Commission Impossible

An underfunded Democrat takes on a powerful Republican in a quest for the state's least-sexy elected office

And on the issues, they sound a lot alike. Both say they want to protect consumers. Both say they want deregulation to be fair to the utilities. And both state the obvious when it comes to how the commission is run: The place is a disaster area.

The Arizona Corporation Commission, set up at statehood in 1912, is one of the most-ignored state agencies. Most people can't name a single member of the commission and don't know what it is or what it does.

This is unfortunate because, more than any other state office, the commission intersects with people's daily lives. It oversees the companies that bring water, power, gas and phone service to your home. In addition, it polices securities traders in the state and incorporates all Arizona business.

The agency is run by a three-member panel of elected commissioners: Jim Irvin, Republican and current chairman; Carl Kunasek, Republican; and Renz Jennings, Democrat.

To put it mildly, they don't get along.
For more than a year, much of the panel's time has been spent in bitter, behind-the-scenes infighting that occasionally blows up into very public embarrassments.

The battle lines aren't drawn along party lines. The real animosity is between the two Republican commissioners, Irvin and Kunasek. Jennings has sided with Irvin, which has left Kunasek on the sidelines. With Jennings' support, Irvin became chairman of the three-member panel last year.

The first public eruption came last year when Kunasek's choice for executive secretary, the commission's chief staffer, was dumped in favor of Jack Rose, who was supported by Irvin and Jennings.

Since then, there's been a host of troubles at the agency, including the abrupt departures of longtime staffers caught in the middle of the hostilities; the hiring of a new head of the utilities division, Morris Wolff, whose resume turned out to be mostly fiction; the public shouting match between Kunasek, his aide Jerry Porter, and Rose, over alleged violations of the open-meetings law; and the memo Rose penned shortly afterward, asking to hire an independent counsel to investigate Porter.

Morale is low. The commission's turnover rate is near 20 percent for each of the past two years, one of the highest for state agencies its size.

This turmoil couldn't come at a worse time for the people the commission is supposed to serve: Arizona's consumers. Arizona, like other states, is struggling with the deregulation of utilities.

Since the commission was created, the utilities have been run as state-regulated monopolies. State government guarantees them "reasonable profits" while ostensibly making sure that everyone can afford air conditioning, heat, water and telephone service.

But in 1992, states began to study a free-enterprise system for utilities. By 1999, any electric utility, even if it's in another state, should be able to sell power in Arizona without being bound by the traditional geographic districts now in place. The states, including the Arizona commission, are helping make the transition by introducing new rules for the free market.

Under the new rules, there are no guaranteed profits. And that leaves utilities with a lot of debt and assets--called "stranded costs"--that they might not be able to pay off.

Before they give up their guaranteed profits, the utilities want to pay off that debt with ratepayer increases. Consumers, on the other hand, don't want to have to pick up the tab. Some consumer groups fear deregulation could boost rates by 10 percent to 15 percent.

Utilities also want to be able to compete on each other's turf, but don't want to lose their own customers. And big-business customers want breaks on their utility bills, since they buy in bulk. But residential customers don't want to have to subsidize those discounts.

And all of this without sending everyone's monthly bills into orbit.
It's a nightmarishly difficult task. And the Arizona Corporation Commission has never been less up to it. The commission has had to ask for outside help just to read the thousands of pages of material submitted by utilities in the process.

Time is running out. Competition is mandated to begin by January 1 for big-business customers, and by the end of next year for everyone else in Arizona.

Whoever steps into the commission in January will have a lot of work to do. The decisions he makes will have repercussions for years to come.

Because the stakes are so high, the campaigning began early. The divisions on the commission extended into the primary: Everyone had a horse in the race.

West, 60, a longtime friend and ally of Kunasek, ran in the GOP primary against Gary Carnicle, a political novice who directed Jim Irvin's campaign for the commission.

It was an uneven contest, at best; Carnicle lost despite dumping $150,000 of his own money into the race.

It didn't take a psychic to see that defeat coming. As state treasurer, Tony West presided over an unprecedented economic boom that filled the state's coffers to bursting. The treasurer's office manages $6.6 billion in state dollars and has earned $1.7 billion from investments during his time in office.

West knows every player in Arizona politics. The list of people on West's campaign committee stretches across three pages, and includes Governor Jane Dee Hull, Senator John McCain, Representative J.D. Hayworth and Scottsdale Mayor Sam Campana, among other influential figures.

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