SB1508 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 40, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 40-207, to read:

START_STATUTE40-207. Utilities; annual disclosures to the commission; civil penalty; definitions

A. On or before May 1, 2027 and each year thereafter, a utility shall report to the commission for the previous calendar year:

1. An itemized list of all of the following expenses:

(a) Membership dues, sponsorships or other contributions to an industry trade association, group or related entity that is incorporated under 26 united states code section 501, including any portion of the membership dues, sponsorships or other contributions that support political activities or advertising. This subdivision does not apply to fees for professional licenses that are related to an employee's job function.

(b) Charitable giving, including contributions to an organization that is qualified under 26 united states code section 501(c)(3) or 501(c)(4).

(d) Institutional advertising.

(e) Promotional advertising.

(f) Payments made to outside attorneys who represent the utility in a proceeding before the commission, including fees paid to experts that testified on behalf of the utility.

(g) Contributions to political candidates, political parties, CAMPAIGN committees, issue committees or independent EXPENDITURE committees, including political organizations as prescribed in 26 united states code section 527 or other related political expenses.

(h) Costs, including marketing, administration or customer service costs, that are associated with products or services that are not regulated by the commission.

(i) PENALTIES or fines that are imposed on a utility, including tax PENALTIES or fines.

(j) liability insurance costs and travel, lodging, food and beverage expenses for the utility's or an affiliate of the utility's board of directors and officers.

(k) costs that are associated with an aircraft that is owned, leased or chartered by the utility's or an affiliate of the utility's board of directors and officers.

(l) Investor relations costs.

(m) Litigation costs regarding existing or proposed federal, state or local regulations, legislation, ordinances or commission decisions.

2. For each covered business unit, an itemized list of all of the following:

(a) The name and job title of each employee.

(b) A job description of each listed employee that is sufficient to describe the employee's responsibilities.

(d) The number of hours that are booked to an above-the-line account for each listed employee.

(e) The percentage of total annual compensation that is booked to an above-the-line account for each employee.

B. To the extent the UTILITY retains outside vendors to perform activities prescribed in subsection a of this section, the utility shall provide to the commission an itemized list of all expenses that are paid to the vendors. The utility shall provide the federal energy regulatory commission's uniform system of accounts number under which each expense is logged and recorded and shall include documentation that identifies the time expended, the work performed and the total cost incurred. Itemized lists shall include for each expense the billing amount, the billing date, the identity of payee and an explanation of the expense sufficient to describe its purpose. The utility shall include a separate line item for each payment that is associated with an ACTIVITY described in subsection a of this section.

C. For each commission proceeding in which the utility is a party, the utility shall provide to the commission an itemized list of expenses booked to an above-the-line account for participation in that proceeding, including employee compensation, vendor expenses and other expenses. The utility shall provide the Federal energy regulatory commission's uniform system of accounts number under which each expense is recorded.

D. The commission shall make all reports that are filed with the commission publicly available.

E. A utility shall clearly and conspicuously disclose in all of its public messages whether the costs of the public messages are being paid for by the utility's shareholders or ratepayers, consistent with advertising and FUNDRAISING DISCLOSURE STATEMENT REQUIREMENTS PURSUANT TO SECTION 16-925. a DISCLOSURE IS NOT CLEAR AND CONSPICUOUS IF THE DISCLOSURE IS DIFFICULT TO HEAR OR READ OR IF THE PLACEMENT OF THE DISCLOSURE IS EASILY OVERLOOKED.

F. fOR PUBLIC MESSAGES that are RECORDED TO AN ABOVE-THE-LINE ACCOUNT, THE UTILITY SHALL IDENTIFY, IN RESPONSE TO A REQUEST FROM A PARTY IN THE UTILITY'S MOST RECENT GENERAL RATE CASE, which EXPENSE OR CAPITAL ACCOUNT IS THE SOURCE OF THE FUNDING.

