BENCH THIS UTILITY MAN

Mormon missionaries do not roar through neighborhoods astride Harley Davidsons, sporting fade haircuts and M.C. Hammer bloomers. Instead, these earnest young men invariably try to convert you by arriving at your residence atop sensible Schwinns, wearing black pants, white shirts and "Hi, your daughter and your soul are safe with me" haircuts.

This sort of day-to-day pattern, because of its very predictability, provides all of us with some modest comfort.

Then something shocking occurs, like Joe Castillo realistically having a shot at the Corporation Commission seat.

You cannot help but feel that life is random; anything is possible except, perhaps, the Red Sox actually winning a World Series.

The mismanagement, the self-dealing, and the virtual collapse of Keith Turley's utility empire, Arizona Public Service Company/Pinnacle West Corporation, have rivaled the bankruptcy and seizure of Charles Keating's Lincoln Savings and Loan for statewide headlines.

Pick your favorite moment in recent APS history: Turley and the gang propose to build the largest nuclear- power plant in the world. Following construction, consumers learn that the land for the utility was purchased from Turley's in-laws. Last year, the plant refused to run 75 percent of the time and, based on Nuclear Regulatory Commission reports, Palo Verde was selected as the worst-managed nuclear operation in the country by the Washington, D.C.-based Public Interest. Turley and his fellow directors voted themselves hundreds of thousands of dollars in home-loan mortgages at the astounding rate of 6.75 percent interest. More than $32 million was siphoned out of the company and into the hands of the son of board member Karl Eller to fund a venture-capital business. Turley and friends plunge the company into a debt of more than one-half billion dollars and secure one of the lowest bond ratings in the country at the same time that the rest of us are paying some of the highest electric bills in the entire nation.

Throughout, Joe Castillo was a carnival barker for Turley's interests.
When the giant electric utility sought rate increases, Joe Castillo grabbed a microphone and demanded commission approval.

As head of the APS shareholders organization, a group funded by Turley, Castillo was an incessant and vocal shill for ever more expensive electricity.

"The proposed rate increase is not enough," and "the proposed increase is merited" are typical comments from Castillo's Corporation Commission testimony.

The greed of Turley and Castillo led to a record Ivan Boesky and Michael Milken might have envied.

The ineptitude led to disaster.
APS took its monopoly profits and, over the objections of the Corporation Commission, gambled in the highly speculative real estate market. The ensuing financial chaos saw the utility's stock collapse, holdings sold off and the public outcry of enraged investors at the last shareholders meeting. A bitter takeover battle ensued when an out-of-state utility, PacifiCorp, did the logical and attempted to buy out the reeling APS.

From this toxic dump, Joe Castillo stepped forward and announced for the Corporation Commission.

He asked voters to unseat incumbent reformer Marcia Weeks.
Joe Castillo was not hauled from the podium, tarred, feathered and put in the public stockade.

People took him seriously.
Pollster Bruce Merrill was recently quoted explaining how Castillo can win.

Candidates like Joe Castillo do not develop in a sterile hothouse; they are encouraged. In Castillo's case, he's had some very helpful ink.

The opening salvo in the Castillo campaign was fired by columnist Bob L'Ecuyer.

On August 30, 1989, L'Ecuyer wrote a diatribe in the Westsider blasting Commissioner Marcia Weeks. Arguing that commissioners needed to " . . . set aside any bias or prejudice for or against utilities . . . there's growing doubts whether Commissioner Marcia Weeks meets that standard. Instead she is engaged in highly inflammatory attacks on people related to utilities . . . Weeks' attack appears to be pure politics . . . Weeks is a very liberal Democrat."

L'Ecuyer concluded his assault comparing Weeks to a demagogue who used " . . . bias and prejudice . . . lust[ing] after power so intensely they risk dividing and damaging society to get it."

Five weeks after L'Ecuyer's column pounding Weeks, Castillo was interviewed in newspapers across the state regarding his candidacy opposing Marcia Weeks.

What readers and voters did not know was that L'Ecuyer and Castillo were business partners, according to 1989 records from the Secretary of State's Office.

They described themselves as "political consultants who contract with candidates or candidates committees to provide campaign services including brochures, tabloids, letters, radio and TV spots, telephone banks and personal contacts. Other services include polling and research, fund raising and budgeting. All campaign services are for the purpose of influencing an election . . . "

Although Castillo marketed himself in the press as a small shopkeeper of blueprints, he and his campaign associates were longtime political operatives, originally called Castillo, Guinn, and L'Ecuyer.

Before joining the firm, Hugh Guinn was a candidate for the state Senate. Records from his campaign show that during one reporting period more than 50 percent of his contributions, amounting to thousands of dollars, came from Keating and his executives.

Fueling the common wisdom that with enough moxie and money you can buy whatever sort of expert testimony you want, Governor Evan Mecham hired L'Ecuyer in 1988 during the chief executive's impeachment. L'Ecuyer swore under oath before an astonished House of Representatives that it was Mecham's right to pilfer state protocol funds to finance the governor's Pontiac dealership. Mecham made off with $80,000 in loans and was removed from office.

It is possible to make too much of the hidden business relationship of candidate Castillo and his press champion Bob L'Ecuyer. After all, the column is now defunct.

Mark Genrich, deputy editor of the editorial pages of the Phoenix Gazette, charged into this vacuum.

In the past six months, virtually one third of Genrich's output has boosted Castillo's candidacy by savaging Weeks.

In his columns, Genrich often cites Ted Humes as an authority.
Humes is marvelous. And much more interesting than the L'Ecuyer-Castillo connection.

