2016 ACC Candidates Respond to Questions

AIC recently asked the seven candidates running for the ACC to tell us about their views on several issues facing regulation of energy, water and telecommunications utilities in Arizona.  In our request to the candidates, we told them we would post their written responses (un-edited) to the seven questions on the AIC website. 

Here are their questions and their responses:

Q1. Why are you running for a seat on the Corporation Commission and what do you hope to accomplish if elected?

Boyd Dunn (R):  I have a long history of public service and for the last few years have been a Superior Court Judge.  The Commission is a quasi-judicial body and needs to be treated as such.  I am running to treat the Commission cases as I did the cases in my courtroom.

Rick Gray (R):  The Corporation Commission has a huge impact of the people of Arizona. I am running because I believe I can help make a difference. Customer service should be a high priority, which will benefit everyone who has to interact with the Commission.

Andy Tobin (R):  The job of elected leaders is not to protect government. It's to protect the taxpayer. This mission has guided my entire career in public service and will continue to do so at the Commission. I led the Commission to adopt Governor Ducey’s “Lean Government” initiative, which will save Commission staff and taxpayers time and money. I’ve also established the Water Emergency Team, comprised of many state agencies and private organizations, to coordinate the best response during times of water emergencies (e.g., water outages or contamination).

I’m running to be a voice for all Arizonans, especially those who live outside of urban Arizona. That is precisely why Governor Ducey appointed me earlier this year because he felt that rural Arizona needed stronger representation on the Commission. 

Since taking office in February, I’ve traveled to rural Arizona, holding town halls and hosting Open Meetings. Arizonans want a reliable electric grid, safe drinking water, and sufficient gas service at affordable prices. I strongly believe that the Commission must play the “long game” and set rates at a level that supports prudent and necessary capital improvements to ensure those services will be provided for many years to come.

Al Melvin (R): I am running for a seat on the Arizona Corporation Commission (ACC) because the ACC can play a critical role in making Arizona the most business friendly state in the USA. The ACC can help the private sector create jobs by making sure that Arizona has electricity, water and gas that are affordable, plentiful, reliable and predictable. I will work to make sure that the ACC is the premier public utility commission, in all respects, of all 50 states.

Bob Burns (R):  I hope to continue to work with the regulated utilities especially in the area of power generation to assist in the advancement of the use of the new developing technologies to better serve the ratepayers. I also intend to participate in the efforts of improving the viability of many of Arizona's small water companies. I will continue to support the projects in place at the commission to improve the customer service functions of the commission.

Tom Chabin (D): I want to restore balance and integrity to the Corporation Commission. We need a commission that is looking out for the long-term interests of all Arizonans.

Bill Mundell (D): I want to restore balance and integrity to the Corporation Commission. We need a commission that is looking out for the long-term interests of all Arizonans.

Q2. It’s often stated that Corporation Commission decisions should balance the interests of customers and shareholders when setting rates. How would you balance the interests of customers and shareholders?

Boyd Dunn (R):  The only way to balance the interests is by looking at the evidentiary record of a case.  I think all aspects must be looked at, not just one piece of rates or expenses.  When the evidentiary record is viewed through a lens of a judge, the balance that must be struck will be obvious

Rick Gray (R):  The Commission is set up to protect the ratepayer while also required to provide an economically viable environment for the utility. If a utility company is in bad financial shape it not only hurts the shareholders of the company, it also hurts the ratepayers. So in essence, we have shareholders and stakeholders who need to be protected.

Andy Tobin (R): It is of the highest importance that the interests of the customers come first when making decisions on the Corporation Commission. We need to create an environment that allows customers and shareholders alike to thrive in our state—not by trying to pit one against the other. Many of the challenges we face today can be solved by working together and using common sense to find the right solutions.

Al Melvin (R): As stated above, I strongly believe that the ACC must make sure that Arizona has electricity, water and gas that are affordable, plentiful, reliable and predictable. Simultaneously, the ACC must make sure that the utilities are viable and profitable to insure that they can properly do their job in providing electricity, water and gas in a safe manner at affordable rates. There are close to 300 private water utilities in Arizona. 50 of them are large. Some of the smaller ones are weak and barely viable. The ACC can play a critical role in bringing about a consolidation of weaker companies into larger, healthier companies in a process that is acceptable to all entities.

Bob Burns (R): As an elected commissioner I took an oath of office stating that I will support the constitution of the United States and the Constitution and laws of the state of Arizona. I do not believe that the constitution contains any reference to "Commission decisions should balance the interest of customers and shareholders when setting rates" in fact commissioners responsibilities have been clearly defined by this statement lifted from an order issued by the Arizona Supreme Court "The Corporation commission was not designed to protect public service corporations and their management but rather was established to protect our citizens from the results of speculation, mismanagement, and abuse of power." The balance that must be achieved is that the commission must set just and reasonable rates that will provide the resources to support a well maintained service utility.

