Vote 2014: Corporation Commission Debate

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Republicans Tom Forese and Doug Little and Democrats Sandra Kennedy and Jim Holway, the four candidates running for the Arizona Corporation Commission, will debate issues regarding energy, utility rates and more.

Ted Simons: Good evening and welcome to this special "Vote 2014" edition of "Arizona Horizon." I'm Ted Simons. Tonight's show is a debate sponsored by Clean Elections. We'll hear from candidates competing for two open seats on the Arizona Corporation Commission. As with all of "Arizona Horizon's" debates this is not a formal exercise. It's an open exchange of ideas, an opportunity for give and take between candidates for one of the state's most important offices. As such, interjections and even interruptions are allowed, provided all sides get a fair shake. We'll do our best to see that happens. The Arizona Corporation Commission is mostly known for its regulating authority over public utilities. But the Commission's responsibilities also include judicial, executive and lawmaking authority. Two Republicans and two Democrats are competing for the two open seats on the commission. The candidates are, in alphabetical order, Republican state lawmaker Tom Forese; Democrat Jim Holway, a member of the Central Water Conservation District Board; Democrat Sandra Kennedy, a former member of the Corporation Commission; and Republican Doug Little, who has worked in the computer software industry. Each candidate will have one minute for opening and closing statements. Earlier we drew numbers to see who goes first, and that honor goes to Doug Little.

Doug Little: Good evening, everyone, my name is Doug little. I'm running for an open seat on the Corporation Commission. I spent 30 years in the computer software industry. 15 years at that time I spent working directly with energy and power generation companies. So I have some direct experience with the primary functions that the Corporation Commissioners would work with. I've been here in Arizona for 16 years, I'm married, my lovely wife Linda works for Clear Channel Communications. My daughter Michaela recently graduated from ASU will be 25 on the 25th of this month. I'm running with Tom Forese. We are running together as a team, running on a platform of clean, reliable energy at the lowest possible price. We hope to achieve that with a balanced energy portfolio.

Ted Simons: All right. Thank you very much. Next opening statement we turn to Tom Forese.

Tom Forese: My name is Tom Forese, I'm married to Casey Forese in Chandler with four children, Jack, Maddie, Tommy and Allie. I love living in Arizona. I'm the CEO of a small education services company in Mesa. I have served in the legislature for the last four years. I currently serve as the chairman of commerce and the chairman of the international affairs ad hoc. I'm running for the Corporation Commission because I believe this is a tremendous opportunity to move Arizona in the right direction. I believe in Arizona, I think Arizona should be the capitol of the southwest. Working with Doug Little, I believe this evening we'll be able to show why we're the right candidates for the office.

Ted Simons: Sandra Kennedy now with the next opening statement.

Sandra Kennedy: Good evening and thank you. My name is Sandra Kennedy and I want to return to the Arizona Corporation Commission to be your consumer advocate. I am uniquely qualified. I have the experience, the knowledge and the ability to tackle the tough issues. During my tenure at the Commission, we created nearly 10,000 solar clean jobs. I want to return to the commission to do the same. Those 10,000 jobs that we created, the utility companies don't even come close to the 10,000 jobs. I want to be your consumer advocate. Please return me to the Arizona Corporation Commission. You can find me at restoresolar.com. Thank you so much.

Ted Simons: All right, thank you very much. With our final opening statement we turn to Jim Holway.

Jim Holway: Thank you very much. I'm running for the Corporation Commission because we need to move Arizona forward. I have the skills, the experience and the commitment to work with all of you to make that happen. I have over 35 years of experience working on the most pressing challenges that face our state. I served for a decade as the assistant director of your Department of Water Resources. I was the first professor of practice when they were starting the sustainability programs at ASU, and I was elected in 2010 to the Central Arizona Project Board of Directors. The mission is critical to Arizona, critical to the water and energy and economic development issues we face as a state. I look forward to the rest of the discussion this evening with our candidates. We need our commission to be independent. We need to it represent Arizona citizens and Arizona ratepayers, but over two million has been spent on this election to elect utility supported candidates. We need to get back to an independent commission. I look for your support for that.

Ted Simons: Let's get it started here. Doug, are Arizonans paying too much for utilities.

