Five Republicans in charge of the Arizona Corporation Commission (ACC) are considering opening Arizona’s energy market to more competition, but those opposed to the action say deregulation could push energy costs through the roof.
The idea to deregulate Arizona’s utility market was first brought up in the ’90s, but was ended in 2004. Now the ACC is revisiting that decision. They’re accepting comments from both sides of the argument and will likely take up the decision in the fall.
“SRP has examined all of the states that have moved to deregulation and none of them have demonstrated any meaningful benefits to customers to justify Arizona’s move to such a system,” said Patty Garcia-Likens of Salt River Project (SRP). “Deregulated states have seen significant price swings. At one point prices in Illinois and Maryland increased by more than 20 percent in a year. Consumer complaints associated with deregulation, including discontinuance of service and deceptive marketing practices, have also increased. In Texas such complaints increased by over 700 percent.”
Those mistakes have happened as people have figured out how to deregulate the market, said Ahwatukee Foothills resident Vicki Sandler, but those mistakes have mostly been worked out by now.
Sandler has been on all sides of the debate — first as legal rate case counsel for a large utility company; then as CEO for the competitive green energy company affiliate who worked directly with consumers; now as the executive director of the transmission organization that ensures that all entities, the utility or new competitors can fairly use the wires to sell and deliver their electricity.
She said while there has been plenty of mistakes made she believes there are too many good companies in the market now to let those mistakes happen again. She believes personally that deregulation makes sense.
“Why wouldn’t people want to choose their energy the way they choose everything else they need to buy,” Sandler said. “The opportunity with that choice is wouldn’t you love what happened with the cell phone to happen in the energy arena? Who knows what wonderful, imaginative things can happen in your home… All kinds of cool ways to use energy will happen.”
Garcia-Likens said deregulation may not increase access to alternative forms of energy or technology. Those alternative energy forms, which SRP and other utility companies already offer, will continue to be driven by policies set by public officials.
SRP also believes rates will not be improved with deregulation. Arizona’s rates are already lower or equal to deregulated states.
“Deregulation is not likely to produce lower rates in Arizona,” Garcia-Likens said. “Proposals put forth by the advocates of deregulation will shift costs from large business to residential customers, increasing their rates.”
Rates depend on resources, weather and government policies, Sandler said. The constructs of how regulated companies decide rates and how a deregulated system might determine rates are completely different.
“When SRP talks about rate increases that is a moving target…,” she said. “The whole point about competition is whatever your rates are now, they will be less than what a utility will charge over time. It’s the way economics works.”
Several professional groups are weighing in on the decision to deregulate or not. They’ve been asked to submit comments, which the ACC is reviewing. The ACC will need to see if there are good ideas for ways to deregulate without running into the same issues Arizona and other states ran into in the past.
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