APS Documents Revealing Millions in Spending Leave Many Questions Unanswered

APS and Pinnacle West have a dark-money problem.
APS and Pinnacle West have a dark-money problem.
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Over the past six years, Arizona Public Service has given $39.9 million in various charitable donations, documents released by the utility last Friday show.

That's nearly three times the $15.9 million that APS Foundation, the corporation’s charitable arm, dispensed over the same period of time.

Because it is a nonprofit organization, the APS Foundation's financial information, including donations, is publicly available through tax forms. By contrast, charitable donations from APS itself are not.

What the new documents don't explain are who received those donations, how the money was ultimately spent, and how, or if, APS reaped any benefits from its largess.

Those questions are among several black boxes contained in the hundreds of pages of documents that APS and parent company Pinnacle West released last week. The document dump came after three of Arizona's five Corporation Commissioners filed two requests in February for documents detailing the utility's political spending.

In response to several of the requested documents, which came with the threat of a subpoena, APS and parent company Pinnacle West protested that the requests were "overly broad." In those and other cases, APS either did not provide responsive documents or provided them confidentially.

Regarding APS and Pinnacle West's charitable expenditures, Commissioner Sandra Kennedy requested a list that included "to whom the expenditure was made, the amount of the expenditure, and what the expenditure was for." She requested the same details for Pinnacle West and APS' marketing and advertising spending. She also demanded internal memos and other records "that describe the arrangements governing" these expenditures.

APS did not provide those details.

For its lobbying expenses over the past six years, APS gave only lump annual sums that added up to $3.06 million. APS reported it put $34.6 million into advertising and marketing, and Pinnacle West put an additional $24.4 million into corporate sponsorships.

Where that money ended up was nowhere to be found in hundreds of pages of documents, much of which were transcripts from earnings calls.

Kennedy did not respond to a voice message seeking comment on the contents of the newly released documents.

Of the documents that APS did provide, it said that it was doing so "voluntarily" and "in the spirit of cooperation and transparency," despite the fact that it faces potential subpoenas for those documents.

Those documents confirmed, as was widely suspected, that APS was the source of millions of dollars in 2014 to dark-money groups that spent heavily to elect two Corporation Commissioners, Tom Forese and Doug Little.

The $10.7 million that APS actually donated far exceeded the $3.2 million that it was believed to have funneled into the Corporation Commission race.

Although the documents put to rest the single, longstanding question over the source of dark-money spending in 2014, they raised many more questions. 

"On this narrow question of what they did on the 2014 Corporation Commission race, they certainly provided more information than they had in the past, but that's not even close to everything that Commissioner Kennedy asked for," said Dave Pomerantz, executive director of the Energy and Policy Institute, a California-based watchdog group that promotes renewable energy. "What stands out to me ... is how APS ignored or objected to many of the other questions that Commissioner Kennedy asked in her subpoena about the specifics of how it spends money to influence elections in Arizona."

In 2014, APS paid the Arizona Cattle Feeders' Association nearly $1.4 million. In subsequent years, it continued funneling money to the group, the released documents showed — $400,000 in 2016 and another $750,000 in 2017. Where that money ultimately went and why APS was donating to an influential agriculture industry group remains a mystery.

But in 2014, at least some of that money went to elect Corporation Commissioners. Text messages buried in the documents — in a font size so tiny they're barely legible — revealed APS' appreciation for the Cattle Feeders' Association's work on that race.

In August 2014, after the Republican primary for Corporation Commissioner, Michael Vargas, the director of state and local affairs for APS, texted Basilio "Bas" Aja, one of the most influential lobbyists and the executive vice president for the Cattle Feeders' Association, with the primary results.

Tom Forese and Doug Little, APS' favored candidates, had a clear victory, each more than 6 percentage points ahead of their next candidate.

"Well, more than a whisker," Vargas wrote. "Thanks, Bas."

With that victory, APS and its preferred candidates had successfully fended off criticisms earlier that summer from the other Republican contenders, Vernon Parker and Lucy Mason. In public letters, they had criticized APS for its alleged involvement in the Corporation Commission race, through independent expenditures.

"It is our opinion that it would be highly inappropriate for APS or its parent company Pinnacle West to
influence the elections of its regulators in any way," they wrote in a letter dated June 18, 2014. They demanded that APS and Pinnacle West clarify its position on contributions to a candidate running for the Corporation Commission.

"The people of Arizona deserve transparency and honesty where your company is concerned," they wrote in a follow-up letter that July to Pinnacle West and APS CEO Donald Brandt. "Instead, you have chosen the route of deception and secrecy."

In addition to the threat of a subpoena from the Corporation Commission — although individual commissioners have demanded documents, the Commission has not — Pinnacle West also has received grand jury subpoenas, the company disclosed in its most recent annual filing to the U.S. Securities and Exchange Commission.

Those subpoenas "seek information principally pertaining to the 2014 statewide election races" for the Arizona Secretary of State and the Corporation Commission, it said, adding, "Pinnacle West is cooperating fully with the United States Attorney’s office in this matter."

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