Tom Chabin (D): The two interests of most concern are those of the consumers and infrastructure needs. I would weigh all of the data and information at hand and ensure that the consumers are getting a fair deal, while we were also meeting the obligations of future infrastructure needs.

Bill Mundell (D): The two interests of most concern are those of the consumers and infrastructure needs.  I would weigh all of the data and information at hand and ensure that the consumers are getting a fair deal, while we were also meeting the obligations of future infrastructure needs.

Q3.  2-parts: 

Part 1) Utility regulation involves multiple disciplines--economics, accounting, finance and engineering among others. What specifically in your background and skill set qualifies you for this multi-faceted job?

Boyd Dunn (R):  You left out that the Commission is a quasi-judicial body and you also need to understand how to weigh evidence within the record.  That being said, I set the water and sewer rates for the fourth largest city in this state for over 16 years. As a mayor and a councilmember, I have met with staff numerous times to discuss infrastructure projects, new development issues and rates.  With my experience as a judge and my experience of setting rates, I bring an expertise that is needed at this time.

Rick Gray (R): I have been a business owner, a plumbing contractor (so I have a lot of understanding of the water issues and costs involved), and a legislator. All three of these areas add insight into dealing with the issues at the Commission.

Andy Tobin (R):  As a lifelong entrepreneur, I have worked from everything as a CEO of an aerospace company and 13 years in Arizona banking, to a family-owned insurance firm, so I bring a unique perspective to the Corporation Commission. Also, as former Speaker of the House, I know the role government should play in making investments in our infrastructure while enticing companies to come to Arizona to grow and create jobs.

Al Melvin (R): I have the business management experience and higher education to excel at the ACC. I was an Arizona State Senator for six years 2009-2015 and Chairman of the Senate Commerce and Energy Committee for four years. I worked for three major international transportation corporations for over 25 years and I retired from the US Naval Reserve as a Captain after 30 years service. I am a graduate of the US Merchant Marine Academy and the US Naval War College. I earned my MBA at Thunderbird (AGSIM) which is now part of ASU.

Bob Burns (R):  I have years of owner operator experience in a small business with multiple locations. I served 20 years in the Arizona state legislature. 14 years as appropriation chairman, 8 years in the Arizona house of representatives and 6 years in the Senate followed by two years as President of the Senate. Working with budget and other legislative staff to design and work a multitude of budget packages representing billions of dollars of state spending through the legislative process for final vote and signature by the governor. During the two-year break between the Arizona House of Representatives and the Arizona Senate I served on the Central Arizona Water Conservation District Board of Directors voting on decisions affecting the operations of the Central Arizona Project.

Tom Chabin (D): I served in the state legislature and on a county board of supervisors. I established a record of securing expertise about issues and reaching fair decisions respected by all parties.

Bill Mundell (D): I served as a Corporation Commissioner from 1999 to 2008, and I was chairman of the commission in 2001 and 2002. Furthermore, I was the Presiding Judge of the Chandler Municipal court for six years.

Part 2) In your opinion, what personal characteristics make for a “good” commissioner?

Boyd Dunn (R):  Simply put, someone who listens, someone who understands that can not know everything there is to know about utility regulation and someone who understands an evidentiary record .

Rick Gray (R): A good Commissioner should be able to understand the emotional fray involved in some of the cases, but they should also be able to avoid getting caught up in it. Intellectual IQ is important, but so is emotional IQ. Having a commitment to the Constitutional requirements of the job is also vital so that both the utility and the ratepayer are protected.

Andy Tobin (R): Integrity, Honesty, Common Sense.

Al Melvin (R): I first learned the importance of team work and leadership skills as a Boy Scout, eventually becoming an Eagle Scout. My military and private sector management experience have resulted in my ability to set goals and meet them, through highly effective teams, large and small. President Ronald Reagan is a hero of mine because of the importance he put on vision, leadership and integrity. He also believed in treating others like he wanted to be treated. I share all of these goals and standards of personal conduct.

Bob Burns (R):  The ability to be flexible and working with others demonstrated by my fourteen years of legislative history serving in a leadership position as the Appropriations Committee Chairman in both the House and Senate plus two years as Senate President. These leadership positions provided the opportunity of working with numerous legislative staff (with a wide range of responsibilities covering many professional disciplines) while at the same time with each new election cycle adjusting to work with an ever-changing mix of legislators.

Tom Chabin (D): Integrity, transparency, and no conflicts-of-interest with regulated entities.

Bill Mundell (D): Integrity, transparency, and no conflicts-of-interest with regulated entities.

