At the NE Valley Pachyderm Coalition meeting Wednesday, September 14, 2011, the three GOP Arizona Corporation Commission (ACC) candidates discussed their views of the proper role of the ACC, regulatory issues, and the Renewable Energy Mandate.

This is the first event at which the GOP ACC candidates, Bob Stump (Incumbent), Bob Burns, and Susan Bitter-Smith appeared together for this campaign.

There is a recent NASA study  that debunks the computer models on which global warming projections from greenhouse gasses is based. It was these models that helped “fuel” the alternative energy mandate. Now that those projections have been discredited, it is time to change Arizona energy policy to reflect reality rather than unsubstantiated doomsday scenarios ala Al Gore.

Susan Bitter-Smith and Bob Burns related their experiences on the board of the Central Arizona Plan (CAP) which has a huge role in managing water supplies. Bitter-Smith was President of the board during the last 4 of her 12 years of service on it. She mentioned how water rates and property taxes were both reduced during her tenure. Bob Burns was credited with bringing in outside auditors to audit CAP financial records on a regular basis as required by law, but not done until he raised the issue and followed through to get it done. The value of this experience for being on the ACC, according to Susan Bitter-Smith, is that most of the work of the ACC involves regulating water rates, and being on the CAP board provides excellent experience with water issues.

Bob Stump and Bob Burns both described their experience and record in the state legislature. Both were recognized as conservatives during their legislative tenure by a variety of organizations. In fact, Bob Burns was rated as a top Senator by the Pachyderm Coalition.

Bob Stump, as an incumbent, had more information about current issues recently before the commission and was able to talk about those not currently pending before the commission. He made some humorous comments about drug tests in reference to alleged possession and use of drugs by a Democrat commissioner.

Bob Burns served as Appropriations Committee chairman in the legislature as well as Senate President. He said that his Appropriations Committee experience would be helpful as member of the ACC as it prepared him to dealing with competing interests and use staff to help evaluate the assertions of various interests and come up with good solutions. He said that he viewed the role of the ACC as being more judicial than legislative in the sense that rate approvals and policy decisions should be based on interpreting facts of a case within the context of laws and protecting rate payers. Burns does not think the ACC should be advocating for particular people, companies, or industries; it should work to protect rate payers and prevent fraud according to the law.

Questions were raised about smart meters costs and potential health effects. Bob Stump said that he had reviewed studies about the smart meters and was personally convinced that they pose no danger, but he is respectful of others who don’t share those views. He and the other candidates all supported a policy of allowing electricity customers to opt out of smart meters. One of the advantages mentioned by the candidates about smart meters is the reduced cost of meter reading. In response to questions about who will pay the extra costs of those opting out, Stump and Burns indicated that they would be receptive to adjusting meter reading fees of utilities to reflect the actual costs of meter reading. Bitter-Smith said she would have to review the information more before supporting different meter reading rates for those who opt out of smart meters.

All of the candidates said they were committed to keeping utility rates as low as possible consistent with utilities being able to earn a reasonable return on their investments. Keeping companies profitable is essential to maintaining and improving service, but the ACC works to ensure that costs are not inflated so that rates can be as low as possible. Susan Bitter-Smith expressed concern that the Federal government is trying to close down a coal powered electrical generating plant that provides the electricity to pump water from the Colorado River to the rest of Arizona because of its carbon footprint. She said that pumping costs were the largest component of water costs, so switching from a relatively inexpensive coal plant to other sources for electricity will substantially drive up the cost of water. Bob Stump added that the Obama administration is engaging in a war on fossil fuels that is driving up the cost of energy. He said natural gas deposits in West Virginia have been discovered that can supply US energy needs for 100 years, but the Federal government is blocking the extraction of this gas.

This raised a question about the renewable energy mandate. This mandate requires that the percentage of electricity generated by renewable energy sources eventually be increased to 15% by the year 2025. It will increase by 1% each year until then. After that, the mandate expires. The issue with renewable energy sources is that most currently cost at least 10 times more than other energy sources and are often less reliable. This means that, if costs compared to nuclear and fossil fuels don’t come down, we could easily be paying more than twice as much for electricity because of this mandate than we need to. This is clearly not a way to keep costs down, and the candidates agreed with that.

