Kevin Thompson reportedly traveled to New York last month to meet with financial investors whose interests are directly impacted by the commission’s decisions.
ARIZONA, USA — Newly elected Arizona Corporation Commissioner Kevin Thompson is facing an ethics complaint after he traveled to New York last month to meet with financial investors whose interests are directly impacted by the commission’s decisions.
A prominent consumer advocate who filed the complaint alleges the trip should disqualify Thompson from ruling on future cases related to utilities like APS. Thompson denies he did anything unethical.
ACC Senior Attorney Robin Mitchell will not comment on how the investigation will be handled, although the matter was scheduled to be discussed during a closed-door meeting on Thursday, according to Thompson.
Thompson boasted about meeting with investors
The state’s five commissioners are expected to act as judges on cases involving Arizona businesses, securities and utilities.
On January 21, Thompson posted on social media that he met with nine utility stockholders and investment banking service providers, including Credit Suisse, Morgan Stanley and Bank of America.
"I spent two days this past week in NY meeting with financial institutions that invest in Arizona's utilities,” Thompson posted on social media on January 21.
"My purpose was to let them know that Arizona is a great place in which to invest, and that the Arizona Corporation Commission is no longer going to allow the regulatory environment in Arizona to be dead last in the nation."
Nick Myers, also new to the Commission, commented on Thompson’s post.
“Amen brotha,” Myers wrote.
On Wednesday, Thompson told 12News he believes he acted ethically.
“I don’t see why it wouldn’t be. Our attorneys reviewed the ethics rules and forwarded it to the commissioners and they will look at that tomorrow (Thursday.) As of right now, I haven’t violated any of the Corporation Commission’s ethics rules,” Thompson said.
Consumer advocate Abhay Padgaonkar, whose activism has prompted the commission to make course corrections in the past involving problems with APS practices, requested that ACC Chief Counsel Robin Mitchell investigate Thompson and make the findings public.
“I will ask you or the Commissioners to refer the matter to the Attorney General to investigate ‘knowing or corrupt conduct,’” Padgaonkar added in his complaint. “The financial institutions maintain a market in the securities of the regulated utilities or their parent companies, such as APS (Stock: PNW), TEP (Stock: FTS), and SW Gas (Stock: SWX).”
Code of Ethics bans certain personal meetings
According to the Commission’s Code of Ethics, Rule 5.2 states, “A Commissioner shall not knowingly communicate with any person, representing an industry or public service corporation whose interests will be affected by commission decisions, and whose intent is to influence any decision, legislation, policy, or rulemaking unless that person has registered as a lobbyist.”
Thompson does not dispute he met directly with people not registered as lobbyists representing industries that benefit from his decisions. Thompson said he believes it’s his “job to reassure there’s regulatory stability in Arizona.”
“It’s unethical, that’s for sure”
Sandy Bahr, Director of the Sierra Club’s Grand Canyon Chapter, has been advocating for environmental causes at the commission for more than two decades.
Bahr said it’s not a commissioner’s job to advocate for a monopoly utility.
“It’s unethical, that’s for sure, and it seems for me that it would be very difficult for him to demonstrate that he can be impartial relative to the utilities’ rate cases,” Bahr said. “He’s already told the utilities’ investors that he’s going to deliver.”
Thompson will be expected to rule on rate cases involving APS and TEP this year.
The most recent federal data shows APS charged its customers an average of 23% more in 2021 compared to SRP customers.
Unlike APS, SRP operates as a not-for-profit organization. It consistently ranks first in customer satisfaction among large utilities in the west by J.D. Power. Last year APS ranked seventh out of 14 large utilities in the west.
According to a filing by the Residential Utility Consumer Organization (RUCO), APS is seeking from the commission an $895 million increase in revenue, amounting to an average 26% increase on utility bills.
WATCH: Commissioner Kevin Thompson discusses with Joe Dana his meetings with utility investors in New York.
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This article delves into the ethical concerns surrounding Arizona Corporation Commissioner Kevin Thompson's meeting with financial investors in New York, which could potentially impact decisions involving utilities like APS. Thompson's trip and subsequent discussions with investors, including entities like Credit Suisse, Morgan Stanley, and Bank of America, have sparked controversy.
The key concepts involved here encompass regulatory ethics, commissioner responsibilities, utility rate cases, investor influence, and the implications for consumers. Let's break it down:
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Arizona Corporation Commission (ACC): This regulatory body oversees decisions affecting businesses, securities, and utilities in Arizona. Commissioners are expected to act impartially and judge cases related to the state's interests.
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Kevin Thompson's Trip to New York: Thompson's visit to meet financial investors, particularly those investing in Arizona utilities, raises ethical concerns. The trip is under scrutiny due to potential conflicts of interest and the possibility of undue influence on future decisions.
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Ethical Concerns and Code of Ethics: The Commission's Code of Ethics, Rule 5.2, prohibits commissioners from knowingly communicating with individuals representing industries or corporations affected by commission decisions, especially if the intent is to influence decisions without registering as lobbyists.
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Consumer Advocacy and Allegations: Activists like Abhay Padgaonkar have raised concerns and filed complaints, urging investigations into Thompson's actions. They highlight the conflict between a commissioner's role, impartiality, and advocating for utility investors.
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Impacts on Utility Rate Cases: Thompson's involvement in upcoming rate cases involving APS and TEP raises concerns about impartiality. APS, seeking a substantial revenue increase, faces scrutiny for higher customer charges compared to SRP, a not-for-profit utility known for better customer satisfaction.
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Stakeholder Influence and Commissioner Impartiality: Sandy Bahr, representing the Sierra Club, emphasizes the ethical dilemma of a commissioner advocating for a monopoly utility. This raises doubts about Thompson's ability to remain impartial in utility rate cases.
The situation underscores the ethical complexities of regulatory bodies and their commissioners' responsibilities. It highlights the delicate balance between facilitating investments and ensuring fairness in regulatory decision-making, especially in the context of public utilities and consumer interests.
