July 30, 2013
Phoenix Business Journal
Patrick O'Grady
A new group of business and political leaders throughout Phoenix and Arizona are backing Arizona Public Service Co.'s position that the state should not deregulate its electric power industry.
The Arizona Power Consumers Coalition is pushing the Arizona Corporation Commission to step away from deregulation. It comes as political muscle from the state Legislature in the form of House Speaker Andy Tobin along with the Navajo Nation also are asking the ACC to not deregulate the state.
Jay Heiler, chairman of the coalition, said the group has coallesed around an idea that deregulation is not what Arizona needs right now given its results in other states.
"I believe once they look at the updated body of information, they'll think it is a worse idea now than it was before," he said.
Arizona once considered deregulating its utilities in the late 1990s, but an experience in California that saw price spikes and rolling blackouts attributed to that state's efforts to deregulate made regulators here and in other states pull back.
In recent years, states such as Pennsylvania, Maryland, Illinois and a host of others have deregulated their electric power service. That means customers are free to chose from an existing power provider or a new company.
In general, deregulation works by splitting off power production from the companies that supply the power to consumers. One company will generate the power and sell it to a second company, which will then sell it to customers.
While deregulation proponents believe they can make Arizona a better market, none of the state's utilities agree. The coalition points to similar evidence filed by APS that prices in deregulated states such as Pennsylvania and Maryland are higher now with deregulation and higher than the national average, while Arizona has lower-than-average prices.
"The evidence (an Arizona market would work better) is extremely weak," Heiler said. "If anything, it's less likely to succeed than it was before."
The group has included members such as Roc Arnett, president of the East Valley Partnership, Lori Daniels, a former state senator, and Diane McCarthy, who has served in numerous roles in Valley and state leadership, including on the ACC.
Also weighing in were Tobin and Navajo Nation Council Speaker Johnny Naize, who issued a statement rejecting deregulation.
The ongoing discussions into deregulation have put a hold on APS' purchase of two units at the Four Corners Power Plant. That move puts in jeopardy a coal mine on the Navajo Nation that supplies fuel for the plant.
What is so fundamentally broken with our electric model that needs to be fixed at a time when so many investment and resource decisions are on the line? This could not come at a worse time," the letter states. "To that end, we strongly urge the commission to provide regulatory certainty to energy providers by issuing a decision to not pursue retail electric restructuring at this time."