Emails show Arizona regulator Olson copied utility talking points on rooftop solar
An Arizona utility regulator appears to have recycled utility talking points in a May interview with a Wall Street analyst, setting off criticism that Arizona Public Service has an unfair level of access at the state Corporation Commission.
The Energy and Policy Institute (EPI) published a set of emails on Thursday which show ACC Commissioner Justin Olson coordinated with APS officials ahead of a public interview with a Credit Suisse analyst. The emails also include a five-page primer the utility supplied Olson that the regulator at times appeared to speak from verbatim.
Olson maintains he is independent from APS and points to his work on ethics reform. And an APS official told Utility Dive there was nothing unusual about the emails or collaboration. But a former regulator says it appears to be a flagrant example of "regulatory capture," and EPI officials say it "erodes trust" in the commission's decisions.
The scrutiny comes as Olson runs for reelection to the ACC and spending on a renewable energy ballot initiative rises sharply, with APS and its parent company heavily involved.
Arizona is embroiled in a debate over Proposition 127, which would direct utilities to deliver 50% renewable energy by 2030. With total spending on the ballot fight now about $40 million, observers say it is the most expensive in Arizona's history.
An 'open door policy'
The relationship between regulators and the companies they oversee is often scrutinized, but utility officials say close collaboration is the norm.
“Of course we communicate with all commissioners and staff – It’s is our responsibility to maintain ongoing dialogue with the ACC," APS spokesman Hal Pittman said in an email.
Pittman went on to criticize EPI, evoking the ballot initiative.
"The Energy Policy Institute is not a think tank, watchdog, or non-profit institute, but rather a dark money organization that attacks the interests of the energy industry; most recently, it has been the primary mouthpiece of pro-Proposition 127 propaganda,” Pittman said.
Olson has reached out to Utility Dive to dispute the characterization that he initially offered APS the opportunity to weigh in on issues in advance of the Credit Suisse interview. Olson told Utility Dive that APS officials phoned him to volunteer information ahead of the interview, and he subsequently shared the list of anticipated questions with the utility.
Olson told Utility Dive he is "independent" and has "an open door policy."
"I've always had an open door policy, and valued getting as much information as I can to determine what's appropriate and accurate and what is not" Olson said.
"APS reached out to me and offered me their insights," he said, though the emails show he offered them the opportunity.
Olson also pointed out that "there was information from the utility I did not include because those were not positions I shared. My positions have been long-held, consistent positions."
"My record speaks for itself," said Olson. "For anyone to argue I've been anything but independent from APS would be wrong."
Criticism of APS's political spending is not new. The utility has previously been accused of a funneling money to support the political campaigns of favored commissioners.
"It shows a continuing effort on part of utilities to control the narrative and to control the landscape of energy policy and delivery of energy services," said Jon Wellinghoff, former chairman of the Federal Energy Regulatory Commission, and founder of Grid Policy at Rocky Mountain Institute.
"If I was a consumer, I would walk down to his office and demand [Olson] resign," Wellinghoff told Utility Dive.
'Blatant' regulatory capture
This is just the latest instance of close ties between regulators and utilities attracting scrutiny. In perhaps the most well-known, emails between Michael Peevey, former chair of the California Public Utilities Commission, and officials at Pacific Gas & Electric led to the regulator's resignation and the firing of three utility officials.
More recently in Indiana, critics of a Utility Regulatory Commission report on the state's energy needs say it merely parrots the resource plans of utilities.
According to the emails EPI received following a public records request, APS supplied Olson with talking points on energy efficiency, rooftop versus utility-scale solar, the Palo Verde nuclear plant and the future of Arizona's electric load growth.
In one part of the policy memo, APS officials wrote about rooftop resources: “From a cost perspective, utility scale solar today is approximately 1/3 the price to install relative to rooftop installations while providing the same environmental benefits. It also has benefits such as tracking that can provide more energy during peak periods on the system."
Rooftop solar supporters would argue those figures are flawed and fail to account for the significant grid benefits rooftop solar provides, or differences in how the resources are acquired.
Olson told Credit Suisse analyst Michael Weinstein in the May interview, "The cost of installation is about a third of the cost of rooftop solar. In addition are added benefits of utility-grade solar that it can track with the sun throughout the day which increases the efficiency of the energy generation. So more energy can be produced during the peak periods on the system."
"This is amazing to me. Shocking," said Wellinghoff. "In 40-plus years of interacting with regulators, representing regulators and being a regulator, I've never seen such a blatant case of regulatory capture. ... it's incredible the guy would ask for a memo to be able to respond to Wall Street, and then read it verbatim."
"Let's cut out the middle man," the former FERC chair added. "Why do we need this guy?"
APS's Pittman defended the happenings and the work of Amanda Ho, the utility's director of state regulatory affairs and compliance. Ho is a former ACC employee and in her role at APS helped Olson prepare for the Credit Suisse interview.
"Amanda Ho is our company’s primary interface with Commissioners and staff, and as part of that responsibility, responds to ACC questions and requests for information," Pittman said.
"It’s is our responsibility to maintain ongoing dialogue with the ACC," Pittman said, explaining the correspondence. "APS is a recognized expert on energy policy issues in Arizona; we implement policies set by elected officials, and our perspective is important to that process.
Election day looming
Questions about the ACC's independence come as new analysis of campaign finance records show APS parent corporation Pinnacle West Capital spent more than $11 million from Aug. 12 to Sept. 30 on the renewable ballot fight, in particular through new contributions to Arizonans for Affordable Electricity, a political action committee (PAC) set up to fight the proposal.
According to EPI, the new round of contributions bring the utility company's spending to more than $22 million. Billionaire activist Tom Steyer has spent almost $20 million so support the initiative.
A recent poll shows the ballot initiative trailing, but with many voters still undecided.
The issue has loomed large in the ACC election, which features Olson and Republican attorney Rodney Glassman facing off against Democrats Kiana Sears and Sandra Kennedy for two open seats. Both Democrats say they support the ballot initiative, while Olson and Glassman oppose it.
The state's AARP chapter on Thursday issued a statement saying Prop 127 “does not belong in our state Constitution."
"AARP is concerned about any measure that could potentially drive up electricity rates," the group said. "Further, this measure does not belong in the state Constitution. This is an overreach and raises real concern."
The group Clean Energy for a Healthy Arizona Committee, which is backing the initiative, over the summer released a poll showing three-quarters of Arizona residents want more investment in renewable energy.
UPDATED: This article has been changed to indicate Olson disputed the characterization that he initially offered APS the opportunity to weigh in on issues in advance of the Credit Suisse interview.
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