Arizona Corporation Commission Exceeds Constitutional Limits

PHOENIX – The Arizona Corporation Commission has over-stepped its constitutional boundaries by making rules and regulations in areas our state founders never intended it to control, according to a new report from the Goldwater Institute.

The study, “Rediscovering the ACC’s Roots: Returning to the Original Purpose of the Arizona Corporation Commission,” shows Arizona’s founders deliberately created the Corporation Commission as an agency with limited and defined powers. The Commission was created to protect residents from fraudulent investments and price-gouging by electric and water companies. But instead of keeping utility rates low, the ACC now is forcing utilities to create electricity from certain types of sources which are more expensive, says study author Benjamin Barr, a senior fellow with the Goldwater Institute and CEO of Government Watch.

“The ACC has usurped the Legislature’s role to set energy policy and it will cost consumers $2.4 billion over the next 15 years,” said Nick Dranias, director of constitutional policy at the Goldwater Institute.

The report reviews records from the 1910 Constitutional Convention and finds that delegates specifically rejected attempts to create an agency with sweeping authority over all incorporated businesses. Instead, the constitution was written to limit the power of Corporation Commission so that it only regulated in-state railroads, financial businesses and certain utilities. That power over utilities was further limited to establishing reasonable payment rates for customers.

Mr. Barr recommends that Arizona courts recognize the intended purpose of the Corporation Commission and require the agency to operate within the limits in the state constitution. The Goldwater Institute is challenging in court the Commission’s legal authority to require the use of renewable energy, saying the mandate violates the separation of powers and other constitutional provisions.

The Arizona Legislature doesn’t have to wait for the courts, however. The report recommends that the Legislature reassert its authority by conducting an audit of the Corporation Commission. The audit would review the Commission’s various divisions and actions to determine if they are within the ACC’s constitutional boundaries. Depending on the audit’s findings, the Legislature could reshape the Corporation Commission or ask voters to assign its duties to other state agencies and shut it down entirely. Arizona is one of only six states that still has a utility regulator that operates outside of the traditional branches of government.

Click here to read “Rediscovering the ACC’s Roots: Returning to the Original Purpose of the Arizona Corporation Commission.”

The Goldwater Institute is an independent government watchdog supported by people who are committed to expanding free enterprise and liberty. Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is Director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.