Arizona Commissioner: Chair's Proposed Direction On Retail Choice Rules Development Could Result In "Anchoring Bias"
Says Staff Should Not Develop Any Formal Retail Choice Rules Package At This Time, In Favor Of More Workshops
August 22, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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Proceeding with the consideration of retail electric choice as proposed by Arizona Corporation Commission Chair Bob Burns in a recent memo would, "unnecessarily burden an already overworked and understaffed Utilities Division, as well as threaten our
ability to adopt ideal policies by prematurely anchoring our discussions to a defined proposal," ACC Commissioner Lea Márquez Peterson wrote in a memo.
Márquez Peterson wrote that directing Staff to advance just one of many potential outcomes, without first incorporating the input of stakeholders and Commissioner questions, "could close the Commission to other possibilities through the affect of anchoring bias."
"Throughout the workshop on retail electric competition and in additional research I have done on
related issues, my primary concern has been to ensure both affordability and equal access to reliable
electricity for all customers, especially those in low-income or rural communities," Márquez Peterson wrote
"Repeatedly throughout the workshop we heard statements from presenters that question whether
these conditions could be met under a system that opened up full retail electric competition to all
customers, including the residential sector," Márquez Peterson wrote
Márquez Peterson quoted the previously reported (story here) statement from Utilities Division Director, Elijah Abinah, who said during a recent workshop: "Based on the information presented to us, based on the information I have today, if you
ask me to make a recommendation on retail competition on residential, I don't believe
there is enough information that it is in the public interest ... Today, when it comes to
residential retail competition, I don't believe there is enough information for me to
recommend moving forward to residential. I believe the rule we proposed today is
appropriate if you want to move forward."
Márquez Peterson wrote, "As I mentioned during the workshop, I question the process of having our Staff develop a draft rules
proposal prior to us having adequate time to examine all of the various issues related to such an
important and multi-faceted policy decision."
Márquez Peterson wrote, "Nobel winning psychologist Daniel Kahneman warns of a cognitive bias called the 'anchoring effect.' He
explains that, 'People make estimates by starting from an initial value that is adjusted to yield the final
answer.' He goes on to warn that, 'The initial value, or starting point, may be suggested by the
formulation of the problem, or it may be the result of a partial computation. In either case, adjustments
are typically insufficient.' Essentially, people rely too heavily on the first piece of information they
encounter when trying to make a decision and tend to only consider a narrow field of alternatives
centered around the initial proposal when in reality, the optimal solution may be found in a completely
different vane. I would like to avoid this bias if possible, by accumulating as much information as
possible before attempting to codify formal rules."
Márquez Peterson wrote, "In this case, you are asking for our 'starting point' to be developed based on a single Commissioners'
suggestion after a solitary workshop on this issue. The last attempt at addressing retail competition
consisted of over two dozen workshops, and it seems that we will hold many more in this case as well.
Accordingly, I would suggest that we avoid having staff develop any formal rule package at this point as
it may lock us into a narrow set of policy options and increase the risk that we ultimately adopt less than
optimal policy recommendations."
"While I would argue that it is not Staff's job to propose rules packages for our consideration, if that is
the approach this Commission chooses to take, the proposals prepared by Staff should at least be informed by the responses of the stakeholders to the questions posed by Commissioners and be
directed by a formal vote," Márquez Peterson wrote
"At the workshop it was proposed that, 'perhaps the next step should be that each of us docket
questions, and then at that point with as much data as we can provide, we move forward.' This
approach was also recommended by our Staff with the understanding that questions would be sent out
to stakeholders, and that their responses would be received prior to any further discussion of specific
rules proposals," Márquez Peterson wrote
"There seems to be a belief among some Commissioners that gathering information and drafting rules
proposals are separate events that can be conducted simultaneously and in parallel. I believe this is the
wrong course. The questions we ask as Commissioners should be answered and addressed in detailed
workshops first, and then used to inform the production of effective policy proposals," Márquez Peterson wrote
"Accordingly, I would suggest that we pursue a course more closely resembling 'Option 2' offered by
Commissioner Olson in his letter dated July 23, 2019. Under such a procedure this Commission would
'establish a deliberate time table for consideration of all the issues that Commissioners feel need to be
evaluated prior to voting for retail competition.' Presumably, this would result in the Commission
holding multiple additional workshops related to retail electric competition prior to drafting or
reviewing any formal rules proposals," Márquez Peterson wrote
Márquez Peterson proposed that at the next Staff Meeting, Commissioners can discuss:
1. A firm deadline for submitting their questions for Staff to distribute to stakeholders
2. A firm deadline for the submission of stakeholder responses
3. Precisely which topics they feel warrant consideration in a future individual workshop and,
4. A "deliberate time table" for these future individual workshops to be held
Márquez Peterson also cited the current strain on Staff's time and resources, writing that Burns' proposal directs Staff to allocate time and resources to a large man-hour project, without
establishing a clear majority of the Commission in support
Márquez Peterson also wrote that, "My concern is that asking staff to take significant hours away from ther [sic] existing backlog of cases could
delay progress on other major ongoing cases like those involving Johnson Utilities, expansion of
renewables investment through PURPA, integrated resource planning, or utility disconnection policies."
"It only seems appropriate that, if we are to commit to such an outlay of limited Staff time and resources,
it should be predicated on the policy the Commission adopted last October and come from a unified
Commission voicing consensus through a formal vote," Márquez Peterson wrote