As the temperature in Arizona, the hottest state in the US, continues to escalate, so does the debate around energy deregulation, when consumers can choose their energy supplier. The Arizona Corporation Commission (ACC), the regulatory body for energy services within the state, is in the process of considering deregulation again. Arizona had previously been a deregulated state, however after California’s attempt at deregulation led to outages and huge price spikes, the plan was scrapped.
It’s interesting to observe then, that the ACC has once again opened the subject for debate. The commission has recently held public meetings and has asked for input from parties on both sides of the debate. Currently there are 25 providers of electricity service in Arizona, with the majority of those being small cooperatives, or sub-districts within more populated areas. Obviously these incumbents have the most at stake if deregulation comes to pass and residents can choose their best electricity rate.
What’s also interesting to note is the fact that Arizona has already opened the system of electricity delivery to competition. Certificates have been granted by the ACC to several providers within specific areas of the state, but so far none of them are providing competitive delivery. The commission has further opened the debate by requesting key stakeholders to submit their responses in support of or opposition to deregulation.
Now that 30 states have deregulated at least some portion of energy delivery within their jurisdiction, it may seem a forgone conclusion that Arizona will do the same. There is a difference however, in this hottest and driest of states.
While Arizona has arguably the most crucial demand for electricity to drive air-conditioning needs, they currently have one of the most reliable energy delivery systems in the U.S. In addition, Arizona’s electricity rates are already lower than almost all of the states that have been deregulated, and equal to or below U.S. averages. Finally, Arizona’s largest utility, APS, ranks 5th among 54 large investor-owned utilities in J.D. Power and Associates survey of customer satisfaction.
So the question of whether energy deregulation is a good thing for Arizona depends as always on which side you’re standing on. If you take the case of independent energy delivery providers, competition may provide even more cost savings and efficiency within the system. On the other hand, the room for large-scale improvement seems hard to see. In any case, the debate is at least coming to some sort of climax, as the deadline for submission of arguments was July 15th. Now the debate continues within the ACC itself, with a ruling expected later this year.
For more information and press releases on deregulation in Arizona, please visit Arizonans for Electric Competition.