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Savings doubtful from flawed plan to restructure electric system

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Arizona’s economy is growing rapidly and folks are moving here for our job opportunities, climate, and quality of life. What could be better?

Yet moves are underway to radically “restructure” our electric system, something no state has done in the last 20 years and many states who did returned to traditional utility regulation.

Steve Jennings

Steve Jennings

Why upset an applecart? Break something that isn’t broken?

Arizona’s 12 cent average residential electric rate per kilowatt hour is the same as other Mountain states and pales in comparison to the 20 cents average  by our neighbor, California. Indeed, the national average is 13 cents. (Source Department of Energy 2/26 EIA report)

Some would jeopardize that by scrapping our current electric system and turn things into a free for all via “restructured” electric system — having individual customers pick their electric supplier.

Arizona is hardly ready for such a move. There are no electric suppliers lurking in the state with lower cost power. There is no wholesale market. There is no independent access to electric transmission. At best the idea is premature.

And don’t be fooled. Big companies want to try and exit our Arizona electric system, buy their power elsewhere, and leave homeowners and renters holding the bag to pay for fixed costs like the Palo Verde Nuclear Generating Station.

Advocates point to Texas as a model of a “restructured” electric system. Really? Texas almost saw blackouts last summer when wind power didn’t show up and electric generation barely covered demands. Do we want a fast-growing state like Arizona (with our high electricity demands) to face a similar fate?

Texas is already in a regional grid operator (a type of RTO). Arizona is not and joining one is a bad idea. Do we really want our power dispatched from the California ISO in Sacramento? Or do we want to hand our energy fate to the Federal government (FERC), which regulates such non-governmental groups? Do we want to have to pay to build power lines in other western states? That all could happen under the idea.

With our current low and affordable electricity rates, it is unclear what problem we are trying to solve.

That’s why AARP and other groups oppose proposals to “restructure” Arizona’s electricity market.

Working to improve the Arizona Corporation Commission and rates offered by our utilities is a better option. And we can learn from the mistakes and problems of those states – like California – that have “restructured”.

Steve Jennings is the Associate State Director of Advocacy for AARP AZ.

3 comments

  1. Read before you type! Learn the facts before you state things you don’t understand. We help more customers save money in deregulated markets than any other consultant group. #stopstupidcommentary #speaktruthorshutup

  2. WOW! This is a really mis-informed writer. Deregulation of the electricity market has proven to be a winner for all customers. It is undisputed that the development of the eastern RTOs and wholesale electricity markets have saved customers billions of dollars. The University of Chicago recently estimated the savings from market competition to be in the neighborhood of $3 billion annually. The writer worries about paying the fixed costs of the Palo Verde Nuclear Station. If that facility was economic, it would not need a subsidy. Maintaining the utility monopoly on generation doesn’t relieve Arizona rate payers from the burden of Palo Verde — it only masks it under the name of a “regulated rate”. In fact, it further incentivizes the utilities to continue developing uneconomic power plants because the customers have no options. The author cites a 12 cent rate. Competition has never yielded higher rates, in any market for any good or service. If the utilities are the best at what they do, then the price won’t go above 12 cents. Competition can only lower rates (and offer a host of other tremendous benefits).

  3. With all do respect, sincerely! But the author of the article is accurate. The “restructuring” of the energy industry Is Not working for all end use consumers. And, specifically Residential & Small businesses have rates that have only gone one direction; UP.
    12¢,national average, really? Our rates in SCE territory had two rates Baseline and everything kWh over Baseline.
    It was .12 ¢ & 14¢ respectively—–back in 1996!!!! Don’t do it!!!

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