Deregulation Supporters Regroup After Surprise Decision

By Kyle O’Donnell         

Cronkite News

PHOENIX – The Arizona Corporation Commission’s sudden decision to stop exploring electric regulation left proponents stunned and pondering their next moves.

“This is a continuous process, and it’s only going to ramp up because energy is the most important thing in our economy,” said Nick Dranias, director of the Center for Constitutional Government at the Goldwater Institute, an independent watchdog group that promotes limited government and free enterprise.

The commission voted 4-1 Wednesday, Sept. 11, to end its exploration of electric deregulation, with members citing concerns that the change would violate the Arizona Constitution.

Sixteen states have some level of consumer choice in their energy markets.

While proponents said deregulation would spur competition and lead to lower energy costs for Arizonans, utilities opposed the idea.

Joe Salkowski, manager of regulatory services at Tucson Electric Power, said the company was pleased with the decision.

“We think it was the correct decision in light of the facts, the legal facts, and a good outcome for our customers,” he said.

Arizonans for Electric Choice and Competition, a lobbying group, pledged to continue to press for deregulation.

“Arizona families and businesses deserve the clear benefits that competition would bring,” Stan Barnes, the group’s president, said in an emailed statement. “This discussion is not over, and we look forward to continuing to pursue a path that will lead to the opening of Arizona’s electricity market to retail competition.”

Lon Huber, a consultant to the state Residential Utility Consumer Office, which represents the interests of residential utility ratepayers, said the commission can still explore changes to the electric marketplace.

“It’s morphed, but the large-scale restructuring is dead,” he said. “And now there’s going to be small, piecemeal policies for each utility.”

These policies could involve innovative technology or new rate plans like free nights and weekends, Huber said.

Patrick Quinn, director of the Residential Utility Consumer Office, said that while large companies may not like the decision, it is neutral or good for residential ratepayers in a state that has below-average energy costs and few grid problems.

The decision still allows the commission to have some control over the electric industry, something he said wouldn’t have occurred in a competitive market, he said.

“This probably gives them more opportunities to do some good things for the residential ratepayer in Arizona,” Quinn said.

Dranias of the Goldwater Institute said consumer choice is inevitable. Next steps for proponents could include making the case in the court of public opinion, legislation or litigation, he said.

“It’s a setback, but a minor and temporary one,” Dranias said.