing coal plants to shut down. Walden supported Lopez’s statement, saying, “The EPA is an unconstitutional agency … the utilities aren’t shutting them down over some investment score, they’re shutting them down because the EPA sued them to shut them down.” Coal plant retirements are largely the result of the growing number of more efficient, modern gas-fired power plants, and the low cost of renewable energy, dropping below the cost of coal. Still, Lopez lamented the loss of coal-fired power, saying incorrectly that, “We’re doing nothing but replacing it with more expensive gas and solar.” All the candidates agreed in opposing the CCT proposal from APS. When asked if ratepayers, who benefited from the plants for years, should be responsible for helping the communities transition, Lopez said, “the communities benefited also, right? Those communities knew what they were getting.” Lopez’s position dismisses evidence that coal plants like the Navajo Generating Station exposes local residents to serious health risks.
The Republican candidates also discussed how they want to continue changing the makeup at the ACC. In February, Commissioner Anna Tovar, the lone Democrat, announced she would not be seeking reelection because, “the current corporation commission needs a shake-up to gain renewed focus on actually serving the people of our state.” During the debate, when asked about the need for a shake-up, Walden said the shake up has “been going on already when we elected Nick Myers and Kevin Thompson and we got a new dynamic on the commission.” Walden has received endorsements from Commissioners Thompson and Myers, and Chairman O’Connor, who is not seeking re-election.
Before Thompson and Myers took seats on the Commission, former Commissioner Sandra Kennedy referred to O’Connor as an ally, and the ACC appeared to be moving toward reining in the influence of utilities. The Commission voted to cut APS’s revenue by $119 million in 2021, lowering customers’ rates. Kennedy issued an inquiry at the ACC which revealed in-depth details about the political spending of APS and its parent company, Pinnacle West, including data showing that over a period of 9 years, APS spent $4.8 million on lobbying expenses, $93.2 million on advertising and marketing, and $73.6 million on political groups like the Edison Electric Institute, the trade association for investor-owned utilities.
But almost immediately after Myers and Thompson took office, the Commission began to swing back toward pro-utility regulation. An Arizona consumer advocate filed a complaint against Thompson, a former employee of Southwest Gas (SWG), for meeting with financial investors, including utility stockholders, during an event hosted by the American Gas Association (AGA) – the trade association representing gas utilities including SWG. AGA offered reimbursement for the travel for regulators who attended the conference, including Thompson, augmenting questions of a conflict of interest. Thompson paid for the trip via the ACC’s travel expense account. Commissioners O’Connor, Marquez Peterson, and Myers voted to dismiss the complaint, while Tovar abstained.
Despite the complaint, Marquez Peterson and Lopez agreed with Walden’s opinion that Thompson and Myers have helped create a “shake-up.”
GOP candidates tied to utility-friendly organizations
Marquez Peterson, elected in 2020, has a track record of allowing the involvement of utility-affiliated organizations in rate cases and has ties to various chambers of commerce with utility representation. She formerly served as CEO of the Tucson Hispanic Chamber of Commerce, which boasts endorsements from SWG on its website and engages at the ACC in support of rate increases. In SWG’s 2023 rate case, the Tucson Hispanic Chamber of Commerce submitted comments opposing proposals by the Southwest Energy Efficiency Project (SWEEP), inaccurately claiming the recommendations would impose unnecessary costs and uncertainty on consumers. SWEEP’s proposals recommended that the Commission stop allowing SWG to force– customers to subsidize the cost of expanding residential gas service to new buildings.
During the 2023 SWG rate case, records obtained by EPI and published by the AZ Mirror revealed that SWG recruited mayors throughout Arizona to back the rate increase and oppose SWEEP’s recommendations. The AZ Mirror story was submitted to the ACC as a public comment in the rate case, but never addressed by the commissioners. During April’s debate, to back up her “ratepayer perspective,” Marquez Peterson mentioned her former position with the Chamber, asserting, “We incorporate every business in the state, and that’s an important role.”
Far more individual SWG customers submitted comments opposing the rate increase, in addition to many consumer groups such as AZ Vets Forward, Moms Clean Air Force, the Arizona Public Health Association, Physicians for Social Responsibility and more. Many of the comments highlighted concerns about the growing struggle of Arizonans to pay for rapidly increasing utility bills while SWG celebrated record profits.
The Arizona Chamber of Commerce and Industry, another business organization with close ties to APS, has endorsed all three Republican candidates for the ACC. The chair of the organization is APS President Ted Geisler, and the state’s large investor-owned utilities are dues paying members. APS is a Champion Level member of the chamber, paying $100,000 or more annually. SWG is a Chairman Level member contributing $25,000-50,000 annually, and Tucson Electric Power is a Board Level member contributing $10,000-15,000 annually.
All the Republican and Democratic candidates for the ACC seats are participating in the state’s Clean Funding program in order to receive funding from the Citizens Clean Elections Fund, which means forgoing direct support from special interests and high dollar contributions.
But Walden has had strong financial ties to the Arizona Free Enterprise Club (AZ FEC), a conservative advocacy group with a notorious history in Arizona as acting as a dark-money vehicle for utility money in an ACC election.
