ME-MEs
Terry never did announce his candidacy, and I never knew if I had gotten bad information or if Terry just decided to turn tail. Either way I ended up the nominee of my party for the open seat on the Corporation Commission. And although I did not know much about regulation, I would soon discover neither did the other two Commissioners.
The Republicans nominated Arizona’s State Treasurer, a fellow who knew little more about regulating companies than he did about hard ball politics. It would be a tough campaign for him, not because I was tough on him, I rarely mentioned him. For me he did not exist, I ran against the other two Commissioners who had a low key, quiet, invisible way of sticking it to citizens on behalf of the major utilities.
The other two Commissioners would not be up for re-election for a few years, but my effectiveness generated a serious effort by citizens who didn’t want to wait for their terms to end. Recall petitions were attracting thousands of signatures.
When I won the election and the recall effort fell just short of the necessary signatures, I had made two bitter enemies. This would be confirmed on the morning of my second day on the job. The first day was spent moving into Jim’s (the retiring commissioner I was replacing), empty office and dropping into the offices of the two other Commissioners to calm ill feelings in hopes of getting along as best we could. The meetings were congenial enough. However, the next morning when I arrived, I received a more official welcome from my two fellow Commission members. They had ordered the staff to remove all my things from Jim’s office and dump them into the hallway.
It was their way of saying, “Our two votes will tell your one vote where to go and where to live around here.
The childishness degenerated into a kind of infantile paralysis at the Commission, in which I participated. I would give as good as I got. Like on the day Taurus, my love—a 14-year-old border collie who suddenly took ill. The vet pumped Taurus full of drugs—just before I had to be at a Commission hearing—advising that I keep a close eye on her for the next 24 hours. I had put my suit jacket in the bottom of a large cardboard box, laid Taurus on top and then carried my crippled sweetie up the Commission stairs to my office.
Thirty minutes later my secretary nervously opened my door saying that the Department of Public Safety was on the line and needed to talk with me right away.
“Commissioner Kimball?” the officer asked uncomfortably.
“Yes, I am Richard Kimball, what can I do for you?”
“Well Commissioner, I know this is odd, but pets are not allowed in your building, and we have gotten a complaint that you have a dog in your office. If you do, I need to ask you to remove it, or they insist that we come over and take it.”
“You’re going to arrest my dog?” I joked.
“Sir,” he said with obvious embarrassment, “We have had a strong complaint from the Commission and so we are required to enforce the law.”
I explained my dog’s situation and mine, then asked, “Can you give me just 20 minutes?” Curious, he asked, “Of course, but why?”
“Because that is how long it will take the media to get here, film your arrest of my half-dead best friend and capture a couple of interviews with my two colleagues for the 6 o’clock news.
As it turned out the complaint was quickly dropped, but the next morning as I arrived without my recovered buddy, a maintenance worker was drilling in a brass plate next to the Commission’s entry door. The plate said: NO DOGS ALLOWED.
Oddly, the three of us voted together more often than not. The nots were the cases dealing with the biggest utility companies in the state. It wasn’t that I had evidence to prove their rate hike requests were unnecessary, it was just that we had no way of independently verifying they were necessary. It was instantly clear to me that it was all one big company-controlled shell game with quick-handed utility companies controlling the shells and maximizing their take by tricking both consumers and their assumed protectors, us.
The basic rules and primary problem in Arizona utility regulation are easily explained:
1. Because costs would be outrageous if numerous competing utilities had to support their own independent production and delivery systems, monopolies are allowed to exist.
2. Because the state must give utilities a monopoly to reduce both their costs and those of consumers, the utility must get approval of the rates it charges citizens.
3. Because the Arizona legislature refused to provide funds sufficient to regulate utilities, the regulators must trust the data and testimony provided by the utilities.
This doesn’t mean utilities always get what they ask for but that is largely because of a “blink and whisper” understanding between the utilities and the Commission. The “blink and whisper” requires the major utilities to request more money than they need or is reasonable. Then the Commission can cut the rate requested down to something that is less unreasonable to maintain the appearance of protecting consumers (their voters).
It works pretty much that way in every state I know of.
Commissioners never really know what is going on beyond what a utility tells them. Utility executives’ only reason for being is to maximize profit for stockholders and thus provide good reason to pay themselves a salary that could be 5,000% higher than that of any regulator whose responsibility is to be in charge.
I kept saying “No” to the large utilities, not because I thought their requests unreasonable but because I could not independently verify that they were reasonable. My two colleagues kept arguing an opposing rationale: we have no evidence suggesting what they say is not so.
You say no to the Big Dogs of the business world, and they will label you as anti-business, even as thousands of small businesses suffer and even go under from spiraling utility charges.
My relationship with the other two Commissioners settled into a comfortable agreement to disagree. Then one died from a heart attack and the other resigned.
The governor had to appoint two new Commissioners until new elections could be held. It was then that things got as good as I would ever experience in politics. He chose two academics, a Republican business professor at Arizona State University and a Democrat, a law professor at the University of Arizona. They were bright, conscientious and, unlike previous Commissioners, unmotivated by politics.