The candidates all said that they would never have voted for the mandate, but, now that it is in place, they would not vote to repeal it. Bob Stump said that repealing the mandate would be like pulling the rug out from alternative energy firms that have made investments based on the mandate. He said that Arizona benefited from the investments and jobs created. He also said that the hope is that innovation and technological improvements will lower the cost of alternative energy by the time the mandates expire. He also said that Republican commissioners Gary Pierce and Brenda Burns who are not up for election for another two years share his view. Apparently, people who made investment decisions based on the low cost of electricity before the mandate was passed do not merit the same consideration as the investors in renewable energy companies. Bob Burns said that repeal of the mandate would possibly expose the state to lawsuits from solar electric companies. That seems unlikely if rate payers are not allowed to sue the state for imposition of the mandate in the first place.

Bob Stump mentioned how, when he originally ran for the ACC in 2008, that the “Solar Team” of Democrats won two of the three seats up for election and that his election was by a very narrow margin. Perhaps challenging the likely “Solar Team” for 2012 is considered too risky by the candidates if they appear unwilling to continue with the renewable energy mandate (mostly solar energy). Bob Burns said that solar energy appears to be popular with voters – another reason not to repeal the mandate.  When asked why electricity customers who are allowed to buy their electricity on a competitive market (only generation of electricity – not its distribution over power lines) from any company could not simply choose alternative energy electricity suppliers if that is what they want and let everyone else keep their low rates, there was no substantive answer given except that it would mean reversing the current policy. It appears that solar power would be less popular if people who want it had to pay for it themselves. This means that solar companies and their employees have a strong political interest in making sure that the mandate does not get repealed, and they would have a strong incentive to fund very aggressive political campaigns against ACC candidates supporting repeal. Without a government body supporting their businesses, solar energy companies would go bankrupt and their employees would have to find new jobs. Candidates running clean elections campaigns each get $137,811 for the general election. There are no longer matching funds available. That means the solar energy industry, which depends on the ACC to survive rather than consumer preference for low cost of its electricity, can easily outspend the three Republicans combined with a $500,000 “solar campaign” targeting Republicans and supporting Democrats and appealing to people who don’t understand how much solar energy really costs.

Energy, including electricity, is the life blood of an economy. Costs made artificially high because of government policies will hurt consumers through what is likely to be a doubling of electric rates. Businesses will take this into account when deciding where to locate their operations. The ACC candidates said that Arizona’s mandate is lower than other Western states, but Arizona competes with other states such as Texas for job creating businesses. The “benefits” of having solar companies in Arizona will be at the cost of seriously damaging the rest of Arizona’s economy.

The GOP ACC candidates are in agreement to maintain the expensive renewable energy mandate. Since there are only three candidates for three positions, they all have an incentive to play it safe and not rock the boat on solar energy. Having Republicans would be better than having Democrats on the ACC even if they are unwilling to fully support Republican principles of free enterprise and not having government picking winners and losers – either individual businesses or industries. Environmental arguments such as global warming have been debunked, so justification of higher costs based on environmental concerns cannot be legitimately defended. The only way the mandate will be repealed is if conservative Republicans opposing the mandate run for the ACC and win, the current candidates change their position based on the latest scientific evidence available, or if the legislature passes a bill to repeal it and the governor signs it.

Information about future NE Valley Pachyderm Coalition meetings was provided just before the meeting concluded.

Next month, Congressman Ben Quayle will be speaking about pressing issues such as the Federal budget, Federal regulations, and the economy. Lynne Weaver, Chairman of Prop 13 Arizona, will briefly describe the ballot initiatives for the Paradise Valley and Cave Creek School districts.

In November, Senate Majority Leader Andy Biggs will be speaking. Superintendent of Public Instruction John Huppenthal will be the December speaker.