Q4. Are you in favor of competition in retail electricity markets in Arizona? Why or why not?

Boyd Dunn (R):  While I never want to close the door on a free market, electricity regulation is one that could be ripe with peril if deregulated.

Rick Gray (R):  I have not looked at all the details of that issue yet, but I think anything that brings a major change from the current policy should be examined thoroughly. And any change that would be made should be incremental.

Andy Tobin (R): As a rural Arizonan, I understand first-hand that electric service provided to rural areas is incredibly expensive and supported in part by either federal loans (to co-ops) or economies of scale from more population dense areas in urban areas (e.g., Arizona Public Service or Tucson Electric Power). I am uncertain that steady service at affordable prices could be solely supported by the ratepayers in rural areas. Because of this economic reality, I am concerned of the price effects that a retail market would have on rural customers who are more expensive to serve.

The Commission must have a multitude of regulatory tools at hand in order to make the best decisions for the taxpayer and utilities, and that might include electric competition, but I would need to see more supporting data on how competition impacts rural areas to better evaluate the merits of such a proposal.

Al Melvin (R): I believe that the retail electricity markets in Arizona must remain regulated to insure that rates are predictable,  affordable, reliable and not wildly fluctuating. To deregulate the retail electricity market in Arizona would turn monthly electricity bills into a lottery in that rate payers would not know from month to month where their rates would be: low, high or no change.

Bob Burns (R): Under our current regulated monopoly model it is not permitted.

Tom Chabin (D): I would listen fairly and objectively to the arguments presented by the parties. My decision will be based on the facts and evidence presented.

Bill Mundell (D): I would listen fairly and objectively to the arguments presented by the parties. My decision will be based on the facts and evidence presented.

Q5. 2-parts:

Part 1) What do you see as the most important issues facing Arizona’s investor-owned water companies regulated by the Corporation Commission; and

Boyd Dunn (R):  Cost recovery and small systems.

Rick Gray (R): From talking with some of the company leaders it seems we have a need for greater consistency and customer service. We also need to reduce the cost of rate cases.  

Andy Tobin (R): Drought poses the single, greatest threat to these private water companies, most of which are very small. Deeper wells will need to be drilled, followed by larger and more powerful pumps to retrieve that water. Groundwater will be tapped more extensively when Central Arizona Project shortages occur, which will accelerate these costs. Coupled with aging infrastructure (with a national price tag of nearly $400 billion) and more stringent environmental regulations, water companies and their customers are facing a very expensive future.

Al Melvin (R): Arizona’s investor owned water companies should be able to maintain their company infrastructure in an ongoing basis where plant structure is kept at a safe and productive level. An adjusted ongoing rate structure would greatly help in this regard. The ACC can help in managing the consolidation of smaller weak water companies into larger more viable ones. This type of consolidation should be carried out for the mutual benefit of all concerned parties.

Bob Burns (R): The never-ending need to maintain and upgrade infrastructure especially in the face of ever increasing water quality regulations mainly from the federal level.

Tom Chabin (D): Making sure they can provide clean and reliable water to their customers at a fair price.

Bill Mundell (D): Making sure they can provide clean and reliable water to their customers at a fair price.

Part 2) What would you suggest as potential solutions to these issues?

Boyd Dunn (R):  Cost recovery is an issue that needs to occur in a manner that keeps rate shock to a minimum.  The utilities and the Commission enter into the regulatory compact and this compact requires prudent cost recovery.  Balancing utility interest and ratepayers interest is key.    Arizona has a numerous amount of small water systems that are troubled.  The larger investor owned utilities should be in a position to step in and help these systems by purchasing them.  Unfortunately, there is no mechanism to allow it to be beneficial to the utility as well as the small system.  The Commission must either allow acquisition adjustments or consolidation.

Rick Gray (R):  I want to bring policies and procedures to the Commission that will help reduce the cost of rate cases and bring a consistency to the entities who have to deal with the Commission. I would also like to work on setting acceptable levels of ROE so that smaller companies will be able to reduce the cost of rate cases, which saves both them and the ratepayers money.

Andy Tobin (R): Rate design for water companies must contemplate the future of water in Arizona, not the past. This future entails a more consolidated industry with larger economies of scale. Rates, especially for smaller systems, should reflect a more deliberate capital improvement planning process that allows for needed infrastructure over time in order to prevent rate shock from hurting families and the local economy.

Al Melvin (R): The two solutions, noted above are: (1) An adjusted ongoing rate structure to pay for ongoing plant maintenance and (2) ACC facilitated consolidation of smaller weak water companies into larger healthier companies.

Bob Burns (R):  Maintenance and upgrading of infrastructure is a matter of just and reasonable rate setting. The issue of small water companies with limited resources has been under review and discussion at the commission with the hope of coming to a win-win solution of consolidation of the small revenue stressed companies.

