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Arizona regulators consider potential rules for electric retail competition

Posted: 7:35 PM, Feb 25, 2020
Updated: 2020-02-25 21:46:31-05
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PHOENIX, AZ — Is Arizona ready to allow a choice of electricity providers for consumers?

On Tuesday, industry experts from around the country presented cases for and against restructuring to the Arizona Corporation Commission.

In the first of a two-day workshop to consider potential rules for a competitive market, commissioners heard about the good and the bad in existing models.

Elin Katz, a former consumer advocate for the state of Connecticut made a presentation in opposition to competition.

Katz says unscrupulous companies inundate consumers with phone calls and spoof phone numbers in attempts to get them to switch.

And even with years of consumer education, she says some consumers still fall victim. "We failed. I failed. We were not able to protect consumers in this market," Katz said.

Part the problem, she says, is that it is hard for consumers to know if they are getting the best plan for their situation.

"Consumers don't understand this market. It's an incredibly complicated market" she said.

Katz testified on behalf of Tucson Electric Power, an investor-owned utility that would be adversely affected by competition.

Commissioner Justin Olson has spearheaded the effort to allow competition with the support of Commissioner Bob Burns.

"Restructuring markets and allowing competition creates a rising tide that lifts all boats," Olson said.

In December 2019, he spoke with ABC15 about why he believes competition will benefit Arizonans.

Now he is working to convince at least one of the other three commissioners who are undecided on the issue that the same pitfalls seen in other states would not happen in Arizona.

"We can learn from the best practices of other states and we can also learn from the worst practices of other states," Olson.

One best practice he points to is the Texas model that he says has seen a decrease in rates over the past 20 years since competition has been implemented.

Olson argued that strict rules will address consumer protection issues. Burns pointed out that having the option to change companies could be a remedy for an unhappy customer, which is unavailable to consumers under the current model in Arizona.

Community Choice Aggregation (CCA) is also being considered.

Industry representative Shawn Marshall with LEAN Energy says that model cities or counties would be allowed to purchase power on behalf of its residents. "The community gets to decide," she said.

CCAs are locally governed and professionally managed with much of the decision making about rates and energy left up to municipalities or its voters.

In docket filings, APS and TEP--the investor-owned electric utilities that operate in Arizona and would be heavily affected--came out against the competition.

SRP is also opposed to retail electric competition according to docket filings. It is still unclear if customers in SRP territory would be eligible to participate in any form of competitive market or CCA.

No votes were taken. The workshop is for informational purposes for Commissioners while they consider if competition is a process they are willing to implement.

Day two of the workshop is on Wednesday at 10 a.m. at the Arizona Corporation Commission and can be live-streamed here.