This is not a complaint Castillo was ever heard making as head of the shareholders association, the position he occupied during the two most recent APS rate hearings in 1985 and 1987. To the contrary, Castillo, using money provided by APS, hired a lawyer and filed voluminous testimony arguing that the company deserved every cent it was seeking. In February 1987, the association's expert witness went so far as to assert that APS deserved more than it was seeking in rate increases.
Castillo acknowledges that the shareholders association submitted testimony during rate hearings, but claims it was only supporting "what was fair and reasonable." He minimizes his own role, saying his main duty was "keeping the membership informed about what was happening with management and with the ACC." Consumer advocates, however, say it's a barefaced attempt to bury his own record of uncritical boosterism.
"The shareholders association was set up to counteract RUCO in rate hearings," says Susan Williams. "Castillo used to come out with incredibly vicious letters against [John] Ahearn, the first chairman of RUCO, very similar to what he's now saying about Weeks . . . `Who are these loudmouths, these troublemakers?'--that sort of thing."
Castillo claims to have operated independently of APS, but in 1984 APS vice president Henry Sargent admitted during a rate hearing that the company had paid for the shareholders association's expert witness and that Sargent himself had reviewed the group's testimony in advance. APS officials claimed it was mere coincidence that the shareholders' testimony plugged vital gaps in their own arguments.
RUCO officials were so incensed by the complicity that they attempted to have the investor group's testimony excluded, saying, "APS and the association must be made to realize that this is not simply a high-stakes poker game--and APS cannot `buy' another seat at the table."
By far the most serious threat to shareholder interests in recent times has been the disastrous diversification set in motion by Turley in 1986, which left the company more than half a billion dollars in debt by January 1990. Castillo contends that, despite representing more than 13,000 small shareholders in the association, he had no power to dissuade management from making expensive blunders like the purchase of MeraBank for twice book value, or grandiose power-plant expansion in the face of shrinking growth projections. Weeks and Jennings were so worried about the potential harm to APS from the PinWest diversification that they convened a special hearing, but Castillo and the stockholders voiced no concern there, either.
"We didn't have direct input at the commission hearing on diversification, because it wasn't a commission hearing in the usual sense," Castillo recounts. "Of course, at the time everything was going great and everyone thought it was a reasonably good deal, including the commission."
Williams says Castillo's remarks are "absolute nonsense." "RUCO brought out the potential dangers of diversification, and Weeks was probably the strongest spokesperson of all about the potential dangers," she says. The corporation commission, however, had no legal authority to stop PinWest's diversification spree, while Castillo had the right--indeed the duty-- to challenge anything that might threaten the company's stability.
"At the time, you didn't hear any representative of the shareholders association reflecting any analysis of the potential negative impact to members," Williams says. "The association leadership voiced very strong support for APS' diversification efforts and was an active opponent to the commission's efforts to regulate the acquisitions.
"Castillo and the shareholders association were basically a cheering squad for the whole adventure," Williams says.
Castillo, of course, doesn't see it that way. He claims that he recognized the PinWest board was no longer acting in the best interests of the shareholders as early as 1986 or '87--two years before the May 1988 annual meeting in which outraged shareholders, including Castillo, openly demanded blood. Castillo says he could see the company was headed for trouble long before that, but preferred to take a low-key approach, and so shared his concerns privately with former PinWest chairman Keith Turley.
"We compiled a list of grievances and presented them to Turley," Castillo asserts. But he can neither recall the board's reaction, nor produce a copy of the correspondence. "Turley said he would take them to the board, but I don't know if he ever did. He never got back to us on that."
Castillo has a long list of complaints about Weeks' record, but when it comes to specifics, most of his claims hinge on a curious rearrangement of the facts. For example, Castillo disputes Weeks' claim that she gave APS less than 10 percent in rate hikes, saying APS rates have actually risen 15 percent during her term. What he doesn't mention-- or didn't until she challenged him publicly--was that the additional 5 percent represented rate hikes granted before she took office.