Revisit Laurie Roberts' question -- WHY is APS trying to BUY itself a personal Attorney General?

Of course, that's not the exact phrasing of her question. Roberts took it back an additional step or two. Why has APS poured such large sums of what ultimately is ratepayer cash into propagandizing for Mark "I am NOT a CROOK" Brnovich? Why do they want to persistently attack the one AG candidate who actually intends to serve the PEOPLE of Arizona, Felecia Rotellini?

The social psychology research of Arizona State University Professor Emeritus Robert Cialdini has established that large donations to political campaigns are not given without firm expectation that the candidate, if elected, will reciprocate. I've established it by reference in several blog posts. That's why it's entirely appropriate to frame the question in terms of the obvious motive. We know APS has contributed heavily to Brnovich because it wants to purchase its own personal Attorney General.

So the real question underlying Roberts' concern is, "why do they want Brnovich?" I believe I answered that question adequately a few days ago.

This evening, however, I found a compelling article on Grist.org that may further illuminate the situation.

By now, most people are aware that solar power — particularly distributed solar power, in the form of rooftop panels — poses a threat to power utilities. And utilities are fighting back, attempting to impose additional fees and restrictions on solar customers. These skirmishes generally center on “net metering,” whereby utilities (forced by state legislation) pay customers with solar panels full retail price for the power they produce, which can often cancel out the customer’s bill entirely. That’s lost revenue for the utility.

Net metering, however, is largely a distraction, a squabble over how long utilities can cling to their familiar business model. Larger reforms are inevitable, because the threat to utilities goes far beyond solar panels and demands a response far more substantial than rate-tweaking. Sooner or later, there must be a wholesale rethinking of the utility business model. And if utilities are smart, they’ll do it sooner. [And if Arizonans are smart, they will exercise whatever leverage they can to force APS to adapt sooner, rather than later].

To understand why, let’s have a look at two recent analyses. One examines the short-term issue for utilities, revealing the core problem lurking within. The second pulls the lens back to take in the big picture. [...]

In short, solar PV at 10 percent would reduce return on equity and earnings a lot — 40 percent in the case of the wires-only utility — but raise rates only a little [based on hypothetical scenarios in which rates are only raised a little bit]. (Why the sharply different impact on the two utilities? Because the wires-only utility only invests in wires and other distribution infrastructure, and those are the kinds of investments that solar PV renders unnecessary.) I don’t know if this is a big enough hit to constitute a “death spiral,” but it certainly isn’t good news for utilities. [...]

...Our power utilities are structured to oppose our social and environmental goals... [...] 

For better or worse, this isn’t just a problem for climate hawks. Now that solar PV and other distributed energy solutions are growing [and becoming dramatically less expensive to install and operate], it’s a problem for utilities too. Standing still is not an option. They either adapt or face the much-discussed “death spiral.” 

That’s what the second analysis is about: “Does Disruptive Competition Mean a Death Spiral for Electric Utilities?” It’s in Energy Law Journal, by Elisabeth Graffy and Steven Kihm. 

It begins with a simple premise: The growth of distributed solar PV is not an isolated or one-off phenomenon, but the leading edge of “a synergistic wave of innovations occurring in several sectors at once—technology research and development, policy development, social and cultural preferences, scientific investigation, and business.” After nearly a century spent in a zone of limited-to-no competition, utilities are entering a zone of disruptive competition, in which customers can reduce or even eliminate their dependence on utility power and grid services. 

Graffy and Kihm describe two broad strategies utilities might choose to cope with this wave: value creation and cost recovery. The former is more promising, but requires more substantial adaptation of institutional practices. The latter might stave off changes for a little while, but by doing so it makes utilities more vulnerable when changes become too substantial to resist. [This is why APS' strategy, a third option in this hypothetical scenario, is to capture key portions of multiple branches of Arizona government in hopes of ensuring the survival of the utility enterprise].

Needless to say, utilities are not prepared for this sh*t. At all. After a century of enjoying regulated-monopoly status, with returns guaranteed by law and expansion as far as the eye could see, utilities have virtually none of the organizational foresight and habits needed to respond proactively to disruptive threats. So at least at the beginning, they’re going for cost recovery. 

Or they are investing heavily in what they've developed as an institutional skill -- buying politicians and the bureaucrats who work with them.

It is the standard utility play and one they’re quite accustomed to. They’ve been protected from competition by regulators for decades. But in present circumstances, the strategy poses three dangers:

First, it requires successive upward recalibration of customer rates [dramatic rate increases] as system costs remain largely fixed while electricity use shifts from the grid to distributed systems. Second, it encourages utilities to defer corporate adaptation unless a deep crisis forces the issue. Third, it encourages them to take actions that slow innovation either by competitors or in the policy domain. Customer backlash, loss of regulatory support, high opportunity costs, and institutional brittleness to external shocks are all foreseeable byproducts that put utilities at greater risk.

The author of the Grist article finally touches on what has been going on in Arizona: utilities defer corporate adaptation (to the disruptive technologies) and they take action to slow innovation by insinuating themselves much deeper into Arizona government (intending to control public policy).

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This underscores the incredible urgency for Arizona voters to elect Felecia. The immediate future under APS controlled Arizona state government portends economic gloom, even if not doom.

Is there ANY basis for expecting an Attorney General Brnovich to do anything but the bidding of Cathi and Mike Herrod, the private prison industry and Arizona Public Service?


The one thing we can and MUST do to stave off the seriously deleterious ramifications of this near certain scenario is to elect Felecia as the next Attorney General of Arizona.