Doug Little: Arizonans pay some of the lowest rates for electricity in the United States. It runs 12.5 cents average between summer and winner, because the rates are slightly different. One of the ways we've been able to achieve that is through using the most effective power generation resources out there.

Ted Simons: Sandra, you do you think we're doing okay with rates?

Sandra Kennedy: Well, I think when you have a commission who allows between 22% and 133% rate increases, we have a problem. We have people on fixed income, low income, and sometimes no income. And especially our seniors have to decide, you know, what do we want to pay? Do we want to pay our utility bill or get our medication that will last us for a month.

Ted Simons: So what do you think, Tom? Too much, or we doing pretty well?

Tom Forese: Compared to other states we're doing well. I want to bring up an important point. Every virtue lies between two vices. Okay, on one hand you have the price. On the other hand you have the quality and the reliability. So the job of a Commissioner to is to mistake sure these things are balanced. A lot of ratepayers have said we want a commitment one way or the other with this or that. What we've tried to do, and I think it's critical this commissioner do this, is to offer transparency into the process. To show them exactly what goes into it. If there was no water or if it was undrinkable you would have an equal outcry so it's the job of the commissioner to balance these two points.

Ted Simons: Are Arizonans paying too much for utilities?

Jim Holway: In general no, but they are highly variable. We have some of the lowest power rates in the community in many areas. It depends on where you are. The job of the commission is to find that balance. We gave you the commission's monopoly and now we need to commission to find the balance.

Ted Simons: Is the commission finding balance now?

Jim Holway: I think they can do a better job at finding balance both today and looking into the future as to how we keep rates low and make responsible decisions.

Doug Little: I think we're missing a point here though and this is one of the challenges that is going to face the commission over the next five years. We're starting to encounter aging water infrastructures. Some of the communities that were built early on are actually starting to show their age. These infrastructures, in order to maintain reliability and maintain a clean, safe water supply, these infrastructure improvements have to be made. The other thing we haven't considered, and one of the reasons some of these increases have been very significant, that Sandra was talking about, it's because of EPA mandates. For example, EPA came out with some very new and restrictive standards for the amount of arsenic that can be in the water. Certainly we want to make sure it's clean and we don't want arsenic levels in the water. At the same time, in order to meet those mandates we have to spend the money on the infrastructure.

Ted Simons: Infrastructure problem especially by way of federal mandate?

Sandra Kennedy: The EPA rules have been around for a while now. I think the commission has a job to look at the rates individuals are paying, our companies are offering, and rate cases. To me, when a company comes and says, we want a 133% rate increase, boy, I just think that is just a far outreach for a company to come and ask for a rate increase that high.

Tom Forese: Looking at President Obama's policy on energy and the overreach of the EPA, Arizona has a serious problem moving forward. What the EPA is doing will result in higher prices for Arizonans. Those will largely be on the laps of future commissioners, whoever they should be at this table. I was very pleased to see both the Republican and Democratic candidates for attorney general come out and say they would sue the EPA if they represented Arizona.

Sandra Kennedy: If I could for one moment. You talk about Obama and the EPA. The rules came in 1990 under the Bush administration. Now we're seeing the effects. You've got to make the changes. You can't keep drawing it out, saying we're not going to do it. We've got to do it now and I'm glad to see we're moving in that direction.

Doug Little: Could I put a human face on this? A week ago early closure was announced for one of the three units. Joseph is a small town about 80 miles east of Florence. It's a town of 1500 people. This closure is a direct result of some EPA mandates that have very recently come down. They receive twenty nine million dollars a year into their economy for the power plant and employ almost 250 people. When they start to close plants because of EPA mandates that costs $350,000 to implement that don't result in any significant reduction in emissions, it's coming at a price that Arizonans are really paying a dear price for.

Ted Simons: Jim? Thoughts on this?

Jim Holway: One of the challenges here is we are going to continue to see environmental regulations. They come in fits and starts, they get stronger and they get weaker. But there is a progression of we want to have a clean environment. We have made major investments in coal. I believe we can continue to use those investments. But coal does create pollution issues that we need to deal with as a state. At the same time we continue our coal, this one of the reasons we want to start to advance to a solar economy. In many of these same communities they have some of the best solar and some of the best wind resources in the state. Let's maintain the coal economy while we start to build a solar economy and we'll have a robust future.