Tom Chabin (D): Please see the attached cover letter.

Bill Mundell (D): Please see the attached cover letter.

Q6. The Commission has implemented rate adjustment mechanisms as a way of protecting customers from large rate increases that build up between rate cases. At the same time, adjustor mechanisms enable utility companies to pay for and finance necessary and unavoidable expenses, such as fuel costs and exceptional infrastructure improvements. However, consumer advocates and others argue certain adjustor mechanisms shift risks away from utility companies and on to consumers.

What is your opinion of adjustor mechanisms – either in general or with specific examples?

Boyd Dunn (R):  Adjustor mechanisms that are set up as true cost adjustors are beneficial to both utilities and ratepayers.  As stated earlier, cost recovery is important and these mechanisms are a great tool to prevent rate shock.

Rick Gray (R):  I think the idea is beneficial but, as we saw in the case of the SIB, the courts do not think it is legal. We need to continue to work in the issue to find a solution.

Andy Tobin (R): The Commission is designed to, if possible, recreate for the monopolies in this state many of the same forces that shape competitive markets. Eliminating regulatory lag is essential to that goal. Lag hurts ratepayers and companies. Adjustor mechanisms can help the Commission get there. At the same time, utilities must be mindful and the Commission vigilant that costs borne by an adjustor mechanism are prudent and reasonable.

Al Melvin (R): I believe that adjustor mechanisms make sense. Every effort must be made to make them fair and affordable.

Bob Burns (R): I supported the SIB mechanism with the belief that it would provide for gradual incremental increases when an increase is deemed just an reasonable, as opposed to the rate shock that results when no adjustment is available when just an reasonable rates are set that result in a significant rate increase. Future adjustment mechanisms if advanced will have to meet constitutional approval.

Tom Chabin (D): Please see the attached cover letter.

Bill Mundell (D): Please see the attached cover letter.

Q7.  Much has been written and said about the “clash” between electric utilities and rooftop solar companies. How would you propose to dampen the discord and deal with balancing interests of solar companies, solar customers, utility companies and non-solar customers?

Boyd Dunn (R):  I cannot wave a magic wand to fix the “clash” but I can look at the evidence in the record and give all evidence the weight that it deserves.

Rick Gray (R):   I have found in business you look for win-win situations. In government we need to look for win-win-win situation. There is a lot of emotion in this area, and one of the most beneficial things we can do is try to keep the emotion down and work on it in a logical, factual manner.

Andy Tobin (R): It is very important to me that a record is being created at the Commission that details the cost of service and value of solar. Both sides need to have the opportunity to present their case. That record will help guide the Commission in future rate cases.

But what may be lost in the rooftop solar debate is the fact that just at the utility industry is changing, so too, is solar. Utility-scale solar is becoming significantly more cost effective, and the solar companies involved in rooftop are diversifying their business portfolio to include more utility-scale. This shift will likely induce solar and utilities to become partners rather than adversaries.

New and improved energy technologies, such as less expensive solar and battery storage, may also help improve the solar-utility relationship.

Al Melvin (R): I will work as hard as I can to bring peace between the electric utilities and rooftop solar companies. There are several efforts underway to bring this about. One approach is to differentiate between older areas with electrical distribution infrastructures that need upgrades to make rooftop solar more viable and newer areas that are more accommodating to solar panels. This way, rooftop solar companies can concentrate their sales efforts in the newer areas while the older areas are upgraded.

I believe that no utility rate payer should be required to subsidize the utility bill of another rate payer. I also believe that utility bills should be as straightforward as possible that are uncomplicated as possible and easily understood. Finally, when the ACC makes a change there should be a grandfather clause to protect people who made investment decisions before the change. 

Another thing that must be done is to evaluate the effect that Arizona’s renewable energy mandate of 15% by 2025 has had on rates since its inception. Some states are eliminating their mandates, reducing them, making them voluntary or increasing them.

Energy rate payers in Arizona deserve to know what effect this renewable energy mandate has had on their electric rates. This review is one of the first things that I will do once I am sworn into office.

Bob Burns (R): The interests of the solar companies and the utility companies is something that they need to work out between themselves, I would however be willing to act in the capacity of facilitator if a permissible opportunity becomes available. Balancing the interests of the solar and non-solar customers is being addressed in two open dockets before the commission; the APS rate case docket and the value of solar docket. Therefore all discussions relative to this issue needs to be addressed in the respective docket or dockets.

Tom Chabin (D): I will seek to find a solution that is fair to all parties. I will give all parties the same opportunity to present their arguments and make their case.

Bill Mundell (D): I will seek to find a solution that is fair to all parties. I will give all parties the same opportunity to present their arguments and make their case.