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Arizona Public Service CEO Don Brandt during a hearing before the Arizona Corporation Commission on September 4, 2019.EXPAND
Arizona Public Service CEO Don Brandt during a hearing before the Arizona Corporation Commission on September 4, 2019.
Tom Tingle/The Arizona Republic

In All-Day Hearing, Arizona Regulators Struggle to Hold APS Execs Accountable

As part of their ongoing investigation into utility disconnections, Arizona's five Corporation Commissioners attempted on Wednesday to take Arizona Public Service CEO Don Brandt to task for shutoffs that led to customer deaths.

Brandt and two other executives, who came armed with lawyers, dodged much of the regulators’ efforts throughout the seven hours of questioning to extract new information or any indications of remorse. Commissioners also sought answers on Wednesday about the utility’s rampant political spending.

The commissioners' probe was sparked by news of the heat-related death of Stephanie Pullman, a 72-year-old woman who died in her home in Sun City West last September after APS cut her power on a 107-degree day. Pullman’s death followed years of reports and public outcry over APS’ secretive political spending, high utility bills, and rising numbers of disconnections.

Throughout much of the questioning, Brandt, president Jeff Guldner, and executive vice president Dan Froestcher appeared unchastened.

Each commissioner brought his or her own questions, some more implicative than others, about the utility’s spending on political campaigns, marketing, and advertising, and about its practices prior to disconnecting a customer’s power.

Still, commissioners elicited little more than defensive and occasionally preposterous refutations of the utility’s policies and practices. A refrain from Brandt, who gave nothing more than an opening statement in the first hour of the hearing, was, “I don’t know.”

The hearing began at 10 a.m. The sounds of pro-solar activists protesting outside the Corporation Commission filtered into the room, then slowly died down. A small child squirmed on a chair next to a parent. An APS spokesperson distributed a fact sheet to reporters, murmuring about at least “trying” to ensure balanced coverage.

Commission Chairman Bob Burns opened with a promise to boot out anyone who booed, cheered, or heckled throughout the hearing. Then, he excoriated APS, saying he believed the utility had violated the public’s trust.

He slammed the “so-called Jessica Pacheco playbook,” referring to the person who was recently promoted to vice president of external affairs at APS, who crafted the utility’s efforts to become involved in political races. Part of the plan, he said, was to create disruption at the Corporation Commission.

In his questioning, Burns also tried to squeeze a promise out of Guldner, who is replacing Brandt as CEO in mid-November, that the utility would not spend money on political races in the future, but Guldner wriggled out of any such commitment.

He wasn’t CEO yet, Guldner reminded Burns, who then threatened to haul the board of APS parent company Pinnacle West before the Commission.

Guldner said he would be “happy” to return before the commission after November 15.

“Consider yourself invited, as soon as you’re sworn in,” Burns replied.

After the hearing, Burns told Phoenix New Times that his primary concern was stopping APS from contributing to political races. “We’re going to have him back as soon as he’s given the title,” Burns said of Guldner.

Brandt, under oath, used his opening statement to talk about how customer service is a tough business. In a tone-deaf, victim-blaming twist, he implied that people who can’t afford their utility bills are to blame for any disconnections: “Customers are often reluctant to disclose personal details even when they need help,” he said.

He offered a meandering anecdote of an elderly woman who APS had helped to fix her air-conditioning unit after she was scammed and told she needed a new one. He dropped a mysterious phrase, “leading with our hearts,” several times.

“We’re not in the business of disconnecting customers,” he said, despite the fact that last year, APS cut off power to customers 110,000 times.

Commissioner Boyd Dunn questioned Froestcher, who oversees operations for APS, about the utility’s process for disconnecting customers. But he failed to secure commitments from the executive that the utility would do more to warn customers about impending shutoffs or help them find ways to pay their bills.

In the case of Stephanie Pullman, Dunn wanted to know whether she’d received an automated phone call warning her, whether she’d received a door hanger from APS, and whether she’d actually seen it. He refrained from using her name, however, after a brief kerfuffle from Corporation Commission staff and APS lawyers over her family’s stated request for privacy since reaching a settlement with APS.

Froestcher said that APS follows a process, and that process was followed for the woman in question, but it was “difficult to say” whether she’d actually seen the door hanger. In his responses, he said the door hanger was left in a "personal visit," even as he described a process more akin to ding-dong ditch than a face-to-face visit: A third-party contractor leaves the door-hanger in the most logical place.

Couldn’t APS do more than that? Dunn wanted to know. Maybe make the so-called personal visit actually personal?