Ted Simons: Last word on this.

Tom Forese: Some of the things that Jim is saying I really agree with. It's really a split from his party. I have to make sure we appoint out again, these aggressive policies from the EPA impact Arizonans not just Arizonans here in Phoenix, not just in Maricopa, what the rural's called the great state of Maricopa, the co-ops derive the vast majority of their power from clean coal. It's going to drastically increase rates, so it has a big impact on Arizonans.

Doug Little: Disproportionate on the rurals.

Ted Simons: Let's change gears here. Sandra, is APS paying too much for power sold back to the grid?

Sandra Kennedy: I think they are not making enough. We have been talking about net metering, a rule the ACC promulgated back when I was on the commission, APS and other stakeholders came to the table and helped put those rules together. After I left the commission, APS, out of the sky, said that people weren't paying their fair share if they had solar. So 50 to 100 already in addition to what the individuals were paying. Even APS's own witness stated, you know we're already getting this fee through the transmission line fee on everyone's bill. I'm not sure why APS was in the game to do that. I'm not sure why they didn't wait until their rate case.

Ted Simons: What do you think, Doug? Is APS paying too much?

Doug Little: Well here's the thing, this coal question of net metering really needs to be discussed in the context of a rate case. Because, that's an evidentiary hearing, sworn testimony, everybody has an opportunity to provide input, all the different interveners and stakeholders. I think what the commission wanted to do in the decision they made last November was they wanted to do two things. One, they wanted to acknowledge that there is a cost shift associated with residential rooftop solar installations to non-solar customers. And I think the other thing they wanted to do was essentially put a piece of rulemaking in place to a least start to address this cost shift. But the true, correct amount, as Sandra was saying, is something we probably do need to look like in the context of a rate case.

Ted Simons: So you're saying it's possible that APS is paying too much to put that power back to the grid?

Doug Little: There are other mechanisms besides net metering for addressing this cost shift. I think that is what we might want to look at, are there other creative solutions that we can use to address the cost shift without penalizing rooftop solar customers?

Jim Holway: What I would enter is that we need a good study. What I felt the commission is for - the job of the commission is to make a decision based on the evidence in front of them. Well they had no facts in front of them. They had a highly biased study from APS. They had a highly biased study from the solar industry. We need an independent study that looks at the costs, the impact, the rate impacts of multiple sources of power and then make that decision. The other fault I have is that when they made the decision without really knowing if we have a transfer of cost or not, they also said we're going make it basically 70 cents a kilowatt today. But we can change it any time we want. As an investor there's nothing you hate more uncertainty. So, I don't know whether to invest now because I don't know what the rules are going to be.

Tom Forese: What the public deserves is for folks that disagree to sit down and hash it out and come to a resolution that makes sense for everyone and that's really not what was done there. From that final ruling things for worse for both sides and it should have been done in a rate case. That's how you get the best result. I knew you would eventually ask me that question. I don't think there's enough information to make a call on that yet, that was the problem. I think, serving in the legislature for four years I've seen a number of turf wars where you have folks on either side coming out saying we want you to do this we want you to do that. There's always a solution that makes sense for everyone but it's putting the ratepayer, the taxpayers first.

Ted Simons: So the corporation did not necessarily do the right thing?

Tom Forese: I would have much rather have seen it done in a rate case.

Ted Simons: As far as solar firms paying taxes on leased panels, your thoughts?


Sandra Kennedy: I'm not in favor of it. I think it is a ploys that APS has pushed the Department of Revenue to go after individuals. It is a ploy to keep them from going solar. It hasn't worked so far. I'm really hoping the legislature takes up the issue as they were going take the issue up last year but it was blocked.

Ted Simons: Are you saying that APS with this move, is trying to either stall or eliminate the progress of solar?

Sandra Kennedy: Oh, absolutely. I think that they have their fingerprints all over it.

Ted Simons: What do you think?

