Utility-funded Harvard group has given tens of thousands of dollars in airfare, luxury hotels and meals to Arizona utility commissioners

A utility-funded group operating under the banner of Harvard University has given hundreds of thousands of dollars in free flights, expensive hotel rooms and swanky dinners to the state officials who are supposed to regulate the utilities funding the group.

The gifts have come via quarterly conferences that the group, the Harvard Electricity Policy Group, hosts for the utility regulators.

Five of Arizona’s Corporation Commissioners, who are responsible for regulating monopoly utilities including Arizona Public Service (APS), have attended the Harvard events for at least the past five years, according to documents provided by the Arizona Corporation Commission (ACC) in response to public record requests.

The Arizona regulators attended the junkets even while the director of the utility-funded Harvard group was being paid as an expert witness by APS to testify against policies supportive of rooftop solar power in two active dockets before the ACC.

The Arizona commissioners – Bob Stump, Susan Bitter-Smith, Doug Little, Boyd Dunn, and Tom Forese – received a total of $45,000 in free gifts since the beginning of 2014, according to an analysis by the Energy and Policy Institute.

Dunn was the most recent Arizona commissioner to travel to the Harvard group’s junkets; he joined the group in 2017 at the facilitation and recommendation of an APS lobbyist, according to emails released by the ACC.

The Arizona commissioners’ attendance of the events was not illegal, but it is the latest data point in a long streak of controversy surrounding the ACC and its cozy ties to the powerful utilities it is charged with regulating.

The Harvard Electricity Policy Group, Harvard University, and the Arizona Corporation Commission did not respond to questions about HEPG’s practices or Arizona commissioners’ attendance of the events.

Harvard Electricity Policy Group wiped references to utility funding in 2016

The Harvard Electricity Policy Group was formed out of Harvard’s John F. Kennedy School of Government in 1993, according to its web site. As of June 2016, HEPG said that “funding for the Harvard Electricity Policy Group over the course of its activities has been provided by the Mossavar-Rahmani Center for Business and Government of Harvard’s Kennedy School of Government, and by the generous support of the following organizations,” according to a copy of the site cached then by the Internet Archive.

The site then listed 79 entities, the vast majority of which were investor-owned utilities or fossil fuel power generators.

In July 2016, HEPG edited the web site to delete the word “funding,” instead saying that “in creating a knowledge network, the Harvard Electricity Policy Group has engaged participants from industry, federal and state government, financial institutions, law firms, environmental and consumer advocacy groups, research shops, and academia,” before listing the same companies. An older pamphlet still included elsewhere on the HEPG site includes the “funding” language. A 2015 filing from Duke Energy showed the utility paid $18,430 to Harvard University in 2015, though it’s not clear whether that funding was for HEPG or other initiatives.

The HEPG deleted a reference to being funded by utilities on its web site in 2016.

One of the utilities listed on HEPG’s now-defunct funder page is Arizona Public Service. A lobbyist for that company, Greg Bernosky, is the one who urged Commissioner Dunn to join the HEPG events last year.

“A utility has asked if you would like to be nominated to fill the vacancy left by Commissioner Stump on the Harvard Electricity Policy Group (“HEPG”),” Dunn’s policy advisor wrote to him. “The ACC has two seats and Commissioner Little currently fills the second seat. If appointed, you would need to attend 4 conferences/year in various parts of the country.  According to the utility, this is a very neutral forum to discuss federal energy issues and an excellent networking opportunity … The utility will be sending some additional information so you can fully consider the opportunity.”

In a subsequent email, Bernosky told the aide that “I did reach out to Ashley Brown, who is the Executive Director of HEPG.  He will have someone from his staff connect with your office to an extend an invitation for Commissioner Dunn to join.”

The lobbyist also implied that he attends the events himself.

“Yes. Sounds great,” Dunn responded.

Dunn’s joining at the behest of the APS lobbyist raises the spectre of “regulatory capture” – the dynamic that occurs when a regulator charged with acting in the public interest lets themself become intentionally or unwittingly controlled by the company or industry that they are supposed to be regulating.

