Rediscovering the ACC's Roots: Returning to the Original Purpose of the Arizona Corporation Commission

EXECUTIVE SUMMARY

The Arizona Corporation Commission was established through the state constitution to regulate corporations, public utilities, securities, and other investments. But in an unprecedented move, the Arizona Corporation Commission sought to single-handedly determine alternative energy policy in Arizona with a bold and unconstitutional energy mandate in 2006. This mandate forced energy producers to embrace state-favored alternatives instead of deciding for themselves which options are most attractive in Arizona.

Arizonans now face the real threat that the Arizona Corporation Commission will continue to seize power meant to be held by the state’s legislative branch. Important decisions about energy policy, corporate governance, and other areas have been removed from the legislative process which, for all its faults, offers more transparency, citizen input, and accountability than the opaque and bureaucratic proceedings of the Arizona Corporation Commission.

The framers of the Arizona Constitution had serious concerns about the Commission’s potential to abuse its authority. Records of the state constitutional debate show the constitution’s authors intentionally limited the Commission’s powers to prevent interference with internal business decisions. The framers’ fears have been borne out. The Commission’s attempt to act as the state’s de facto energy czar clearly oversteps its original role.

Arizona courts should re-establish a proper balance between the Commission and legislative power. Courts in other states with similar utility regulatory commissions already have concluded such agencies don’t have constitutional authority to mandate statewide policy. The Legislature also can reassert its authority by ordering an audit of the Commission that would recommend ways to streamline the agency and to restore it to its proper role. Finally, the state constitution could be amended to transfer necessary functions to other agencies and decommission the ACC to stop its policymaking power grabs, which Arizona’s founders specifically aimed to prevent.

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