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Majority Of Arizona Commissioners Say More Info Needed On Retail Electric Choice Before Decision; More Workshops To Be Held

Kennedy: "Long Way To Go" On Retail Competition

Kennedy: Current C&I Only Retail Choice Proposal Presents Nothing But Risk To Residential Customers

Commissioners Concerned With Rate Impact In Choice States

Dunn: "Cringe[s]" At Thought Of Losing Jurisdiction To FERC If RTO Needed For Choice

August 1, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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A majority of Arizona Corporation Commissioners said that more time is needed to study retail electric competition before making a decision, and more workshops will be held

Chairman Bob Burns said that, "I do believe competition works," and that he is, "very interested in seeing this process go forward."

Burns said that as part of any retail competition, the ACC will need to make sure that retail suppliers entering the state are, "credible"

Commissioner Sandra Kennedy said that it is evident that the Commission, "has a long way to go," and, "much more to consider," before making a decision on retail choice

Kennedy said that, "There doesn't appear to be anything but risk to regular residential customers in the current proposal that limits retail competition and choice to large commercial and industrial users."

Kennedy said that even limiting choice to large C&I customers may put upward pressure on rates for remaining utility supply customers as large customers exit utility supply

Kennedy said that, from examining other states with electric choice, she, "didn't see enough evidence that residential users have saved money, except through community choice aggregation."

"But I certainly saw many problems, especially what appears to be patterns of consumer fraud," Kennedy said

Kennedy asked staff to research scenarios for CCA implementation in Arizona

Kennedy made particular note of states that had previously restructured but are now having second thoughts, with such states finding it hard to return to their prior model before competition. This underscores the risks that if changes in Arizona are made, the decision might not be reversible, Kennedy said

Commissioner Justin Olson said that, "competition is something that we ought to pursue," and reiterated his proposed tenets for electric choice (see our story here for details)

Olson agreed that the current Staff draft, which would only allow larger C&I customers to take retail choice, does present risk to residential customers while not providing the benefits of choice to residential customers, and therefore Olson supports a plan to implement a complete direct access market for residential customers

Commissioner Boyd Dunn said that he is not ready to make a decision at this time.

Dunn said that he does think the ACC must investigate the possibility of increasing electric competition, but more information is needed on how to proceed, and to determine the extent of such competition

Dunn stressed the need to understand how electric rates were affected in other areas that have adopted customer choice

Dunn also "cringe[d]" at the thought of losing jurisdiction to FERC over important policies under an RTO structure

Dunn previously cited the RTO issue, as well as stranded assets, as "huge" questions facing the Commission (story here)

Dunn proposed a series of additional workshops, perhaps five, with each focusing on a specific issue or topic

Commissioner Lea Márquez Peterson agreed that the Commission should move, "cautiously."

Márquez Peterson said that it is not clear what the rate impact for retail electric choice has been in other states.

While Márquez Peterson agreed with the need for more workshops, she hopes that the timeline isn't extended greatly

Utilities Division Staff emphasized the need to move cautiously, and said that Staff needs time to perform due diligence. Staff noted other proceedings and priorities at the Commission which also require Staff's time and attention, but emphasized that it is not Staff's intention to delay the choice review process. Staff, in particular, cited the time needed to develop a set of rules that would withstand legal and technical challenges.

Staff reiterated at the close of the workshop that, based on information presented thus far, Staff does not believe there is enough information to recommend that it is in the public interest to adopt residential electric competition (see prior story here on Staff's view)

Commissioners agreed that, as a first step, Commissioners will docket their questions for stakeholder comment. Staff will then develop another draft proposal that will serve as a discussion document for Commissioners and any workshop (not a formal draft rule that would initiate the formal rulemaking process)

Additional workshops will then be held

Prior to adopting this approach, Burns had sought for Staff to include in the next draft a specific proposal to include residential electric choice in the rules, not for purposes of voting but to facilitate discussion; however, other Commissioners expressed concern with such approach. In response to Burns' suggestion, Staff had said that Staff would need until October to return with such a draft.

No specific timeline was adopted for the next Staff draft or next workshop under the approach adopted by the Commission which, as noted above, will be initiated by the issuance of various questions for stakeholder comment by each Commissioner

Docket RE-00000A-18-0405

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