“Regulatory capture is real, insidious, and corrosive to the public trust,” said Karl Rabago, the Executive Director of the Pace Climate and Energy Center in New York, and a former regulator with the Texas Public Utilities Commission from 1992 – 1995. Rabago doesn’t think he ever went to one of the HEPG events as a commissioner, but said that if he had, he would have only paid out of the PUC budget.

“Industry-paid junkets are classic breeding grounds for regulatory capture. While often trying to pass as policy forums, they are frequently the setting for subtle recruitment to industry points of view set in swanky settings stacked with industry advocates. Even regulators with the strongest principles are subject to the adverse effects, which is why industry groups fund these policy forum junkets in the first place,” Rabago said.

Ashley Brown, the man behind HEPG

Ashley Brown, who runs HEPG, was himself an Ohio utility commissioner from 1983 – 1993. He has advocated aggressively and publicly in op-eds and speeches against policies that support rooftop solar power like net metering, taking the utility-backed position that it is a “socially regressive subsidy.”

When APS needed an expert witness to testify against rooftop solar policies in front of the ACC, it turned to Brown. On February 23 and February 25, 2016, APS submitted Brown’s expert witness testimony to the ACC in two cases: the first was a docket to determine the value and cost of distributed resources like rooftop solar power; the second was an application by another utility, UNS, which owns Tucson Electric Power, also related to rooftop solar power.

“The current rate design and net metering tariff overly-subsidizes rooftop solar, and, in the aggregate, transfers wealth from less affluent to more affluent customers,” Brown testified in the UNS case.

In both testimonies, Brown is careful to note that he is speaking as an individual, and not on behalf of HEPG:

“HEPG, as an institution, never takes a position on policy matters, so my testimony today represents solely my opinion, and not that of the HEPG or any other organization with which I may be affiliated,” Brown said in a disclaimer before both testimonies.

HEPG echoes that language on its web site, where it says that “participants can and do speak on their own behalf in the broader public policy debate.”

The disclaimers notwithstanding, thirteen days after receiving Brown’s testimony, Arizona Commissioners Stump and Little would be at the luxurious Four Seasons hotel at the March 2016 HEPG forum in Washington, D.C. A booking for the lowest-cost room at the Four Seasons in March of 2019 would run to nearly $1,000 per night. HEPG, as it did in every trip, covered the costs of the commissioners’ flights, hotel rooms and a private dinner.

Brown also testified as a paid witness on behalf of utilities in New Hampshire, Oklahoma and Wisconsin. He separately advised the board of the Salt River Project, another Arizona utility, urging it to slash compensation rates for rooftop solar customers in 2014, which the board did. Salt River Project (SRP) is a government agency with an elected board, not regulated by the ACC. After the utility took the actions that Brown supported, rooftop solar companies said new installations fell by 96% among SRP customers.

“The message to the public is that these are the places where the regulators’ thinking is shaped to serve the regulated businesses, and that the public can never know how that shaping takes place,” Rabago said.

Rack of lamb or sea bass for the main course?

HEPG holds three to four conferences per year, which it says “provides a forum for the analysis and discussion of important policy issues facing the electricity industry.” An email invite to a 2014 conference indicated that 10 commissioners attended from around the country.

About half the events since 2014 have been held at Harvard or in D.C, with the other half at luxury hotels like the Eau Palm Beach in Florida, Ritz Carlton in Half Moon Bay, California and Sandals on the Beach in Santa Monica, CA.

The events follow the same format, with a light workload of seven hours spread across two days: Thursday features two ninety-minute panels, an hour-and-fifteen-minute discussion, and then a private reception and dinner at a high-end restaurant. Friday has a final ninety-minute session and second hour-and-fifteen-minute discussion. HEPG provides breakfast and lunch on both days.  

Before an event at Harvard in June of last year, one email from an HEPG assistant to Boyd Dunn, the ACC Commissioner, instructed him to “Kindly RSVP … and indicate your preference of rack of lamb or sea bass for the main course.”

Dunn brought his wife along for the trip, according to his RSVP.

