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The truth behind resistance to electric restructuring

In his famous book, “1984,” George Orwell describes “newspeak,” the use of language to fool people into believing the opposite of the truth. You can witness it today in the name of the Arizona Power Consumers Coalition, which opposes restructuring the electricity industry. Its board of directors consists of two lawyers. Its website includes high praise for the state’s two biggest electric utilities, SRP and APS.

Its newspeak goes beyond the name. In one email, they characterize restructuring as both “deregulation” and “re-regulation,” expecting us to ignore the obvious contradiction. For those who believe consumers actually have anything to do with the Arizona Power Consumers Coalition, I have some oceanfront property near Tucson to sell you.

As Adam Smith said in 1776, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The real powers behind the Arizona Power Consumers Coalition are the utilities – large, well-funded corporations guaranteed profits by law. Don’t be fooled into thinking they have the average Arizonan’s interests at heart any more than other corporations do. Their concern is to keep the status quo, one where their investors are guaranteed profits and these corporations have the very best credit ratings, because they have government-granted and enforced monopolies.

I have no problem with big corporations whose products and services I buy only caring about my desires because they are out to make a profit. Where free enterprise prevails, big corporations competing for my business are forced by necessity to do the bidding of customers. 

Competition forces my interests to become their interests.

But competition is not present for the utilities. Our interests as consumers are unlikely to become their interests except through an unwieldy system of committees whereby the Legislature and the Arizona Corporation Commission pass edicts for the utilities to follow. 

Average individual consumers have no real clue of what happens in meetings of the Legislature or the ACC. Therefore, it’s the utilities’ interests that prevail.

When Howard Hughes decided, after World War II, to add international flights to the list of routes his Trans World Airlines would fly, he challenged the preeminence of Pan American airlines. He found himself up against Maine’s powerful Republican senator, Owen Brewster. A private conversation between Hughes and Brewster portrayed in the movie, “The Aviator,” included this exchange:

Hughes: “So, I mean, do you think it’s fair that one airline should have a monopoly on international travel?”

Brewster: “A monopoly? No. No. No. No. I think one airline can do it better, see, without competition. All I’m thinking about are the interests, you know, the needs of the American passenger.”

There is no disputing that Brewster was advocating for a monopoly even as he refused to use the word.

Many Republicans have come out against deregulating electricity in Arizona to make it more competitive. The fear, fed by the utilities, is that we will suffer power outages the way California did 13 years ago with its supposed experiment in electric deregulation. Even a cursory reading of a Congressional Budget Office report on California reveals that California’s problems were caused by too much remaining regulation. The utilities raise the specter of Enron’s manipulations but never reveal that Enron could only happen because of California’s restrictions on long-term contracting.

In the 1980s, the airline industry, previously divided into dozens of little government-granted monopolies, was deregulated. Household names like Braniff, Eastern, TWA, and Pan Am disappeared, but we benefitted from lower prices and more flights. Pennsylvania and Texas have deregulated electricity and their citizens have enjoyed similar fruits. Arizona’s electric restructuring has been delayed for almost 20 years. Its time has come for all Arizonans, especially Arizona’s electricity consumers.

— Byron Schlomach, director, Center for Economic Prosperit, Goldwater Institute.


  1. Excellent article Me. Schlomach!

  2. Dear Mr. Schlomach,

    You and the Goldwater Institute like to quote Adam Smith a lot. You seem to forget that the current Arizona electricity market is, for good reason and the public’s benefit, a “highly regulated” market, not the kind of unfettered monopoly your writings portray and demonize. As a student of economics and Smith’s writings, you conveniently ignore a major concern embodied in Smith’s treatise. Here’s the part you forgot to mention: “…in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.” Well it’s not the government or the incumbent utilities seeking and arguing for electricity deregulation — it’s the energy traders, large industrial customers and merchant power generators. Can deregulation, then really be in the public interest when consumer groups, like AARP fail to rally to your cause? I hope the Arizona Corporation Commission heeds Adam Smith’s warning about those who seek changes to laws and regulations and decides against your position.

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