When Ted Humes served as a hearing officer during the years the Corporation Commission routinely rubber-stamped utility requests for rate hikes, he was an eccentric bit player in Arizona politics. Once, in response to a consumer's complaint about Ma Bell, Humes demanded to know if the customer would prefer the service of the phone company in Russia. A former CIA man, Humes visited European battlefields on vacation.

In the early Eighties, Arizona changed. Following a string of astronomical rate hikes, it was discovered that the Republicans on the Corporation Commission were raising the price of electricity using language drafted by the very utilities the commissioners were elected to regulate. The attorney general sued.

In 1983, after a bitter battle, the legislature created the Residential Utility Consumers Office (RUCO). RUCO was funded as an advocate, with legal staff, to speak on behalf of Arizona's consumers at rate hearings.

In 1986 Ted Humes ran for the Corporation Commission on a platform that included withering attacks on RUCO and an understood bias on behalf of big utilities. He was defeated.

But in January of 1987, the newly elected governor, Evan Mecham, appointed Ted Humes to take over RUCO.

At the time, Republican state Senator Greg Lunn recalled being told by Mecham that the governor intended to cripple RUCO. Although Mecham denied this, the governor was not shy in his criticism of the consumer agency.

In the midst of an unprecedented rate hike sought by APS, Humes fired the staff attorney who'd spent six months preparing the case. He replaced the terminated lawyer with a litigator who'd been hired away four days earlier from his previous job as chief engineer for Williams Air Force Base. Thus RUCO turned into a straw man. Humes also brought on board as staffers an attorney who'd been working for the utilities as well as one Todd Fahey who'd founded Students for John Birch at Arizona State University.

Described as overly suspicious of his staff, Humes began to keep his office calendar in Polish.

When the travesty of Ted Humes running a state-mandated consumer agency ended, Humes turned up as an acknowledged Castillo supporter and an expert witness in Genrich's wild ramblings.

What is Marcia Weeks' crime? She has held utility rates to reasonable levels.

Genrich is one of those silver polishers from the gentry who truly believes that giant corporate interest can never profit too greatly.

In the Reagan era, this sentiment was not only given a good airing, it became law. Voodoo economic stunts like the trickle-down theory took on credence. This idea suggested that the more the corporate executives gobbled, the more crumbs would fall from their lips for the rest of us. And so, to take one example, the savings-and-loan industry was deregulated. Out of the same economic gestalt, the Securities and Exchange Commission allowed enormous utility- operation monopolies to set up holding companies and diversify.

In Arizona this turned into a swell scam. The state's largest utility, Arizona Public Service, had always enjoyed a state-granted monopoly. No one was allowed to compete against APS. Furthermore, profits were guaranteed. The Corporation Commission was nominally chartered to see that profits from this monopoly did not become obscene and that ratepayers were not pillaged.

The old commission failed on both counts.
Electricity from APS was some of the most expensive in America and soon the giant utility wanted to take its enormous profits and gamble.

Under the Securities and Exchange Commission exemptions, APS bought up vast tracts of real estate, Arizona's largest savings and loan, a chunk of the Phoenix Suns and a partridge in a pear tree. The utility's first venture outside a state-guaranteed monopoly ended in a financial Apocalypse bringing APS to the brink of bankruptcy.

On the national level, we are beginning to see that a Charles Keating cannot happen without a Senator Dennis DeConcini or a Senator John McCain.

On the local level, an APS cannot run rampant without a Joe Castillo, a Ted Humes, and a Mark Genrich.

Turley's plunge into real estate speculation, sports franchises, savings-and-loan ownership and resort management is only possible in an atmosphere that condones monopoly profits so high that they have to be laundered somewhere.

It never occurs to the Ted Humeses, the Mark Genrichs, the Joe Castillos to say, "Let's lower the monopoly's profits by lowering the cost of electricity."

But there is something more remarkable still about the candidacy of Joe Castillo.

Let's assume you believe that the rich already pay too much in taxes. Let's grant that the savings-and-loan crisis is actually the result of government auditors hounding honest businessmen like Charles Keating. We'll agree that what's good for Keith Turley--like exclusive skyboxes at Cardinals games--is good for Arizona.

In these difficult economic times, let's say we want the voice of a successful financial investor on the Corporation Commission.

By this bottom-line standard, Joe Castillo shouldn't be trusted with his own lunch money.

Castillo ran the utility shareholders organization. The shareholders in APS/Pinnacle West have been left in worse shape than Cambodian boat people.

In 1986 the shareholders' stock in APS was valued at $30 per share with dividends of $3 per unit. After the Castillo-endorsed diversification, the company plunged into a one-half billion debt and dividends were frozen. The stock plunged to $4.25 per share last Christmas. Finally, PacifiCorp offered shareholders more than $20 per share, a remarkable lifeline. But Castillo's buddies at APS nixed the deal. The utility boys then went out into the marketplace and borrowed millions to prop up their failure.

In order to get the loans, they promised the bankers that the shareholders would see no dividends for years.

The only people in Arizona to get a bigger screwing than the customers of APS were the Castillo-led shareholders of APS; and now, having helped scuttle those investments, Castillo has abandoned them. Today, he offers to chart a path to fiscal responsibility for the rest of us.

And some of you out there actually believe this guy?
Pogo was right.

Joe Castillo was a carnival barker for Turley's interests.

Genrich is one of those silver polishers from the gentry who truly believes that giant corporate interest can never profit too greatly.

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