Another email, this one to Bob Stump in 2014, advertised the Thursday night dinner at Melisse restaurant in Santa Monica, where “Chef Josiah Citrin will once again be preparing a special meal for us.” The cheapest dinner at Melisse is the restaurant’s four-course option, at $135. A separate “caviar & truffles” menu includes 28 grams of “Le Prestige Caviar” from France for $200. Stump and Susan Bitter-Smith both attended the Santa Monica event.

In Calgary last year, Dunn and the other attendees attended an equestrian event.

Some of the commissioners had family members join them on the trips, and while HEPG did not pay for the family members’ airfare, they did pay for the hotel rooms and invited the spouses to join the dinner receptions. Dunn’s wife joined him in Palm Beach this past January, at Harvard in June of 2017, and she was RSVP’d to join him again at Harvard last month. Receipts indicate the Dunns spent the weekend after the June, 2017 conference in Palm Beach.

Susan Bitter-Smith brought her husband and daughter to the dinner reception in Washington, D.C. at the Decatur Carriage House, just behind the White House. EPI estimated the value of the dinner at over $200 per person, based on the Carriage House’s rates. Bitter-Smith stayed in D.C. for an extra five days of personal time.

Stump RSVP’d his mother to the dinner reception four times – to Harvard, New Orleans, Palm Beach and Washington, D.C. An ACC staffer also asked if HEPG could extend its discounted hotel rate to additional nights that Stump spent in New Orleans after the conference ended in 2014.

ACC commissioners receive an annual salary of $79,500.

Panelists dominated by utility representatives

The HEPG panels themselves tend to focus on issues like federal legislation, regulation and electricity market structure. The group says that it features a diverse array of panelists:

“HEPG’s participation spans the breadth of interests in the electric sector. Participants include electricity industry executives from public power and investor-owned utilities, independent power producers, consumer advocates, regulators, energy officials from both state and federal governments, representatives of the environmental and financial communities, and academics.”

EPI examined the affiliation of the 199 panelists that HEPG listed for its events from 2014 through January 2018. The plurality of the panelists – 42% – either worked directly for utilities, or as industry lawyers or consultants. Another 25% of the panelists came from government. 21% came either from HEPG or other academic institutions.

Less than 3% of the panelists – 5 out of 199 – were environmental advocates. Only 2% – 4 out of 199 – were consumer advocates. Nine panelists, or 5%, came from entities that could be called renewable energy or energy efficiency industry representatives or advocates.

APS employees attended the June 2015 event in Washington, D.C., which Commissioners Bitter-Smith, Little and Stump also attended, and the December 2016 event in Scottsdale, which Commissioners Forese, Little and Stump attended. Timothy James, an Arizona State University professor who has written studies paid for by APS, attended the December 2015 event, which Stump and Little again attended.

HEPG posts anonymized transcripts from the events that do not reveal the identity of the speakers.

Harvard gifts the latest in trend of Arizona Corporation Commission ethics violations

The ACC, which is an elected office in Arizona, has been plagued by ethics scandals since 2013, when APS is widely suspected to have begun spending millions of dollars to defeat candidates for the commission that it did not favor, and to elect Forese and Little via untraceable political spending – a claim APS never confirmed or denied.

The FBI investigated whether a recent ACC chairman, Gary Pierce, helped protect APS’ monopoly in exchange for the utility giving money to his son’s 2014 political campaign for treasurer. Pierce was indicted and tried in a federal corruption case that did not involve APS; the jury hung on the case last week, leading to a mistrial.

Earlier this month, the Executive Director of the ACC resigned, allegedly because of a conflict of interest that emerged due to his wife working on behalf of APS’ effort to kill a clean energy ballot initiative. A later report suggested he was fired by Forese for challenging some of Forese’s pro-APS decisions.

Of the Arizona commissioners, Bob Stump, who served on the commission from 2009 until 2017, received the highest value in gifts, at over $18,000, according to EPI’s analysis. He attended all 12 events from 2014 through the end of 2016.

Stump came under a cloud of scandal due to text messages that he allegedly destroyed which may have shown communications between him and groups that made independent expenditures on the 2014 ACC elections. After a failed bid for Congress this year, Stump announced in July he’d be leading a trade association for Arizona’s electric utilities, called the Arizona Energy Policy Group, which has filed to intervene in an APS rate case before the ACC.

