Tucson Weekly: Power Play (October 22

Democrat Paul Newman Faces Republican Tony West In The Race For A Swing Seat On The Arizona Corporation Commission.
By Chris Farnsworth
THE LUNCHEON appears to be nothing special, just another stop on the rubber-chicken circuit for some of the state's true power brokers--the heads of Arizona's utility companies. But for Paul Newman, it's like entering the lion's den.
At the annual gathering of the Arizona Utility Investors Association, Newman, a Democrat, faces off against Tony West, his Republican opponent for the Arizona Corporation Commission, the state's top regulatory agency. Newman and West are vying for the seat being vacated by Democrat Commissioner Renz Jennings, who is leaving after 14 years due to term limits.
You don't have to tell this crowd that the three-member commission is a mess, mired in backstabbing and internal politics between the two remaining commissioners, Carl Kunasek and Jim Irvin. This is one of the few audiences in the state that even knows the commission is responsible for setting the rates utility customers throughout Arizona must pay.
Currents The crowd is also well aware that Democrats like Newman only get elected to the commission by promising lower rates. That's popular with Arizona's consumers--who pay the second highest electric rates in the country--but to investors, higher rates mean more money.
West, the outgoing state treasurer, stands and orates like a preacher, promising a new day on the commission if elected.
The commission "is the most chaotic, most dysfunctional state agency I have seen in 26 years in state government," West thunders.
Newman, on the other hand, hems and haws through his 15 minutes, remaining seated. His slogans pop up in the middle of long and involved sentences about regulations. His nasal voice gets constricted when he loses his place.
It's like watching William Jennings Bryan debate Dr. Joel Fleischman from Northern Exposure.
West clearly wins the match-up. At the end of the debate, Newman looks like a man with the whole world against him.
Which he almost is. With little more than his famous name, Newman is taking on West, who's armed with cash from political action committees, years of connections and the blessing of the GOP.
Whoever wins the seat will control the flow of billions of dollars between utility companies and consumers. And unless Newman, a Bisbee lawyer with six years in the Legislature, can pull off an upset, the commission will become home to one of state government's top dealmakers, string-pullers and insiders.
West has a hefty wallet as the race enters its final weeks. He's raised more than twice as much campaign cash as Newman, much of it from securities firms, bankers, and developers.
But Newman surprised many with a strong showing in a recent KAET poll conducted by Arizona State University professor Bruce Merrill. The race was shown to be a dead heat, with Newman pulling in 30 percent to West's 31 percent, according to Merrill's poll. The undecided votes--39 percent--are crucial.
West started his run saying his integrity and character made him the most qualified to join the commission.
But that strategy has backfired. Now, West's integrity has become the only substantial issue in the campaign.
THE ARIZONA Corporation Commission is one of the most-ignored state agencies. Most people don't know what the commission is, let alone what it does.
Unfortunately, the commission intersects with people's daily lives more than any other state agency. It oversees the companies which bring water, power, gas and phone service to people's homes. In addition, it polices securities traders in the state and incorporates all Arizona business.
The agency is run by a three-member panel of elected commissioners: Jim Irvin, Republican and current chairman; Carl Kunasek, Republican; and Renz Jennings, Democrat.
And for more than a year, much of the panel's time has been spent in bitter, behind-the scenes in-fighting that occasionally blows up into very public embarrassments.
The battle lines aren't drawn along party lines. The real animosity is between the two Republican commissioners, Jim Irvin and Carl Kunasek. Jennings has sided with Irvin, which has left Kunasek on the sidelines. With Jennings' support, Irvin became chairman of the three-member panel last year.
Since then, there's been a host of troubles at the agency, including the hiring of a new head of the utilities division whose résumé turned out to be mostly fiction. Morale is low. The commission's turnover rate is near 20 percent for each of the last two years, one of the highest for state agencies its size.
This turmoil couldn't come at a worse time for the people the commission is supposed to serve: Arizona's consumers. Arizona is currently struggling with the deregulation of utilities.
By next year, any electric utility, even if it's in another state, should be able to sell power in Arizona, without being bound by the traditional geographic districts now in place. The commission is introducing new rules for the new, free market.
This has to be done without sending everyone's monthly bills into orbit. Some consumer advocates fear deregulation could raise utility rates by 10 to 15 percent.
Whoever steps into the commission in January will have a lot of work to do. The decisions he makes will have repercussions for years to come.
