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Dirty Tricks In Arizona’s Net Metering War

Originally published on San Diego Loves Green
by Roy L. Hales


The most recent skirmish in America’s Net metering war may involve “fake controversies” manufactured by Arizona Public Service (APS).

A couple of articles published on yesterday revealed that in 2009 two employees of the Lincoln Strategy Group approached Arizona Public Service Co (APS), the state’s utilities company, with the idea of using false information to further the election of more favorable regulators or “influence legislators to add additional seats on the commission.”

Both APS and the Lincoln Strategy Group have distanced themselves from the 2009 plan.

Nathan Sproul, the managing Director of Lincoln Strategy, said Jessica Pacheco and Brian Murray came up with the proposal “at the request of APS” but that his company never implemented a plan.

“I get unsolicited sales pitches all the time from consultants trying to sell ideas, the overwhelming majority of which go nowhere,” APS’ CEO Don Brandt informed The Republic. “Frankly, I have little memory of this one … I didn’t keep a copy and it was not something I discussed at length with Jessica, Brian Murray or anyone else. We are not using this plan today or anything like it.”

The pair left Lincoln almost immediately after this proposal and went to work for APS. Jessica Pacheo is now APS’s head lobbyist and Barry Murray is a consultant.

Though APS denies the connection, some suspect they are now executing on the tactics to eliminate net metering and stop rooftop solar.

APS recently informed the Arizona Republic that it provided money to at least two non-profits –  60 Plus, which focuses on seniors’ issues, and Prosper – that support APS’ position in websites, online videos and in television advertisements.

One 60-Plus ad that ran in Arizona stated, “Connected companies getting corporate welfare. Now California’s new Solyndras, SunRun and SolarCity, are getting rich off hard-working Arizonans.”

At that time, APS denied any connection to the ads or 60 Plus.

Their story appears to have changed.  The Republic reports that, “John Hatfield, APS vice president of communications, said the utility is contributing money to the non-profits, and potentially other groups, through political consultant Sean Noble and his firm, DC London.”

Noble is better known for having handled millions of dollars, put up by the Koch brothers, in a publicity campaign designed to unseat President Obama during the 2012 election.

“APS is clearly executing the plan that Pacheco and Murray brought forward in 2009,” said Bryan Miller, the Vice President of Public Policy & Power Markets at Sunrun.

Miller added that the events taking place in Arizona are part of a larger national battle.

The Edison Electric Institute, which represents all U.S. investor- owned electric companies, recently published a booklet (PDF) which identified “Distributed energy resources (DER, better known as Rooftop solar) as (p 4) “the largest near-term threat to the utility model.”

Though the impact of this “disruptive technology” is still small but, (p 13) “Once the sustainability of the utility earnings model is questioned, investors will look at the industry through a new lens, and the view from this lens will be adverse to all stakeholders, including investors and customers. While we do not know the degree to which customer participation in DER and behavior change will impact utility earnings growth, the potential impact, based upon DER trends, is considerable (as stated earlier, industry projections propose that 33 percent of the market will be in the money for DER by 2017, assuming current tax and regulatory policies).”

On page 18 the author added that, “Investors have no desire to sit by and watch as disruptive forces slice away at the value and financial prospects of their investment. While the utility sector provides an important public good for customers, utilities and financial managers of investments have a fiduciary responsibility to protect the value of invested capital. Prompt action to mitigate lost revenue, while protecting customers from cross-subsidization better aligns the interests of customers and investors.”

One of the suggested strategies was recovering fixed costs “created by distributed resources and net metering.”

While there were no specific encouragements to fabricate stories, such as is alleged to be taking place in Arizona, AZ Capitol Times recently reported that “in August, Global Strategy Group, a D.C.-based crisis management public relations firm working on behalf of Edison Electric Institute, APS’ trade association, tried to secretly shop stories to local media outlets aimed at smearing a local solar panel company’s employee, who lashed out at APS in an email to his customers. The email, which included accusations against APS, was later deemed inaccurate.”

“At the same time that APS lied about funding attacks against residential solar customers, its national trade association was secretly shopping articles that attacked the local Arizona solar industry,” said Miller. “APS is executing on EEI’s national playbook.”

(Image at top of page: “Taken by myself atop an unnamed hill northwest of my home in Scottsdale, Arizona” – photo by Dominic, courtesy Wikipedia.)

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