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Corporation Commissions can question utilities about campaign contributions

PHOENIX -- State utility regulators have a legal right to question company executives about whether they secretly funneled money into political campaigns, Attorney General Mark Brnovich said Wednesday.

In a formal legal opinion, Brnovich sided with Bob Burns who has been trying for months to get Arizona Public Service to open its books to show any political donations. When efforts to secure voluntary compliance failed, Burns made an official demand.

APS refused. And attorney Mary O'Grady, writing to Burns on behalf of utility investors, said the powers of commissioners to inspect the books of utilities is limited.

So Burns asked Brnovich to take a look.

Burns called the opinion "a victory for Arizona ratepayers and those of us on the side of transparency.'

An APS spokeswoman would say only that the utility is studying what Brnovich wrote.

The questions Burns want to ask are more than academic.

There are allegations -- not denied by APS -- that is put money into the 2014 campaign for Arizona Corporation Commission through one of two "dark money' organizations which were spending heavily to influence the elections.

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 nomination, and then to ensure they won the general election. 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.

Don Brandt, the chief executive officer of APS, 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' First Amendment rights,' he wrote to Burns.

The company has been cagey about its role in the campaign.

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 that sell and lease rooftop solar units.

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

Burns has not disputed that right. But he said what APS spends to influence the election of those who set its rates should be a matter of public record.

Brnovich, in a 12-page formal opinion, did not address what is required under campaign finance laws.

Instead, he said he reads Arizona law to allow individual commissioners and their employees to "at any time, inspect the accounts, books, papers and documents' of any utility. And he said commissioners may examine utility company officers and employees under oath.

And Brnovich said that includes political contributions, charitable contributions and lobbying expenses.

Still, the opinion could leave Burns short of what he wants.

Brnovich said that right of individual commissioners does not extend to affiliates. And it is possible that any campaign donations were made not by APS but by Pinnacle West Capital Corp., its parent.

He did say that the commission, as a whole, does have some right to review the records of affiliates as long as that review is necessary for the panel to do its job of setting rates.

But Brnovich said that requires a decision by the commission. And so far Burns is the lone regulator who has shown an interest in pursuing the information.

Burns said the ruling backs his contention that individual commissioners have the authority to gather information about the utility's political, lobbying and charitable expenditures.

"Importantly, the attorney general concluded that the First Amendment does not bar me from investigating the books and records of APS, an argument that APS and others have repeatedly made in response to block my efforts to get this information,' he said in a prepared statement.

On Twitter: @azcapmedia

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