TREASURER IS ONLY the most recent office that Tony West has held. He was elected to five terms as a state representative and three terms in the state Senate. He's racked up a lot of alliances, favors and friendships in that time.
West knows almost every player in Arizona politics. The list of people on West's campaign committees stretches across three pages, and includes Governor Jane Dee Hull, Senator John McCain, Representative J.D. Hayworth, and Mayor Sam Campana, among other influential figures.
West, 60, says this race is about integrity and competence, about bringing peace and tranquillity to the fractious commission.
Mangling his metaphors, West says that he can "bring oil to the waters [of the commission], where nobody's poking one another in the nose."
But there's a large gulf between West's record and his rhetoric.
West wants to be a peacemaker, but his election could mean just another 2-1 commission, only this time stacked in Carl Kunasek's favor.
West, a longtime friend and ally of Kunasek, ran in the GOP primary against Gary Carnicle, a political novice who ran Jim Irvin's campaign for the commission. Carnicle lost despite dumping $150,000 of his own money into the race.
West and Kunasek have known each other for 26 years and served together in the Legislature. The friendship extends into West's campaign as well. Kunasek's staff and allies have given time and money to West's election effort.
Another old friend assisting West is John Stiteler, a GOP fundraiser and developer who was forced to resign from the Arizona State Retirement System board after his past business failures were disclosed. Stiteler is now the chair of West's campaign finance committee.
Stiteler and West's connections run deep. West works for Stiteler Investments as a sales representative, and owns a share in Stiteler's 99th Avenue Limited Partnership, valued at more than $100,000 (according to his most recent financial disclosure statement). The two are also close, personal friends.
In West's first term as state treasurer, he and Stiteler profited from deals with other state retirement funds at least twice, before Stiteler was named to the board. West also lobbied on Stiteler's behalf while a state senator.
When Stiteler came under fire while on the retirement board, it was West who came to his aid, blasting back at his friend's opponents in the press.
That's not all.
West's biggest embarrassment in office came in 1994 when he resigned as treasurer just before midnight at the end of his first term, and then resumed office three days later. The move enabled him to begin collecting his $37,000-a-year state retirement pension at the same time he was drawing a $54,600-a-year state salary. He was widely criticized for "double-dipping" at the state trough.
West was also director of the Arizona Chiropractors Association for two years during his first term--an outside job he says he did on his own time, after office hours.
Renz Jennings, the only Democrat in statewide office, went after West in the GOP primary for the ethical lapses that Newman is pressing now.
"His ministry has been to utilities, banks, and big business. And for him to run for the state's top consumer office is absurd," Jennings says.
If West is elected, all three members of the commission will be corporate-friendly, anti-government conservatives.
"Can you imagine what kind of shake the consumers are going to get when all three commissioners are big business Republicans?" Jennings asks.
Jennings questions whether the cozy relationship between Stiteler and West will continue on the corporation commission. He notes that the commission regulates investment firms and deals with a number of issues that concern developers, like power-line siting.
West promises Stiteler will have no role at the commission. And he still adamantly defends his decision to take his pension before he actually retired as "legal, ethical and moral," noting he consulted with the Attorney General's office.
"The opportunity was there to take [the pension], and it would've cost me $160,000 not to take it. And that's financial stupidity not to have done that, as far as taking care of my family and financial obligations," he says.
Kunasek and West also deny that they're working on a package deal together.
"We are not joined at the hip. If we disagree, we disagree, period," Kunasek insists. "And the one that gets the second vote on any disagreement is the one who carries the day. As far as him getting my proxy, it ain't going to happen."
West also fires back at Jennings, calling Jennings' charges "outright lies" and Jennings himself "a disgrace."
West's affable demeanor evaporates when he defends himself. He has the instincts of a political gut-puncher. One former opponent of West's, who didn't want to be named, says, "Tony West is the last man in state government you want to piss off."
West's tendency to go right up to the ethical line between his public and his private roles calls into question the entire premise of his campaign: that he has the most integrity and character for the job.
In the race for the commission, West has gotten close to the line again. He has accepted $8,300 in political action committee money and personal contributions from bankers and investment advisers, despite a possible conflict of interest in both areas.
But no matter how close he gets, West insists he'll never cross over that line.
"Listen, I'm the guy that put our accountant in jail for five years when he embezzled $1.9 million from the state treasury," he says. "In AzScam, I'm the one guy that when they tried to get me in that web, I reported it to the AG's office, and then followed up on it. Don't ever worry about me not doing the right thing in the public interest."
PAUL NEWMAN ONCE took a beating to protect someone else's money.
