Arizona Commissioner Issues Retail Choice Questions Concerning Costs, FERC Jurisdiction, Low-income & Rural Customer Treatment

October 1, 2019

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Arizona Corporation Commissioner Boyd Dunn issued a list of questions for stakeholder comment concerning the ACC's review of retail electric choice

Dunn further suggested an extension in a comment deadline

"As to the process moving forward, Staff offered to compile the questions for stakeholder response. I am not sure this is necessary, but since it was agreed to during the Staff Open Meeting, I am not opposed to proceeding with this approach. I am also concerned that the October 18, 2019 deadline to respond is a bit too aggressive. Given the complexity of our questions, I propose that stakeholders and interested parties file their responses by October 31, 2019 and file any replies by November 30, 2019. This will allow us to consider the stakeholder positions along with Staff's report on other jurisdictions in December. It is my expectation that the Commission will decide our next steps at that time," Dunn wrote

Dunn's questions included, among others:

• Are there any legal barriers to retail competition in Arizona?

• How do we square our constitutional obligation to set just and reasonable rates with the adoption of electric retail competition?

     --- Is a rate range constitutional?

     --- Will the Commission set the return on equity for competitive suppliers?

• If we implement electric retail competition, how do we avoid the pitfalls of Phelps Dodge Corp. V. Ariz. Elec. Power Coop.,207 Ariz. 95 (App 2004)?

• Will deregulation result in stranded assets for public service corporations or other interested parties?

     --- If yes, what are the estimated stranded asset costs if deregulation took effect today?

• Phelps Dodge prohibits the Commission from requiring utilities to join an RTO. Is it possible to be a fully deregulated system without joining an RTO?

• What is the average cost to establish an RTO?

• What role will FERC play in a deregulated Arizona energy system?

• Are there any pending cases against FERC for exceeding its jurisdiction? If yes, please provide details of each case.

• Has FERC ever alleged that states have exceeded their jurisdiction? If yes, please provide the details of each case.

• Has the National Association of Regulatory Utility Commissioners ("NARUC") filed suits or lodged complaints against FERC on behalf of state utility commissions? If yes, please provide details of each case.

• Will FERC have plenary power over the sources of generation in a deregulated Arizona system?

• In an RTO, will Arizona be able to decide what costs for building out the grid and new transmission infrastructure are passed on to the customers?

• What would the effect of deregulation have on the overall tax revenue for the state of Arizona?

• Can we guarantee that all customer bills will be reduced, assuming usage remains the same, under a deregulated system?

• Will there be a default electric provider in an Arizona deregulated system? If yes, how is that accomplished on a statewide basis?

• What would the overall bill impact be, on average, during a summer and a winter billing period for each customer class? At 1 year post-deregulation, at 5 years post-deregulation, at 10 years post-deregulation?

• Have any patterns of consumer fraud occurred in deregulated states?

     --- If yes, have other commissions taken action against the market participants?

     --- Have other jurisdictions sued power providers over improper consumer and business practices in their states? If yes, what were the circumstances of those cases and how were the cases resolved?

• How will a deregulated system ensure that all customers are treated equally and have similar access to rate offerings?

• Will all customers have equal access to price plans or will they be different based on location? Income? Credit score?

• What will the impacts of deregulation be on rural customers?

• If Arizona adopts retail competition, is it guaranteed that Arizona's power will include more clean or renewable generation sources? Is it guaranteed that more clean or renewable generation will be built in Arizona? What is the experience in other deregulated states?

• Do deregulated states see a reduction in the percentage of nuclear power generation?

Docket RE-00000A-18-0405

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