Bill limiting electricity competition gets Ducey’s OK

Gov. Doug Ducey signed two bills this week making big changes to energy policy in Arizona. 

On April 26, Ducey signed House Bill 2101, which repeals language passed in 1998 that was meant to increase competition in the electricity sector. 

The day before, Ducey signed House Bill 2411. Sponsored by Rep. Gail Griffin, R-Hereford, the bill authorizes the Arizona Department of Environmental Quality to create its own program that, if the federal government approves, will take over coal ash regulation in the state from the federal Environmental Protection Agency. 

“We should be working at taking care of things here at the local level, the state level, (not) somebody sitting in California or Washington, D.C.,” Griffin said during a committee hearing on the bill in January. “We can do it better.” 

HB2101 divided Democrats and Republicans, with supporters and opponents in both caucuses, while HB2411 passed on a series of party-line votes. HB2411 was supported by utility companies, a fact that worried its opponents. 

“We are concerned about ADEQ being too cozy with the utilities on this program, which could risk protection of waters and public health,” the Sierra Club Grand Canyon Chapter said in an email to supporters last week. 

Some also pointed to last year’s DEQ audit, which found the department wasn’t fulfilling some of its water quality monitoring responsibilities and questioned whether it was wise to put more on DEQ’s plate. 

“It is clear that while the folks at the agency are doing good work, they are not following state law,” Rep. Andrés Cano, D-Tucson, said during the House vote on the bill. 

Lawmakers’ attempt to create a competitive electric market in Arizona in the late 1990s mostly stalled in 2004, when a court ruling in the case Phelps Dodge Corp v Arizona Electric Power Cooperative threw out some of the Arizona Corporation Commission’s deregulatory rules. 

The state’s big utilities supported repealing the 1998 law, which Ducey called “outdated and unused” in his signing letter. Supporters said it would protect consumers and help Arizona avoid the power crises some nearby states have experienced and which they blamed on deregulation. 

At the bill’s House committee hearing, Brandon Blake with AARP Arizona, said, “Quite simply, we don’t support deregulation in any way, shape, or form across the country. … We believe that no matter how many protections you put for consumers, it’s simply not enough and they continue to see problems with reliability, with predatory behavior, things like that.” 

Ducey called the repeal a first step but said lawmakers still need to “identify new solutions that actually increase retail competition and encourage the development of new energy sources.” 

“Arizona will not follow the path of California, Texas and other states that have mismanaged their grids and continually experience rolling brownouts and blackouts,” Ducey wrote. “We must build an approach that maintains strong reliable energy grids, drives down costs, and secures our energy future.” 

The bill’s opponents included a mix of Democrats and, particularly in the House, more libertarian-minded Republicans. The Sierra Club said last week HB2101 “could negatively affect community choice aggregation of electricity which allows cities to purchase or generate electricity for their residents, as well as rooftop solar in Salt River Project territory.” 

Others worried it would stifle competition from smaller electricity providers, limit consumer choice and kill Green Mountain Energy’s pending application to sell solar power. Mark Parson, the vice president and general manager of Green Mountain, said the bill would remove the company’s legal basis to get a license in Arizona. 

“Some have suggested that HB 2101’s passage, which leaves a policy vacuum in this space, would simply allow the Arizona Corporation Commission to adopt whatever rules about competition it desires, and that this may nevertheless provide Green Mountain an entry into the state,” Parson said. “Simply put, it is not reasonable for Green Mountain to invest in a business model exclusively built around a majority vote of the Arizona’s elected utility regulator, without a statutory pathway to licensing, but that is what HB 2101 would in essence require us to bet on.”