It was the summer after he graduated high school. He was working as an Italian ice salesman in his hometown, a little place outside Jersey City. "I tell you, on a hot summer day, you were the most popular guy around in that truck," he recalls.
While making rounds, he was jumped by a gang. Newman curled into a ball, hugging the cash to his chest. He ended up in an emergency room, but they didn't get the money from him.
It's a pretty good metaphor for the theme of Newman's campaign.
"My main focus is to make sure that the consumers of Arizona don't get screwed," Newman says. And he's going to have to hang on against the odds to do that.
Newman, 44, is financially outgunned by West, according to the most recent campaign filings. West has raised nearly $123,000 in contributions, compared to Newman's $55,467.
Newman also seems badly in need of a day-planner. He was hours late for two campaign appearances in Fountain Hills and Tempe when he blew a tire driving from Tucson. His campaign staff couldn't find him.
About the only thing Newman has going for him is that he shares the same name as an actor known for Oscar-worthy performances and salad dressing.
However, that may be enough to tip the race in Newman's favor, says ASU professor Bruce Merrill, who conducted the poll that showed voters almost evenly divided.
Merrill doesn't think people confuse Newman with the actor, but "when you have a good name, a name that is familiar and positive to people, they'll choose it."
Newman says he'll take whatever he can get.
"To be honest, I knew my name was going to help in overcoming all the chits that Tony has over the years, doing people favors, and all the power that Carl [Kunasek] has over the years, doing people favors," Newman says.
Newman is no political novice. A member of the state House of Representatives for the past six years, he was the only Democratic sponsor of HB 2663, the Legislature's deregulation bill. Newman managed to get several amendments tacked on the bill which provided for consumer education and protections for rural customers.
One on one, Newman comes off a lot better than he does in debates or speeches. He explains himself without bogging down as he did at the investors' luncheon debate.
Newman's motto for the campaign is "lower rates, better service." Consumers are going to need a lot more protection under deregulation, he argues, not less.
He ticks off a list of measures he wants to implement if elected: working out the details of deregulation in a way "that doesn't favor utilities," funding for consumer education, and an alternative energy portfolio which includes solar power.
But first, Newman has to convince people that there's even a reason to care.
With so many newcomers in the state, Newman may be a victim of the Democrats' success on the panel. There are a lot of people who don't remember the astronomical utility bills under the GOP-controlled commissions of the '70s and early '80s.
When the Republicans ruled the commission from 1975 to 1984, electric rates rose from 4 cents per kilowatt hour to 10 cents. From 1985 to 1994, under the Democrats, rates only went up a quarter of a cent. (Kunasek, however, blames the increases under the Republicans on the energy crisis and high interest rates.)
Voters finally reversed the trend in 1985 by electing Jennings and Marcia Weeks, another Democrat, who led a push for reform. The Republicans reclaimed the majority in 1996, when Weeks was replaced by Irvin.
"That's the difficulty for the Democrats today: the rates aren't skyrocketing, so you won't get a GOP crossing party lines to vote," says Weeks, who, like Jennings, supports Newman.
NEWMAN'S DILEMMA IS this: To get on the commission and do something about the real issues of deregulation, he has to have a single, compelling issue. Deregulation, unfortunately, is a fuzzy, boring topic that won't get him elected.
He has to have something on which to focus the voters' attention. And right now, that's West's record.
His strategy isn't without risk. West believes Newman violated the clean campaign pledge only three days after he signed it by issuing a press release which echoed Jennings' earlier attacks about the pension and lobbying.
"You talk about integrity, I can't imagine signing a letter and reneging on my signature within 72 hours," West says. "I don't think people like that deserve to be in office."
Newman concedes that it sounds like he's going negative, despite the pledge. He thinks West, however, opened the door to his past by making character the focus.
"Wherever Tony can take advantage monetarily of his position, he does. And I'm worried about that, because the position of corporation commissioner is that of a judge," Newman says. "There are billions of dollars on the table. And just the threat out there worries me. I don't think Tony West is evil. I think I've got a duty to point out these things that show he's ethically challenged."
More to the point, if the last year of turmoil on the commission has proved nothing else, it's shown that character--at least the playground-variety character taught by coaches, such as take your lumps, don't whine, and play well with others--really does matter. It may even be the most important qualification for the post.
And in the end, Newman has little choice but to raise the issue. West's ethics are really the only card he's got to play.
"He could get burned," Weeks concedes. "But he has to do something, because Tony West has all that
money."

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