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Is electric company competition coming to Arizona?

Posted at 9:30 PM, Dec 04, 2019

PHOENIX — For more than 1.2 million customers, Arizona Public Service is the only game in town when it comes to electricity.

But state regulators are currently looking into the possibility of dismantling the monopoly and allow retail electric competition.

Commissioner Justin Olson is spearheading the Arizona Corporation Commission's efforts to research competition and says that could mean more companies could create and sell power to Arizonans.

"I think that it's time that Arizonans have that opportunity to choose who will provide power to their home and businesses," Olson said.

In the early 2000s, California tried it and failed. The resulting energy crisis was marked by market manipulation, blackouts and bankruptcies of power companies.

Nearly twenty years later, Olson says, lessons have been learned.

13 states and the District of Columbia now have some form of competition.

"What we've seen in Texas is that rates from 2008 until 2018 actually fell by 20 percent, which is remarkable," Olson said. "During that time rates in Arizona increased by over 20 percent."

Former Texas lawmaker Steven Wolens wrote Texas’ competition law, which has been in place since 2002. He is still a believer today.

"Here in Dallas, I had one business that I could buy my electricity from. Now there are 135," Wolens said.

Regulators run a website where consumers can shop hundreds of plans. They can search by estimated use, price per kilowatt-hour, even a particular generation source.

"You can tell your electric retail provider to give you only green energy," Wolens said.

But critics say it's not all good. Watchdog columnist for the Dallas Morning News, Dave Lieber says competition creates new headaches for consumers.

"You have to kind of be a math genius to figure out how to find the lowest rate from the best company," Lieber said.

He says confused consumers have been contacting him for years.

"It's so complicated that the electricity companies have figured out how to game the system," Lieber said.

Lieber points to that state-run website and says many of the low prices are introductory to lure in new customers.

"Once the contract expires in 3, 6, 12, 24 months the rates will jump," Lieber said.

Then there are the hidden fees. He says some plans even charge to talk to a live person. Others charge a penalty when you don't use enough power.

"That upsets a lot of people because here we are trying to conserve," Lieber said.

For the fiscal year 2019, Texas had more than 5,500 electricity-related complaints or inquiries, according to a report from Texas Coalition for Affordable Power. 46 percent were about billing.

During that same time, more than $250,000 was refunded to customers, and with so many companies operating, scammers have plenty of places to hide. There are also warnings about fake websites and shady door to door salesmen.

"When a bill comes it's twice as much is you were promised," Lieber said.

His advice to regulators, "Have the tightest regulatory rules known to mankind because these companies are smarter than you and they will come in and they will game the system 50 different ways."

Olson says he and Commissioner Bob Burns are still drafting potential rules to avoid pitfalls and hoping to convince the commission and the public to get on board.

Under Olson's plan, competition would apply to APS, Tucson Electric and UNS customers.

Co-ops and non-profits like SRP could likely be invited to join the competitive market but not required to.

A public meeting about competition is scheduled at the Corporation Commission on December 19 at 10 a.m.

December 6, 2019 update: The Arizona Corporation Commission announced the cancellation of the Dec 19 work shop about retail electric competition. The agency says it will be rescheduled in late January or early February 2020.