Documents released by subpoenas from former Commissioner Kennedy revealed that AZ FEC was the largest recipient of money from APS’ parent company, Pinnacle West, that the group then spent boosting candidates that APS perceived as friendly to its interests, and attacking those that the utility perceived as hostile, in the 2014 ACC elections. AZ FEC received a total of $5.8 million from Pinnacle West and spent $450,000 to help the campaigns of Tom Forese and Doug Little get elected to the ACC. AZ FEC also spent $733,000 to help Justin Pierce, the son of then-Commissioner Gary Pierce, in his election bid for secretary of state.
On June 26, 2023, several weeks after Walden declared her candidacy for the ACC, Walden’s campaign committee for the Mesa School Board zeroed out her account when it contributed $3,219.34 to the Freedom Club PAC, AZ FEC’s political action committee. The next day, Walden terminated her campaign committee account with Maricopa County. (Walden, who currently sits on the Mesa Public Schools Governing Board, gained notoriety when America First Legal, sued Mesa Public Schools and its Superintendent on Walden’s behalf over school guidelines to protect transgender students. America First Legal Foundation is led by former Trump White House senior policy adviser Stephen Miller, and the legal group is associated with the far-right, “MAGA” wing of the Republican party.)
Walden also received $1,000 from Freedom Club PAC in 2022 for her school board election.
Before Christy Kelly dropped out of the race, the Freedom Club PAC contributed $5,000 to her campaign.
Clean energy falsehoods pervasive during ACC GOP debate
The Republican candidates all criticized renewable energy standards throughout the debate. Walden said the Commission’s role is “to make sure all sources of generation are presented to the commission.” She further added, “It’s not about implementing a political agenda or a climate agenda, it’s about doing what is affordable and what is reliable for the grid.”
Walden cited an AZ FEC report claiming the renewable energy standard has cost Arizona $2.3 billion. Walden was likely referring to AZ FEC’s 2023 report criticizing renewable energy mandates authored by Stephen Moore, a senior fellow at the Heritage Foundation and chief economist at the libertarian organization FreedomWorks. Moore claims a long history of denying the scientific reality of climate change.
Also during the debate, Marquez Peterson said that the previous Commission’s composition “mandated a source of energy unnaturally.” In previous election cycles, she has supported ACC- issued goals for utilities to derive all electricity from renewable sources of energy by 2070 through renewable energy standards, but now she says “market principles have really driven things,” and she “does not support a mandate.”
Earlier this year, the ACC voted 4-1 to repeal the renewable energy rules along with the gas and electric Energy Efficiency Standards Rules, which had required utilities to take measures to reduce electricity demand. O’Connor, Thompson, Márquez Peterson, and Myers all cited costs as the reason for repealing the rules.
Walden said, “The Commission shouldn’t be energy-biased; we need to let the free market determine where we get our energy at the best cost.” She referred to the ACC’s decision to repeal the renewable energy and energy efficiency rules when asked her thoughts on ratepayers believing the ACC does not prioritize them over utilities. She said, “A lot of people don’t understand what the commission does,” and then went on to argue, without evidence, that the REST hurt “utility companies” because it “forced our utility companies into renewables and that drove up the cost because they had to start generating an emerging technology.” Walden asserted, “We shouldn’t be forcing any kind of generation on our utility companies.”
Lopez disagreed with the assertion that the current ACC is on the side of utilities. He said “backbreaking rates” have been caused by “inflation and federal government policies.” He said, “Everything goes up. We’re all ratepayers, we’re all business owners that have to pay this,” and went on to talk about the increased costs of commodities and fuels, including gas and coal.
Public interest and environmental organizations have criticized the vote to end the renewable energy and energy efficiency rules. SWEEP, an organization promoting greater energy efficiency, asserts that utility compliance reports and dockets show that the efficiency standard has saved Arizonans billions of dollars while avoiding costly capital investments. The director of the American Council for an Energy-Efficient Economy (ACEEE) called the decision a “big step backward” for the state. When asked during the debate about the benefits of these programs, such as cutting harmful pollution, Walden responded, “We have the cleanest air in America. Our corporations are good stewards of the environment. America is already doing it, our utilities in Arizona are already doing it, they’re already good stewards of the environment.” Lopez followed up, stating mandates are “the government picking winners and losers” and “when you do the mandates, the problem that sneaks in is the cost.” Walden then claimed that increasing solar energy also increases demand for gas, and that is why “we’re still paying Southwest Gas for when the cost of natural gas went up 300 percent.” Increases in solar energy use would have no bearing on the rates charged by Southwest Gas, which does not generate or sell electricity.
Countering many of the candidates’ claims, a recent report by Energy Innovation – a non-partisan energy and climate policy think tank, illustrated that clean energy is not driving high electricity costs. Clear factors driving skyrocketing electricity rates include the volatility of the price of methane gas, incentives for regulated utilities to maximize capital investments and investments in aging infrastructure, rising transmission and distribution costs due in part to increasing extreme weather events, and high utility profits via the return on equity proposed in rate cases and approved by regulators.
Correction (July 24, 2024): An earlier version of this article said the American Gas Association (AGA) paid for Commissioner Thompson’s travel to a meeting that AGA hosted with Wall Street investors. AGA offered to pay for the travel of the regulators who attended, but Commissioner Thompson paid for his travel out of his Corporation Commission office travel account. EPI regrets the error.
