Arizona Corporation Commission Stops Looking Into Deregulation

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On Wednesday, the Arizona Corporation Commission (ACC) voted to close its docket on ?electricity deregulation, based on concerns over the constitutionality of a deregulated electricity ?market in Arizona. The issue had been on the table since May, when the ACC opened a docket ?to explore the possibility of allowing consumers to choose their electricity provider in a ?competitive market.

The all-Republican Commission presumably supports the idea of ?deregulated markets but was constrained by Arizona’s constitution and prior court opinions on ?the issue.? Specifically, Article 15, Section 3 of the state constitution requires the ACC to set electricity ?rates: “The corporation commission shall have full power to, and shall, prescribe… just and ?reasonable rates and charges to be made and collected, by public service corporations within the ?State for service rendered therein… .” In a 2004 decision dealing with the ACC’s prior attempt ?to deregulate electricity markets, the Arizona Court of Appeals held that deregulation was essentially an ?abdication of the ACC’s constitutional responsibility to set rates. Phelps Dodge Corp. v. Arizona ?Elec. Coop., 207 Ariz. 95 (App. 2004).?

Supporters of deregulation, including service providers, out-of-state utilities, and certain ?large consumers; claim it would lower prices through competition among providers. ?Opponents claim it would create uncertain and potentially volatile electricity prices and argue that it has ?failed to benefit consumers in states that have implemented some form of electricity deregulation.?

The vote was not unanimous. Commissioner Brenda Burns voted against the action, preferring ?that the ACC continue exploring options for deregulation and whether it could be done ?constitutionally.?

Arizona Public Service Co. (APS) issued a statement in support of the Commission’s decision.?