Some Republicans on the Arizona Corporation Commission (ACC) are resisting calls to stop Environmental, Social, and Governance (ESG) plans by the utilities they regulate, and the controversy has extended to the upcoming fall election.
Three of the five seats are up for election: two are wide open, and the third is held by Commissioner Lea Márquez Peterson, who is seeking reelection. While two new Republican candidates appear to be running as a slate with Márquez Peterson, newcomer Christy Kelly is running alone on a platform that emphasizes stopping ESG, Diversity, Equity, and Inclusion (DEI), and the Green New Deal.
Kelly (pictured above), who describes herself as an America First candidate, said on X Tuesday that the ACC has a precedent for banning ESG at the utilities they oversee.
“This is the POLICY former Commissioner Justin Olsen did with masks — something with teeth,” she said, including a copy of the Opinion and Order the ACC issued banning utilities from requiring masks. “To my knowledge, this has not been done with ESG or DEI.”
This is the POLICY former Commissioner Justin Olsen did with masks—something with teeth. To my knowledge, this has not been done with ESG or DEI. https://t.co/lIv0bq26HH pic.twitter.com/PHy4ZBHMNv
— Christy Kelly (@Kelly4Humanity) February 20, 2024
The controversy began when former ACC Commissioner Justin Olson and the Arizona Free Enterprise Club (AFEC) sent letters to the ACC last year urging the commission to prohibit utilities under its control, like Arizona Public Service (APS), from implementing ESG. AFEC President Scot Mussi said in his letter that ESG would cost ratepayers $6 billion, pointing out that the Arizona Constitution requires “just and reasonable rates.”
Two months later, receiving no response from the ACC, Mussi sent a second letter, which stated, “We are concerned that the Commission is operating under an incorrect belief that it lacks the authority to regulate Environmental, Social and Governance (ESG) policies adopted by public service utilities. Not only does the Commission have the authority, it has a constitutional and statutory obligation to ensure a reliable grid with affordable energy for the benefit of ratepayers.”
In Olson’s letter, he pointed out that the ACC had precedential authority since, during his tenure, the ACC issued an Opinion and Order prohibiting utilities from implementing COVID-19 vaccine mandates for their employees.
“Just as the Commission protected utility employees from vaccination requirements, so too should the Commission protect them from discriminatory employment practices,” the letter said.
A coalition of grassroots advocacy organizations led by AFEC sent a letter on January 31 to the ACC urging the commission to reject proposed “Integrated Resource Plans” submitted by energy companies. The letter cited evidence that the utilities have implemented ESG.
“It is clear APS, TEP, and UNS have as their top priority meeting voluntary climate goals,” the coalition said. “They publicly advertise it on their websites, commit to it in their SEC filings to shareholders, and even more importantly their top executives are incentivized by financial gain to build more unreliable generation sources.” They warned, “If approved, they will cost ratepayers billions and result in likely rolling blackouts.”
The Arizona Sun Times asked Myers about a comment he made on X in response to Kelly stating that the prior prohibition against vaccine mandates had “no teeth.” Myers, who served as a policy advisor to Olson prior to becoming a commissioner, responded by criticizing AFEC.
“Well, you can choose to believe an organization that refuses to understand how the commission works, even after repeated educational meetings,” he said. “Or you can choose to believe a current commissioner, who happened to be a policy advisor to then Commissioner Olson when that was done.” He did not explain why he disagrees with Olson.
AFEC told The Sun Times that attorneys from the Goldwater Institute provided the commission with a legal analysis explaining that they have the authority to tackle ESG by the utilities. The letter, which was sent in December 2023, stated that Myers had “a misunderstanding of the Commission’s authority to regulate ESG.” Staff attorney Stacy Skankey said the ACC has “permissive authority under article 15, section 3 of the Arizona Constitution to ‘make and enforce reasonable … orders for the convenience, comfort, [ ] safety, and … health’ of the public at-large.”
Skankey cited the Arizona Supreme Court’s decision in Johnson Utilities, L.L.C. v. Ariz. Corp. Comm’n, which held that “the Commission had permissive authority to appoint an interim manager for a PSC [Public Service Corporation] because it was necessary to protect the safety, health, comfort and convenience of its patrons, employees, and the public. … The Court held that if the Commission did not use its permissive authority, the PSC at issue would have negatively impacted the ratepayers by, among other things, increasing the costs to the ratepayers by their mismanagement and costs of health and safety violations.”
Similarly, Skankey said, “The adoption of ESG will drive up rates through its forced adoption of ‘clean energy.’ It will also impose requirements that will undermine energy reliability, and thus customer safety. The Commission has limited permissive authority to act to prevent these outcomes.”
Myers claimed on X that the utilities had not implemented ESG.
He said,“ESG has no legal definition, none of our utilities have ESG policies, and there is nothing to actually do.”
A study released by AFEC in November 2023, performed in conjunction with economist Steve Moore, found otherwise. It stated that even though the ACC and voters recently rejected renewable mandates, the utilities voluntarily committed themselves to green energy goals, known as “Net Zero by 2050,” under the broader requirements of their ESG commitments. The study said the utilities’ ESG plans will double Arizonans’ utility bills.
A source with knowledge about the controversy told The Sun Times that the public utilities are pressuring the commissioners to let them off the hook because dropping ESG would require them to change their SEC filings, an immense task. The source also said one of the key policy advisors for the ACC said they believe the ‘S’ and ‘G’ parts of ESG are working well.
Four Republican candidates are vying for the three seats; in addition to Kelly, Márquez Peterson is running for reelection, and two candidates who appear to be running as a slate with her are Rachel Walden and Rene Lopez. Lopez, who does not appear to have a website, raised eyebrows when he held a “Meet and Greet” at a solar company last month, Ray Solar.
Márquez Peterson has come under fire by AFEC previously for serving as a “key swing vote to drive” New Green Deal measures. AFEC nicknamed her “Green New Deal” Lea and said she “sold out” since Márquez Peterson ran for the ACC as a Republican.
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Rachel Alexander is a reporter at The Arizona Sun Times and The Star News Network. Follow Rachel on Twitter / X. Email tips to [email protected].
Photo “Christy Kelly” by Christy Kelly.