Bitter-Smith received over $12,000 in gifts. She attended every event in 2014 and three in 2015, missing only the December conference after she announced that she was resigning due to a scandal that erupted over her second job working for a telecom industry group.

Little received nearly $9,000 in gifts, having attended eight of the events in total. He left the ACC in September 2017 after he received a political appointment to the Department of Energy. UtilityDive reported last week that he is a top candidate to be appointed by the Trump Administration as a federal electricity regulator.

Forese attended only the December 2016 HEPG dinner in Scottsdale with his wife.

The policy advisor of another current commissioner, Andy Tobin, told HEPG that Tobin was interested in attending the October 2016 conference in Washington, D.C., and asked for confirmation that HEPG would pick up the costs. Tobin did not attend.  The documents do not show any response to HEPG invitations from the other two current commissioners, Bob Burns or Justin Olson, who was appointed in the end of 2017 by Gov. Doug Ducey to replace Little on the ACC.

Some commissioners disclosed the Harvard gifts, others did not

All Arizona state officials are supposed to report gifts with a value of over $500 on annual financial disclosure forms. Public officials are not required to list the exact value of the gifts in Arizona – simply the name of the donor. Some commissioners followed that rule for the HEPG events, but others did not.

Bitter-Smith never mentioned the HEPG on her 2014 or 2015 disclosure statements, during which time she attended the seven events. Little did not mention HEPG in any of his disclosures either.

Stump wrote “Harvard University” on his forms in 2014 and 2015 with no further detail, and “Harvard Electricity Policy Group” in 2016.

Dunn listed the two events he attended in 2017, and checked a box indicating the value of each at between $1,000 and $25,000. In 2018 as part of new ethics rules drafted by Dunn, commissioners began posting quarterly financial disclosure statements that are meant to increase transparency. Dunn’s statement for the first quarter of 2018 included the 2017 HEPG events, but was not updated to include a January 2018 HEPG event in Palm Beach.

Dunn has championed ethics reform at ACC

The ACC passed a new code of ethics in 2018 in response to the years of scandal, with Boyd Dunn leading the charge.

The new code is designed to cut down on conflicts of interest, but it includes a carve-out that seems specifically tailored for events like the HEPG conferences. Rule 4.4 of the code states:

It is appropriate for Commissioners to attend luncheon meetings, dinner meetings, or industry-related gatherings and conferences sponsored by industrial, technical, and professional associations, when attendance and participation serves the public interest and involves a discussion of matters of mutual interest to the Commission and in furtherance of the Commissioner’s duties. Likewise, it is appropriate for Commissioners to accept travel-related reimbursement for events related to Commission business when (i) attending educational or informational settings; (ii) attending events or meetings in which the Commissioner is scheduled to meaningfully participate; or (iii) the events relate to the Commissioner’s official duties. No benefit or travel-related expense may be accepted if it is offered in exchange for official action.

Another rule, Rule 5.3, obligates commissioners to disclose on a quarterly basis any gifts or things of value received directly from any person or entity affiliated with a public service corporation regulated by the Commission. ‘Gifts or things of value’ under this code shall be limited to those things or services with a cash value of more than $20.” It’s unclear from the Code whether HEPG would be considered to be “affiliated with a public service corporation regulated by the Commission.”

“The Commission is committed to transparency, and the public should have access to and know who we are meeting with, and who those people represent as we conduct our daily business,” Dunn said about the new code of ethics on June 21. “The Code of Ethics ensures that Commissioners conduct themselves with the utmost integrity.”

Critics have called the ethics reform toothless. Bill Mundell, a former ACC commissioner who is running for the office again in 2018, criticized the effort in a Democratic primary debate on June 27:

“The first thing we can do is pass a real code of ethics. They passed one this year and it was a joke. There are so many loopholes in it that you can drive a Mack truck – I should say a rate increase through it,” Mundell said. “No lunches, no meals, no money from people that appear.”

Dunn called the ethics reform “one of, if not the, most comprehensive in the nation” in a press release earlier this year, but other state public utility commissions have taken a different stance on trade associations and similar groups.