Doug Little: First of all, going back to the primary debate, I want to be less nuanced this time. I am not in favor what DUR has been done to pass the costs along to solar customers. I understand that business property is taxed in other areas but this is one I think we need to back away from it.

Tom Forese: Do you think this is part of a plan to stall or eliminate solar?

Doug Little: Absolutely not. This is something that DUR figured out on their own, I believe. I do agree with Sandra. If there is a discussion on whether or not this is appropriate, the proper place is in the legislature, not the commission. The commission has no control over what DUR does.

Ted Simons: Jim, what say you?

Jim Holway: First I'm glad to see that Doug's come around to Sandra's and my's position that we shouldn't have this tax there. Two concerns about it. One is we are trying to get incentive to expand the solar industry. This runs against that very strongly. It is more expensive than the fees that we've talked about. Second, if you own your system you don't pay the tax. If you lease your system you do. Seventy to eighty percent of people in Arizona lease them and that's going to be our lower income customers so we're giving the benefit to the wealthy that we aren't giving to the lower income. And that I think is inappropriate.

Ted Simons: Is this again, an attempt by APS to stall or somehow, eventually, keep solar from advancing.

Tom Forese: I don't think so.

Ted Simons: Not a ploy?

Tom Forese: As I said before in the primary debate, I have concerns with it. The timing of it was my biggest concern. Solar is a wonderfully disruptive technology, it's in its infancy. In terms of it being a day, we're lying in bed and the alarm clock hasn't gone off yet. Same thing with solar, what we will see in our lifetime with solar technology is going to be amazing, so the timing is crucial. I've talked to the folks at DUR, but the timing, I don't want to see solar go through this right now.

Jim Holway: Clearly APS is trying to limit the rooftop solar industry. They see it as competition with their bottom line. Financial advisors are telling them if the rooftop solar industry expands you're worthiness as a company is going to be depreciated. Clearly they're concerned about it if they spent millions to try and stop it. That's one of the things we need to have more of an open conversation about.

Ted Simons: Utilities regulated by the Corporation Commission, should those regulated by the Commission be allowed to use ratepayer rates for promoting candidates and promoting issues.

Doug Little: Ratepayer money does not get used for that purpose. That is not something that the companies are allowed to do. But the companies that are providing these services in many cases are investor owned companies. APS is a wholly owned subsidiary of Pinnacle West. What Pinnacle decides to do with profits that they might make is up to them.

Ted Simons: Is it a good thing for the Arizona ratepayer to have them involved with candidates and issues.

Doug Little: I think what you're alluding to is some of the stuff that talks about APS essentially has bought the election for Tom and I. That is absolutely not case. I don't know what APS' involvement has been but what I do know, as a result of being a part of the campaign trail - 15 counties we've campaigned in, we have the broad support of the business communities, we have the broad support of many consumers. From my perspective I look at it as broad support along a lot of constituencies, not just the business people.

Sandra Kennedy: The answer to your problem is absolutely not. APS have not come out and said, we are not putting money into that race. They have not said that. We talk about what APS -it's a integrity issue. I'm wondering why the current commission hasn't done this. Why haven't they called APS in, called the CEO in and said, hey, come and tell us what's going on. Are your ratepayers going to pay for everything you've put out?

Ted Simons: Should APS be compelled to show those things?

Jim Holway: Absolutely. I've written several letters to the commission saying you could order this tomorrow. And in fact not just the commission, individual commissioners have subpoena power. We only need one commissioner to say I need to see this information. To some degree we respect the law of the land. If they can make a contribution in an attempt to buy the election of their regulators that needs to be publicly known.

Ted Simons: Should it be ordered. Should the commission order APS not to donate to candidates or issues?

Jim Holway: I don't know that they have that authority. That's a touchier issue. Personally I don't think they should. And in the past they hadn't. APS, all the other utilities had a policy of we will not make contributions. They've clearly changed it. And we should go back to that.

Tom Forese: The idea that it is possible that we could be bought support is insulting. The idea that we could be bought is insulting. Okay? I'm calling you out on it. Stop. I'm talking, I am talking.

[talking at once]

Ted Simons: Let him finish, let him finish.

