The battle to grant American consumers a choice in their energy provider is a state-by-state fight, and one that has seen over a dozen individual states find success. In contrast, a handful of other states are ground zero for this push to continue reaching new communities.
Arizona is one of those states ripe for progress, and in fact, has among the brightest spotlight being shined on it by both energy choice advocates and the opponents who want to see utilities retain their monopolies.
The movement toward energy choice in Arizona has seen a fair amount of progress, and there’s reason for optimism, but the hill is still a tough one to climb in the face of the powerful and well-funded opponents. So, while there’s a lot of compelling discussions going on about opening the electricity markets to competition, there’s much work to be done and a lot of disagreement about what can be done.
A victory toward energy choice for consumers would not just be a win for residents of the Grand Canyon State. Still, it would also be a sign for continued optimism and success of activism and action for energy choice advocates everywhere.
With that in mind, let’s look at where energy choice has been in Arizona, what it is at today, and what the next steps are.
History of the Energy Choice in Arizona
Arizona’s history with energy choice starts two decades ago when the state adopted rules to open the market to greater competition. Those rules, however, were ultimately found to be unconstitutional by the state courts.
About six years ago, energy choice advocates again saw an opportunity to open up the power market to competition via the Arizona Corporation Commission, a five-member state commission charged with oversight of utilities operating in Arizona. However, those talks didn’t make much progress after the commission was advised they would need a constitutional amendment for such a plan to work.
In late 2018, however, the commission voted unanimously to hold a workshop to discuss moving toward retail electric competition and even exploring pilot programs of energy choice.
Tom Forese, the chairman of the Arizona Corporation Commission at the time, asked the workshop to explore proposals similar to Arizona’s previous wholesale competition rules that allowed large customers to buy up to 200 megawatts from competitive suppliers. Chairman Forese went further, though, and asked the workshop to look at letting all consumers purchase their energy from private sector suppliers. “I’d like to see something that would be similar in size but would be open to all of the electric utilities that we regulate in the state, but would specifically be available for smaller users,” Forese said.
Where Arizona Stands Today Regarding Energy Choice
Today, however, the sentiment that Arizona is ripe for opening its power market to competition is widely held. In particular, the Arizona Corporation Commission is actively investigating the possibilities and impacts of energy choice. This focus is mostly thanks to Commissioners Justin Olson and Bob Burns, who took over as chairman after Forese’s term.
Olson, as he noted in an editorial earlier this summer, believes that “retail competition stands out as a priority reform that can ease ratepayers’ burdens. “Allowing households to choose their energy provider in a competitive marketplace will empower Arizona ratepayers who are tired of being captive customers to a monopoly.”
Olson’s editorial asked why Arizona Public Service is a monopoly when “competition makes customers happier” and, in areas with energy choice, “customers in those states also pay less.”
Interested parties can keep up with the latest news on energy choice in Arizona by following the docket opened by the Arizona Corporation Commission. Original documents by the commission researching the possibilities, updates from officials, and letters and comments from public stakeholders in favor of or opposed to energy choice can are all available in the docket.
Notable contributions to the docket include:
A letter from Chairman Burns requesting a “rules package for full retail electric competition for all customers in time to be discussed (not voted) no later than the Commission’s February 2020 Open Meeting.”
Similarly, a letter from Olson asking for many policy measures in pursuit of the interest “in considering energy competition in Arizona.”
Next Steps Toward Securing Energy Choice for Arizona Residents
As of August, Arizona Corporation Commission Chairman Burns proposed advancing retail electricity choice with the drafting of new competitive market rules in the next several months.
The timeline remains ambiguous, however, with the AZ Central noting in their explainer of energy choice that “when that vote could happen is unclear. And if they vote to initiate a rule-making, it could take six months to a year to pass the new rule.”
In early February, Chairman Burns and Commissioner Olson issued two sets of draft rules outlining how Arizona retail electric choice could be established. The two proposals have substantial differences, not the least of which is that monopoly utilities would be permitted to participate in the retail competition arrangement in one proposal, but not the other. Either way, though, the rules would require power suppliers to obtain a Certificate of Convenience and Necessity, while transmission and distribution systems would remain under their existing monopoly. The Commission has begun its stakeholder engagement process, including hosting a workshop this week to gather public comment on the proposals.
Current Risks to Energy Choice
While the current focus on energy choice by the Arizona Corporation Commission is encouraging, there are reasons to be concerned that the opposition could stop reform in its tracks.
For one, advocates pushing for open markets are not in complete agreement on the extent that competition should be allowed. Even among the commissioners, some worry the proposal does not go far enough. There’s disagreement as well on whether energy choice should include residential customers or just businesses or even the possibility of community choice aggregation. Such infighting among advocates of energy choice puts the entire movement at risk by making it easier for the monopoly utilities to stop it.
The Commission is looking at a number of ways to address the concerns of ratepayers, including a new rate case and allowing consumers to switch plans. Commissioner Olson, though, continues to insist that “adding competition to this multi-pronged solution will likely prove to be the most important reform.”