A Kentucky public service commissioner received guidance in 2015, based on a standard set in 2004, that he could not accept payment to attend events funded by utility trade associations that represented companies regulated by that PSC.

“The solution to this problem is easy,” said Rabago, the former Texas commissioner. “If the regulator believes the forum is vital to the public interest and necessary to better enable him to regulate, he or she should just pay his own way using commission funds. That will make the junkets less frequent, and when they do happen, the public will have a record of the spending and frequency of the trips.”

View the Documents

Notes on Methodology

The Energy and Policy Institute requested all correspondence and receipts related to the Harvard Electricity Policy Group from the Arizona Corporation Commission from January 2014 through June 2018 in two requests in 2017 and 2018. The ACC released 2,500 pages of responsive documents.

To determine the value of the airfare, hotel rooms and meals provided by the HEPG to ACC commissioners, EPI used the methods below. Detailed notes showing EPI’s estimate of the value of every gift are available here.  

Reception Dinners

• For reception dinners, EPI obtained a price quote from most venues for a private reception of about 15 – 20 people. We quoted the minimum, most conservative price option offered.
• For pricing purposes, EPI assumed that 20 guests attended the dinner, which was an estimate based on emails which suggested about that many attendees. When we could not obtain a price quote, we made a conservative estimate based on the restaurant menu for one appetizer, one entree and no alcohol.

Hotels

• For all hotel bookings, EPI matched the same weekdays (Wednesday – Friday) on the closest week of the year for which we could find availability in that hotel for the coming year. If prices seemed exorbitant, we checked adjacent weeks to make sure the price was not anomalous.

Airfare

• EPI used the ACC commissioners’ receipts to determine the value of airfare.
• No receipts existed in the responsive files for Doug Little’s flights to Palm Beach in December, 2015 and D.C. in March, 2016. For those flights, we estimated the costs to be the same as Bob Stump’s flights, for which receipts do exist.
• No receipts existed in the responsive files for three of Bob Stump’s flights (to Santa Monica in February 2014, to Boston in June and Boston again in October of 2014.) For those flights, we estimated the costs to be the same as Susan Bitter-Smith’s flights, for which receipts do exist.
• No receipt existed in the responsive files for Doug Little’s flight to Boston in June, 2017. We used as proxy the cost of Boyd Dunn’s flight, for which a receipt existed.
• No receipt existed in the responsive files sent by the ACC for Susan Bitter Smith’s flight to Houston in October, 2015. We used as proxy the cost of Bob Stump’s flight, for which a receipt existed.

Breakfast and Lunch

• Each conference provided two full breakfasts and one lunch, according to the HEPG agendas. We assumed a value of $15 for the breakfast and $20 for the lunch.

Transportation

• Transportation costs to and from dinner, which HEPG covered, are not included. Other incidental costs, like taxis to and from the airport, or other meals not covered by HEPG, were usually paid by the ACC, according to the commissioners’ expense reports. Those are not included in EPI’s gift analysis unless there’s documentation that the commissioners expensed them to HEPG, as Susan Bitter-Smith did a few times.

Panelist Analysis

• EPI cataloged all 199 panelists who spoke at the 16 conferences from 2014 through January 2018 into the following categories:
  • “Industry” (41% of total) with the following sub-categories:
    • Utility Industry (20%)
    • Industry Consultant (10%)
    • Industry Lawyer (5%)
    • Industry – Other Generator (6%)
    • Industry – other (gas) (1%)
    • Finance (1%)

• • “Government” (25% of total) with the following sub-categories:
    • Regional Transmission Operators (14%)
    • Other government officials (11%)

• • Academia/Think tanks (21%) with the following sub-categories:
    • Non-HEPG Academia/Think tanks (14%)
    • HEPG (7%)

• • “Advocates” (10%) with the following sub-categories:
    • Renewables/Efficiency industry or advocates (5%)
    • Environmentalists (3%)
    • Consumer advocates (2%)

• • Other (7%).

Top photo is of the Ritz Carlton in Half Moon Bay, credit Christopher Michel, Flickr.

Correction: An earlier edition of this post listed the incorrect salary for Arizona Corporation Commissioners.