Tom Forese: It's insulting. I think we have broad support. I don't have a problem with asking them to show who it is. I look forward to that information more than anybody else does. I think it is broad support, I believe we have a message of balance and of responsibility that resonates with a lot of folks. Not just the business communities, the ratepayers.

Jim Holway: What we need to call it is APS. I'm not saying anything about my opposition but clearly the money's been put in. The money has helped win the primary election. It's 10 times the money the candidates themselves had, this shouldn't have happened.

Ted Simons: You're saying it is insulting but should there not be concern among ratepayers that people that are going to be regulating that utility might be getting money, whether they know it or not, from the utility?

Tom Forese: I'm the beneficiary of that spending and I have concerns about it.

Ted Simons: Sandra, what do you think?

Sandra Kennedy: I think my two opponents can call APS out and say stop it, but they haven't done that.

Tom Forese: That coordination. That's illegal.

Ted Simons: Final word.

Doug Little: Tom and I focused on our own campaign effort. We've focused on what I think is a message that resonates with the ratepayers, the business community. If you look at the fact that we have received endorsements from business and consumer organizations, up and down the line. What that tells me is we have very broad support across the business and the ratepayer community.

Ted Simons: Each candidate will now give a one-minute closing statement. Going in reverse order of the opening remarks, we start with Jim Holway.

Jim Holway: Ted, thank you. I'm glad finally everyone's at the table to do that. We need to talk about these issues more. I want to start briefly on the issues just raised. Clearly this amount of money puts a cloud over the integrity and the independence of the commission. That's why the commissioners should act. The fact that none of them will act says something about fear of what an entity like APS with that amount of money could do to their own political futures. That's why it shouldn't happened. What I'd love to do is continue with these debates. What I ask the viewers to do is check out my website holway2014.com. We've got a lot of information, details answers to questions that have come up. What we're looking to do is start a whole conversation about what can Arizona do to bring new innovation and get our economy going and back on track.

Ted Simons: Thank you very much. To Sandra Kennedy now with our next closing statement.

Sandra Kennedy: Again, thank you for the opportunity to participate tonight. Clearly you can see who my opposition is. You can clearly see they are the APS chosen candidates. I want to be your consumer advocate, return me to the Commission. Analysts say that they are going to be good for APS's bottom line. I want to be good for your bottom line, I want to help you keep money in your pocket. A vote for Sandra Kennedy is a vote for you. Please return me to Arizona Corporation Commission. Thank you.

Ted Simons: Thank you. Tom Forese now with our next closing remark.

Tom Forese: I'm grateful to be with you this evening. A little bit about my background. My grandfather first came to this country as a teenager. He lived the American dream, was able to get a job at a steel mill. Put eight kids through college and bought a store and some property. It's a great point of pride knowing that that sort of story can happen in America. I think Arizona is most American of the 50 states. We have 10 to 15,000 people who still move here every month looking for a similar dream and a similar opportunity. I believe in Arizona. I think this is a great place for great opportunities. The Corporation Commission has a tremendous impact on that. I hope you'll send me and Doug Little to the Corporation Commission to represent you.

Ted Simons: Thank you very much. And now Doug little's closing statement.

Doug Little: Thank you for watching this. This is an important discussion that unfortunately not a lot of voters are participating in. I want to help you understand why I am running for this office. A little over a year ago I saw some things potentially happening in Arizona that would have tremendous negative effect on the Arizona consumers and ratepayers. I'm not a politician, I'm a citizen like most of you are. I'm doing this because I feel like the ratepayers in this state need a champion, somebody protecting them from out-of-state interests that would do things that would affect our economy in a very negative way. By using this platform that Tom and I have, we're going to make Arizona better. Making that economy better is going to make life better for the ratepayers. Please support Tom and I in our race for the Arizona Corporation Commission.

Ted Simons: Thank you, candidates, and thank you for watching this Clean Elections debate. That is it for now. Thank you so much for joining us. You have a great evening.

Tom Forese:Republican Candidate, Arizona Corporation Commission; Doug Little:Republican Candidate, Arizona Corporation Commission; Sandra Kennedy:Democratic Candidate, Arizona Corporation Commission; Jim Holway:Democratic Candidate, Arizona Corporation Commission;

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