These two new Commissioners allowed me to become the Commission’s Chairman and I then proceeded to preside over one hell of a Commission mistake and another that paved a road to utility control.
In our blindness we allowed a Tucson utility to split up. With the combination of insufficient staff, no independent research, an unscrupulous utility chief and our own naivety we approved the sale of assets. The power producing parts of the utility formed a new company that didn’t sell power directly to citizens thus the Commission could not regulate while the distribution and sales stayed under Commission supervision. We effectively lost control of costs and citizens got screwed.
To our credit, the two appointed Commissioners and I managed to adopt new regulatory principles that forced utilities into pretend competition. We started approving not rate increases but the possibility of rate increases. We would set rates on what amounted to an average or fair rate of return on the costs the utility bore. However, if they failed to reach the efficiencies we judged to be normal and achievable, they would get penalized by our reducing their profits. Conversely, we would provide them with a financial incentive: Should they exceed our expectations a bonus larger than what they had requested could be obtained, thus rewarding them for good decisions and efficient operations. In effect it was pretend competition in a world where no competition exists.
As it turned out I would not be at the Commission long enough to see if our plan would work or even be sustained. I was about halfway through my six-year term, new elections had been held to replace the governor’s temporary appointees and two fellow “consumer advocates” were elected as result of all the concern created. They were politicians to the bone and egos and jealousy, including my own, would reign again. Only this time we were all of the same party, all so-called “consumer advocates.” A perfect representation of why people get so disgusted with government. There we were, the Commission totally reversed, presumably intent on representing and protecting citizens.
What achieves primacy in the minds of the elected? Me! Me! ME!
I was elated with their elections. OK, a bit weary that Marsha, the vacationing member of the Breakfast Bunch, and wife of the former Commissioner Jim Weeks was one. The other was Renz Jennings, an ultra-liberal former State Representative who slept in an open shed on what he said was his farm, though it had little produce to put in anyone’s pot other than his own.
Bottom line: The Commissioners who had been in the utilities’ silk pockets were now replaced by three scrapers, all posturing for an Oscar as Best Consumer Advocate. For my part, I wanted war, with either the Republican State Legislature that would not fund us, or the large utilities themselves who thought themselves protected by our in ability to examine them.
I wanted to force the legislature to give us adequate funding or the utilities to provide funds for us to independently verify the need or requested rate increases.
For an initial blast across the utility’s bows all we needed to do, I thought, was let it be known that we would not blindly approve any rate increase without the ability to independently investigate the utilities’ operations and need for a rate increase.
My hopes of accomplishing this took a hit on the first morning we all met. My new colleagues had only stomach enough to go to war with each other.
Renz asked me to join him and Marsha “socially” for breakfast one morning. The social gathering quickly turned into a Commission business meeting. I pointed out that it was inappropriate to discuss Commission business secretly outside of an open public hearing. I had fought hard against the first two Commissioners I served with when they wanted to continue with Commission tradition and privately discuss the public’s business, only without me. I made it so difficult for them to do so that I managed to enforce a rule prohibiting expartee (secret) meetings.
My two new commissioners instantly poo-pooed any such prohibition and continued their Me-Me negotiations.
What was foremost on their minds was to get themselves elected chairman of the Commission. They thought it was best that the chairmanship be rotated between the three of us and since I had been elected chairman by the two appointees, one of them should now get it. I can’t deny that this hurt a little. I had initiated what was clearly a successful fight against the pro-utility Commission long before they got involved. Now that the fruits of the fight were supposedly ready for harvest, I thought their Me-Me position a bit unjust, but I listened.
The question continued over the next week: Which one of them should get to be the next chairman. Marsha thought she was the clear choice, having spent years in bed with a former Commissioner. Renz, for his part kept cornering me with the grace of a turtle climbing stairs, to say three things:
“I have no ego!”
“I am more likely to side with your positions than she is.”
“You will vote for me to be Chairman, won’t you?”
This was going to be three more years of “Please won’t someone shoot me?”
It might be worth it I thought if only I could push through my one primary objective, get the commission the resources it needed to actually regulate utilities.
I was certain that the citizens would support us on this. Consumer savings would make up for any budget increase a thousand-fold.
Both options would require the three of us to stick our collective necks out, but even if we failed the loud public fight would make the shell game apparent to any citizen concerned with their utility bill (just about everybody) and put enormous pressure on the Republican Legislature. Anyway, after all that I could say was said in support of doing our job and actually regulating utilities, my two Me-Me colleagues let it be known that they had no stomach for it.
I was trapped and completely disinterested in finishing my six-year term of office. Unlike in the State Senate, I had a sense of some success since the Commission would no longer just rubber stamp rate increases, but I wanted out. What excuse could I give? How could walking out with less than half my term served be explained?
A freshly-minted Arizonian, former prisoner of war, freshly elected to congress and about to burst onto the national stage would provide the answer.
(New chapters will be added roughly once a week)
Richard Kimball, Vote Smart Founder
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