The Corporation Commission may soon take another look at retail electric competition, just five years after its last foray into the issue ended with a whimper.
Commissioners Robert Burns, Boyd Dunn and Justin Olson have all submitted recent letters into an open docket asking that the commission explore possible changes to its retail electric competition rules. Those rules currently permit utilities such as Arizona Public Service to operate as regulated monopolies.
Olson said he believes the commission should consider opening up the energy retail and generation markets to competition, which would create competition for regulated monopolies like APS.
“If we’re going to be analyzing what the grid of the future is going to look like and what, if any, policy reforms do we need enacted at the commission in order to accomplish that, I think retail choice is certainly something that needs to be part of that discussion,” Olson said.
Burns said he believes technological advancements in recent years have created more of an impetus for re-regulation – Burns rejected the term “deregulation” – in the energy generation arena. He said he expects resistance from the utility, which he said spent millions fighting the last push for deregulation in 2013.
“It’s only natural that the utilities would be a little uptight about it, a little bit nervous. They’ve got a pretty good deal going,” Burns said.
Dunn said he’s keeping an open mind on the issue, but isn’t making any commitments on deregulation. He noted that he wasn’t on the commission the last time the issue came up, and wants to get some information on it as the Corporation Commission discusses the energy modernization plan that Commissioner Andy Tobin initiated.
“I felt like I’d like to look at the whole concept and just get the communication, get feedback without any sort of agenda on that issue,” he said.
Commission Chairman Tom Forese, who is widely viewed as an ally of APS, hasn’t made any official calls for the commission to explore deregulation. But he told the Capitol Times that he’s willing to discuss the idea, though he said he has a lot of questions, such as how deregulation would work in rural areas and how it would affect people who can’t afford utility services.
Nonetheless, he said there is merit in the idea of hearing from experts and finding out how deregulation has worked in other states.
“There’s no idea so dangerous that it can’t be discussed,” he said.
A spokeswoman for APS said the company has no comment on the issue.
While deregulation could give consumers the option of purchasing electricity from multiple utilities, Burns acknowledged that there will likely be a continued need for a monopoly that controls the transmission and distribution of electricity. It’s not feasible to have multiple utilities running electrical lines to the same house, he said.
Burns, a frequent critic of APS who has clashed repeatedly with the company, is the only member of the five-person commission who was in office during the last time it considered electric retail deregulation. In 2013, then-Commissioner Gary Pierce moved to end discussion of the issue after the Corporation Commission received legal advice that deregulation would likely require a voter-approved amendment to the Arizona Constitution. The commission voted 4-1 to end the debate, with then-Commissioner Brenda Burns as the only dissenting vote.
The legal advice that led to Pierce’s motion stemmed from a 2004 ruling by the Arizona Court of Appeals in Phelps Dodge v Arizona Electric Power Cooperative. In that case, which lasted for seven years, the court struck down as unconstitutional rules that the commission adopted in the 1990s to govern a deregulated electricity market. The Constitution empowers the commissioner to set “just and reasonable rates,” and the court determined that the commission’s rules were an abdication of that responsibility.
Olson said he believes the commission can enact rules to allow competition in the retail electricity market without amending the state Constitution. Just because the commission’s previous rules were unconstitutional doesn’t mean any move by the commission toward deregulation and competition would be, he said.
And Burns and Olson both said the debate could turn out differently than it did in 2013 because there are different people in office now.
CORRECTION: A previous version of this story incorrectly identified Robert Burns as the only commissioner to vote against ending the deregulation discussion in 2013.