G. tHE COMMISSION SHALL MONITOR AND INVESTIGATE COMPLIANCE WITH THIS SECTION.

H. tHE COMMISSION SHALL ASSESS A CIVIL PENALTY of not more than $1,000 AGAINST A UTILITY THAT FAILS TO comply WITH the reporting requirements of this section.

I. For the purposes of this section:

1. "above-the-line account":

(a) Means an account that contains EXPENSES that a utility recovers from ratepayers.

(b) includes an account that contains expenses that the utility used to calculate a revenue requirement request in a general rate case.

2. "affiliate of the Utility" means an entity that is related to the utility as a subsidiary, parent or sibling corporation, including by shareholding or other means of control.

3. "Compensation":

(a) Means an employee's annual salary.

(b) Includes a bonus, benefits or other consideration of any value.

4. "Covered business unit" means a division, department or other organizational employee group within a utility that performs any of the activities prescribed in subsection a of this section.

5. "Expense" MEANS a payment to an external entity, a cost incurred by a parent company or corporate affiliate and invoiced to a utility and compensation paid to an employee of a utility.

6. "Institutional advertising":

(a) means written, online, video or audio COMMUNICATIONS that primarily build the public image of a utility.

(b) Does not include public messages that:

(i) the utility is directed to publish by a federal or state agency.

(ii) Provide information on safety measures, emergency conditions, energy conservation programs, rates, utility programs and services that are approved by the commission or on service interruptions and that do not primarily build the public image of the utility.

(iii) Provide necessary information to customers about specific actions customers may take for their safety.

(iv) Are required by the commission.

7. "Investor relations" means any ACTIVITY, communication, service or expense for the purpose of promoting, supporting or managing the utility's relationship with current or potential investors, shareholders, securities analysts, investment ADVISORS or financial media or for the purpose of marketing to enhance the utility's stock price, market perception or investment appeal.

8. "political influence activity":

(a) means An activity that directly or indirectly influences any of the following:

(i) The adoption, repeal or modification of federal, state, regional or local legislation, rules or ordinances.

(ii) The election, recall, appointment or removal of a public official or the adoption of initiatives or referenda.

(iii) The approval, modification or revocation of franchises of a utility.

(iv) Public opinion WITH respect to LEGISLATION, rules, ordinances, elections, referenda or rate setting of a utility.

(v) Decisions of federal, state, regional or local public officials.

(b) Includes Research, preparation or any other activity undertaken FOR the purpose of supporting any activities prescribed in subdivision (a) of this paragraph.

(i) An ACTIVITY that is directly and necessarily related to appearances before regulatory or other governmental bodies in connection with the utility's existing or proposed operations of the utility's regulated system, except that Policies AFFECTING the use of gaseous FUELS or ELECTRICITY are not directly and necessarily related to the utility's existing or proposed operations.

(ii) An activity that is directly related to a energy EFFICIENCY program approved by the commission or another public purpose program approved by the commission if the participation of the utility has not otherwise been prohibited by the commission.

(iii) An activity that responds to a written request by a legislative committee, the commission or a government agency in this state for technical information from the utility.

(iv) An activity that is required by applicable federal or state law or by order of a regulatory authority and that is undertaken to satisfy that law or regulation.

9. "Promotional advertising":

(a) Means written, online, video or audio COMMUNICATIONS for the purpose of inducing a person to patronize a product, service, business or industry.

(b) Does not include public messages that:

(i) the utility is directed to publish by a federal or state agency.

(iii) Provide necessary information to customers about specific actions customers may take for their safety.

(iv) Are required by the commission.

10. "Public official" means:

(a) a decision-maker within an administrative agency or legislative body of this state or of the federal government.

(b) an executive officer of this state or of the federal government.

11. "utility" means:

(a) an electrical public service corporation or gas public service corporation that is regulated by the commission.

(b) an agricultural improvement district that is organized pursuant to title 48, chapter 17.

12. "Vendor" means a person or business that provides goods and services. END_STATUTE