Too dangerous, Froestcher said. The news that one’s electricity is about to be cut off “is not always well-received by consumers,” he said. It can “instigate, if you will, a confrontational or potentially dangerous situation,” he added

His evidence was that he himself had done that job in the early 1980s. “I had dogs unleashed on me. I was verbally threatened, and on one occasion, had a weapon pulled on me,” Froetscher said. “That risk is there. It’s very real,” he told Dunn.

“Really? Sun City West? You have that concern?” Dunn pushed back, referring to the area of metro Phoenix where Pullman lived.

Froetscher rebuked him, saying that not all areas of APS’ service territory are like Sun City West, where many seniors live. He did not openly dismiss Dunn’s suggestions that APS alert customers in person that they're close to being disconnected. Instead, he said, “We’ll discuss.”

With Sandra Kennedy, the lone Democrat on the commission, the conversation grew more heated, and she was even less successful at soliciting answers.

She tried to home in on the utility’s political spending, and on what and when Brandt knew about customer deaths, but she stumbled in framing her questions, which she insisted Brandt answer himself.

Her first question was about the number of customer deaths tied to APS’ actions, like rate increases, or its inaction.

“We don’t believe there have been any,” Brandt said.

Kennedy looked incredulous. “No deaths?”

Brandt reiterated his claim.

“Okaaayyyy,” Kennedy said. Her next question, an effort to solicit some remorse from Brandt, fell flat, too. She wanted to know how Brandt felt, knowing that a customer died for $1 (APS said it won’t cut power if customers owe less than $50; Pullman owed $51).

Brandt again blamed the customer. “If that customer would have called, I am almost certain that that individual would not have been cut off, regardless of what the amount was,” he said.

Soon, Bill Maledon, the attorney flanking Brandt, was grabbing Brandt’s mic, frequently swiveling it to his own mouth to protest a question as unfair or not factually accurate.

“I really appreciate the company hiding behind you,” Kennedy told Maledon. “But I’m going to continue my questions.”

But when she asked about APS’ political and marketing spending, she did not specify exactly which campaigns and which spending she meant, giving Brandt room to wriggle out.

“I am at a loss as to what you mean by marketing decisions,” he said. When Kennedy asked him to describe Pacheco’s involvement in those decisions, Maledon leaned over and whispered in Brandt’s ear.

Brandt lowered his mouth to the microphone. “I can’t respond to that question.” When Kennedy asked him how much he earned in bonuses and on what grounds, Maledon smirked.

“We don’t award bonuses,” Brandt said. APS’ latest proxy statement shows that the company, indeed, does not award bonuses. Instead, it has stock awards, “non-equity incentive plan compensation,” and other forms of compensation.

No bonuses here, folks.EXPAND
No bonuses here, folks.
Pinnacle West

After the hearing, Kennedy told New Times that she was “absolutely not” satisfied with the responses she received. “Every time I asked a question, Mr. Maledon would interrupt,” she said.

Still, her questions seemed to irk Brandt. “At one point, he hit the table, and he was rolling his eyes,” she said. “Don Brandt had an opportunity to come clean about everything, but chose not to.”

Lea Marquez Peterson, the newest member of the commission, appointed by Governor Doug Ducey on May 31, also failed to secure commitments from APS. In asking about the timeline that APS followed when it cuts power to customers, she wanted to know whether policy changes could “improve that timeline.”

Yes, Froetscher said, but he didn’t know what those might be. The subject was “ripe for discussion,” he promised.

If a real person — not an automated system — had seen that Pullman’s power was about to be disconnected when she was a dollar over the cutoff limit, might her electricity have remained on? Marquez Peterson asked Froetscher.

A long silence filled the room.

“I think it’s a fair question. I don’t know what the answer is,” Froetscher finally answered. “You and others on the bench have suggested that more personal touch points would make a difference … I think that’s part of the process we’ve got to improve moving forward.”

Picking up on the dispute over privacy for the Pullman family, Marquez Peterson also asked, pointedly, whether or not APS had petitioned to delay Brandt’s appearance before the commission, which was originally scheduled for August, to buy time to finalize the settlement agreement that resulted in the family's lawyer's request for privacy.

“Absolutely not,” Brandt said, denying too that the family’s statement had been sent at the behest of APS.

Justin Olson, another commissioner, couldn’t get answers about why APS has disconnected customers with medical issues who, per Arizona code, cannot be disconnected because of those very issues.

After the hearing, Olson told New Times that he hadn't gotten a response to that question, and that the Commission’s efforts to fix disconnect rules is not over.

“It’s an ongoing effort,” he said. “The solutions to these questions have yet been fully resolved.”

He said it remains to be seen whether Brandt will have to appear before the commission again, but things could be different for Guldner, his replacement.

“I expect that we’ll hear from the CEO again,” Olson said.

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