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Protecting Consumers and Small Businesses from Deregulation in Arizona

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(1)

Protecting Consumers and Small Businesses

from “Deregulation” in Arizona

(2)
(3)

Arizona Today

• Electric utilities regulated by Arizona

Corporation Commission or an elected governing board

• Cost of service model means rates must be

justified, profits are limited

• Current model keeps prices stable, system

reliable

• Arizona took steps toward “deregulation” or

actually “re-regulation” in the 1990s before elected leaders wisely changed course

• “Deregulated” states have higher electric

rates, less reliability, and more customer complaints

(4)

Deregulation is Limited in the U.S.

Competition Active (12 states + D.C.)

Competition Approved then Repealed; No Customer Access (5 states) Competition Approved then Repealed; Limited Customer Access (5 states)

Competition Allowed for Specific Customers, Customer Classes, or Utilities (5 states) No Competition at any time (23 states)

Alaska Hawaii

(5)

Deregulation Hurts Consumers

and Small Businesses

• New merchant energy

companies typically operate like hedge funds

• Providers “cherry pick” large

consumers like Wal-Mart who negotiate special low rates

• Residential customers and small

businesses left “holding the

bag,” paying higher costs

• Residential customers face

numerous competing options, but none offer the savings realized by large customers

(6)

• Provider service contracts vary by terms and

lengths, termination fees, and other fine print – often luring customers with

incentive offers – making it difficult for consumers to compare service offerings

• Customer service complaints in deregulated

states are very high

• Arizona customers already can choose from

a variety of innovative programs and pricing options

Deregulation is NOT the same

(7)

Deregulation was a disaster

in other states

When they tried deregulation

in California it was a complete

disaster

Power shortages Blackouts

Out of control pricing

ENRON and other companies

manipulated the market to increase costs for power so they could make more money

(8)

Deregulation was a disaster

in other states

Maryland Power Rates Increased 60% Rates

*Baltimore Gas and Electric Rates – June 2006 (9.07¢/kwh) vs. June 2007 (14.48¢/kwh) Pennsylvania &Illinois Power Rates Increased 53% Rates Rates

(9)

Deregulation was a disaster

in other states

Reliability

-For the second year in a row, Texas faces the prospects of blackouts since adequate generation is no longer being built in spite of dramatically rising electricity prices. -The 50 biggest power users in Texas have come out against market changes that will lead to increased wholesale prices.

*“Texas power retailers face tight supply, higher $5,000 price cap," Reuters. June 4, 2013.

Texas Complaints Increased 700%

(10)

Arizona Has Low Electricity Rates

• Residential rates in Arizona are below the national average

• Of the 16 states with the highest electricity rates in the country, 13 are

deregulated markets

• Average rates show residential rates in deregulated states are 26% higher

than those in regulated states

• While prices continue to increase in all states, price increases in

restructured states have tended to increase at a faster pace than in traditionally regulated states

(11)

Arizona Has Stable Prices

11

Restructuring of Texas Retail Electric

Market Begins on Jan. 1, 2002 Had Texas’s prices

remained at the national average after retail electric competition, Texans would have saved more than $10 billion between 2002 and

2012.**

*Energy Information Administration, Electric Sales, Revenue and Price, Table 4. Average retail price for bundled and unbundled consumers by sector, Census Division, and State 2011 (Release Date: September 27, 2012)

(12)

Arizona Has Stable Prices

12 Average Residential Retail Price*

*Energy Information Administration, Electric Sales, Revenue and Price, Table 4. Average retail price for bundled and unbundled consumers by sector, Census Division, and State 2011 (Release Date: September 27, 2012)

6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 17.00 18.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Av er ag e Res id en tia l Ret ai l P ric e ( cen ts /k W h) Year IL MD NJ PA TX AZ US Avg

(13)

Diversity Offers Stability

(14)

Our members include:

• Coalition Chairman: Jay Heiler

• Co-Chairs-County Supervisor Sylvia Allen, Roc Arnett, East Valley Partnership, Lori Daniels,

Former State Senator, Lisa James, Russ Jones, Former State Representative, Diane McCarthy, Former Arizona Corporation Commissioner, Kim Owens, Dodie Londen Excellence in Public Service Series, County Supervisor David Tenney, Phil Townsend, Yuma Cty Rep Party Chair

Arizona Power Consumers Coalition supporters:

• Agri-Business Council of Arizona, Arizona Association for Economic Development, Arizona

Cattlemen's Association, Arizona Charter Schools Association, Arizona Community Action Association, Arizona Investment Council, Arizona Municipal Power Users' Association, Arizona Opportunities Industrialization Center, Arizona's Generation & Transmission Cooperatives, APS, B. Bunch Company, Inc., Central Arizona Project Association, Chicanos Por La Causa, Inc., Children's Action Alliance, East Valley Partnership, Glendale Chamber of Commerce, Graham County Electric Cooperative, Grand Canyon State Electric Cooperative Association, Greater Phoenix Economic Council, Greater Phoenix Leadership, Mohave Electric Cooperative, Mt. Graham Regional Medical Center, Navopache Electric Cooperative, North Scottsdale Chamber of Commerce, Salt River

Project, Scottsdale Chamber of Commerce, Scottsdale Healthcare, Surprise Regional Chamber of Commerce, Tucson Electric Power/UNS Energy, United Dairymen of Arizona, Valle Del Sol, Western Growers Association, WESTMARC…Many More

(15)

Thank you!

Web Site:

www.AZPowerConsumers.com

Email:

info@AZPowerConsumers.com

Facebook:

Facebook.com/AZPowerConsumers

References

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