Electric Dreams: After more than two decades, Legislature poised to end competition

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A major rewrite of Arizona’s electric energy policy is making its way through the House. 

Supporters of House Bill 2101, which will repeal the 1998 law that tried to create a competitive electric market in Arizona, say it will ensure Arizonans have access to reliable power and make sure the state doesn’t suffer from the sort of power crises that happened in Texas last year or in California in 2000 and 2001. 

“This bill protects customers by eliminating the antiquated, defunct provisions that were contemplated a quarter-century ago and never materialized,” said Molly Greene, senior director of state and local government relations for the Salt River Project. 

Greene said the current law, which requires native utilities to be the “provider of last resort,” means Arizona doesn’t have a free market and encourages new providers to seek the most profitable customers. She cast the deregulatory policies of the 1990s and early 2000s as a failed experiment that didn’t reduce prices for consumers. 

“We do not think that the critical responsibility of providing electrical service is anything (less) than an essential service,” Greene said. 

Opponents say Arizona needs more competition among electricity providers, not less. In particular, some said the bill would kill Green Mountain Energy’s plans to sell renewable energy that would be generated at new in-state solar facilities. Lobbyist Chad Campbell, who represents Green Mountain, said he doesn’t think the bill’s timing is a coincidence. 

“What (the bill) does and what the proponents of it claim it does are two different things in many cases,” Campbell said. “The biggest focal point of the bill is to try and end any ability for regulated competition here in the state. That’s the centerpiece of the bill.” 

Campbell said decisions about energy policy should be left to the Arizona Corporation Commission. The bill, he said, would give more power to utilities and the Legislature instead. 

“It will prevent new competitive companies from coming in and giving consumers a choice,” Campbell said. “Ultimately, consumers want choice. They want to be able to choose who they use for electricity.” 

HB2101 has 39 co-sponsors, including 11 Democrats, House Speaker Rusty Bowers and Senate President Karen Fann. The House Natural Resources, Energy and Water Committee voted 10-2 on January 18 to advance the bill to the full House. 

“I am here to protect my constituency, and my constituency needs air conditioning in the summertime, and I do not feel good about letting a company with no proven track record in Arizona … to come in and do it and then, all of a sudden, they turn on the air conditioning and guess what? They don’t have air,” said Rep. Teresa Martinez, R-Casa Grande. 

Rep. Jacqueline Parker, R-Mesa, who worked for the Corporation Commission before her election to the House, argued against the bill and in favor of a more deregulated energy market. 

“This bill does not, in fact, help the constituents,” she said. “It should be called the monopoly protection bill.” 

The Corporation Commission approved rules in 1999 to allow for competition among electricity providers, but a 2004 court ruling in the case Phelps Dodge Corp v Arizona Electric Power Cooperative threw out some of the rules and effectively stalled Arizona’s experiment with electricity deregulation. 

HB2101 would get rid of the pro-competition language in the current law and add new consumer protection language to the 19-page statute, such as requiring public power entities to investigate customer complaints and protect against deceptive, unfair and abusive business practices. It would also allow anyone to apply for a rehearing on a ratemaking decision. 

It was amended in committee to, among other changes, give cities and towns that run power companies more flexibility to decide how they “address customer service and consumer protection issues,” and to require agricultural improvement districts that are also public power entities to allow, with some limitations “buy-through” programs, which let some power users buy power from third-party generators. 

“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,” said Brendon Blake with AARP Arizona. 

Travis Kavulla, vice president of regulatory affairs for NRG Energy, said more competition could drive down prices for consumers. Green Mountain is one of NRG’s subsidiaries, and Kavulla said the bill would kill their application. If the bill were really about reliability, he said, it would address issues such as weatherizing power plants, ensuring a robust fuel supply chain or making sure customers who need oxygen aren’t turned off in extreme heat. 

“None of those things appear in this bill because reliability in this legislation is simply being used as a fig leaf by people who want to close off choice to their customers and to retain a monopoly,” Kavulla said.