Background and Organization
Article 15 of the Arizona Constitution establishes the Arizona Corporation Commission. Only 7 states have constitutionally formed Commissions. Arizona is one of only 13 states with elected Commissioners. In the 37 other states, Commissioners are appointed by either the governor or the legislature.
In most states, the Commission is known as the Public Service Commission or the Public Utility Commission. Our Commission, however, has responsibilities that go beyond traditional public utilities regulation. These additional roles include facilitating the incorporation of businesses and organizations, securities regulation and railroad/pipeline safety.
By virtue of the Arizona Constitution, the Commissioners function in an Executive capacity, they adopt rules and regulations thereby functioning in a Legislative capacity, and they also act in a Judicial capacity sitting as a tribunal and making decisions in contested matters.
The Commission is required by the Arizona Constitution to maintain its chief office in Phoenix and it is required by law to conduct monthly meetings.
In November 2000, the voters of Arizona approved a measure, placed on the ballot by the State Legislature, which expanded the size of the Commission from three to five Commissioners. The measure also changed the term of office from one six-year term to a four-year term with the possibility of reelection to one additional (consecutive) four-year term. The initial terms of the two new seats are for two years. In the case of a vacancy, the Governor appoints a Commissioner to serve until the next general election. The Commissioners choose one member from among themselves to serve as Chairman.
The Commissioners have the ultimate responsibility for final decisions on granting or denying rate adjustments, enforcing safety and public service requirements, and approving securities matters.
The Director of the Commission Staff is the Executive Director. Ted Vogt serves at the pleasure of the Commissioners, and is responsible to the Commissioners for the day to day operations of all Divisions. Section 40-105, Arizona Revised Statutes, outlines the powers and duties of the Executive Director's position.
The Commission staff is organized into nine Divisions. Each Division is headed by a Director who reports to the Executive Director.
The Administration Division plans, coordinates and directs the administrative and fiscal activities necessary to support the Commissioners and all Divisions of the Commission. The Division also provides information to the general public and media on all Commission activities.
The Media Services Division is responsible for the television broadcast production of all meetings and hearings of the Commission for public viewing and for archiving. Additionally, the Division produces video tutorials and short educational segments on the many varied duties of the Commission. The Division is also responsible for the Commission's website.
The Corporations Division approves for filing all articles of incorporation for Arizona businesses; all articles of organization for limited liability companies; grants authority to foreign corporations to transact business in this state; propounds interrogatories when necessary to determine a company's lawful purpose; and revokes the corporate charters of those corporations which choose to not comply with Arizona law. The Division collects from every corporation an annual report which reflects its current status, business, and financial condition; maintains this information in a format conducive to public access; responds to public questions concerning Arizona businesses and corporation law; and responds to the needs of the business sector by disseminating whatever information is mission-critical to them in the most expedient and cost-effective manner possible.
Any significant changes to Articles of Incorporation or Articles of Organization for Limited Liability Companies in the form of amendments, mergers, consolidations, dissolutions or withdrawals are also filed with the Division. All filings are public record and available for inspection.
The Hearings Division exercises the Commission's authority to hold public hearings on matters involving the regulation of public service corporations, the sale of securities and the registration of non-municipal corporations. The Hearings Division is also responsible for the Commission's Docket Control Section.
The mission of the Information Technology (IT) Division is to provide accurate, efficient and timely technology design, development, implementation, communications and maintenance support services to the agency and its respective divisions in support of their missions and objectives
The Legal Division provides legal assistance, advice and representation to the Commissioners and each Division of the Corporation Commission except the Securities Division. Matters handled by the Legal Division fall into five general categories: Commission dockets, Federal regulatory dockets, litigation, other administrative matters and special projects.
Most of the Division's resources are devoted to Commission hearings. Major rate cases, such as those involving firms like the Arizona Public Service Company and Qwest, where tens of millions of dollars in potential rate increases are at stake, take several months to prepare and require close coordination with the Commissioners, staff and professional consultants.
The Pipeline Safety Section enforces Pipeline safety standards and operating practices applicable to the transportation of gas and hazardous liquids by pipeline and the operation of liquefied natural gas facilities. Inspections are conducted on all interstate gas transmission and interstate hazardous liquid pipeline facilities.
The Railroad Safety Section enforces the Federal Safety Standards for track, signal, motive power and equipment, railroad operating practices, and the shipment of hazardous material by rail. The Railroad Safety Section is also responsible for inspection and review of industrial track, and rail-highway crossing construction projects.
The Securities Division strives to ensure the integrity of the securities marketplace through investigative actions as well as the registration and/or oversight of securities, securities dealers and brokers, investment advisers and their representatives; to enhance legitimate capital formation; and to minimize the burden and expense of regulatory compliance by legitimate business.
The Division reviews prospective offerings of securities to ascertain that full and fair disclosure is made to potential securities investors and that the terms of offerings are not inherently fraudulent.
Certain securities dealers, salespersons, investment advisers, and investment adviser representatives are required to register with the Division. The Division reviews these applications and monitors the conduct of investment advisers, dealers and salespersons; investigates possible violations; and when the evidence warrants, initiates administrative or civil actions, or refers cases for criminal prosecution.
The Arizona Corporation Commission has jurisdiction over the quality of service and rates charged by public service utilities. By state law, public service utilities are regulated monopolies given the opportunity to earn a fair and reasonable return on their investments. What is fair and reasonable in any particular case has been and always will be open to debate in rate hearings before the Commission. Generally, the Commission tries to balance the customers' interest in affordable and reliable utility service with the utility's interest in earning a fair profit.
The Utilities Division makes specific recommendations to the Commissioners to assist them in reaching decisions regarding public utility rates, utility finance and quality of service. The Division is responsible for researching and developing utility issues, providing information and evidence in Commission proceedings dealing with utility applications, and monitoring the quality of utility service, and the rates approved by the Commissioners. Additionally, Division staff inspects gas pipelines for safety, operates a railroad safety program and maintains the official documents of proceedings before the Commission.
All rate changes require approval of the Commission in an Open Meeting. Staff preparation for a major rate hearing begins at the time of utility's initial filing, and takes approximately four to six months before the hearing takes place. Work efforts between the time of filing and hearing include a review of past Commission actions, a review of documents on file with the Commission, an audit of the books and records of the utility, discussions with utility personnel and other interested parties, formulation of the staff recommendation, an analysis of the impacts of the recommendation, and preparation of written testimony and schedules.