Arizona Municipal Aggregation Proponents: Model Where Utility Continues To Supply Standard Offer Service A "Better Fit" Than Model Removing Utility From Supply Role

Says Limiting Residential Choice To Municipal Aggregation Has, "Less Risk And Better Consumer Protections"

March 6, 2020

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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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A number of environmental and renewable energy advocacy groups and individuals representing the solar industry around Arizona, who support municipal aggregation, filed a letter (hereafter, "CCA letter") with the Arizona Corporation Commission stating that the "Draft B" rules for electric customer choice, under which utilities would continue to provide a standard offer supply service, are a "better fit" for the state that the "Draft A" rules, which would remove utilities from any supply role after a brief transition period

As first reported in EnergyChoiceMatters.com's exclusive analysis of two sets of draft rules filed by ACC Chairman Robert Burns and Commissioner Justin Olson, under Draft "A", the utility would not provide supply to customers after a brief transition, with the utility's competitive affiliate designated to serve customers who have not made a choice. Under Draft "B", utilities would serve customers who have not selected a competitive supplier, under standard offer service. See our prior story for more specific details on the two proposed models

The CCA letter, which supported "community choice energy (CCE)", was dated February 5, but docketed in Docket RE-00000A-18-0405 on March 4, included about two dozen signatories, including Shelly Gordon; Duane Ediger, Sustainable Tucson; Brandon Cheshire, President, Arizona Solar Energy Industries Association; Douglas Fant, Southwestern Power Group; Sonny Rock, Arizona Wholesale Solar; Nancy Thias, Environmental Defense Fund; and Lauren Kuby, Tempe City Council, among others

Notable is that the signatories included Neil Saunders, Design Engineer, Climate Energy and Sustainability Commissioner, City of Tucson

The CCA letter said that, "we believe elements of option B offer a better fit for Arizona."

In particular, the CCA letter said that, under Draft "B", "The utility would be able to continue offering standard service to customers who do not participate in a CCE."

The CCA letter further said that, "Option B potentially provides less risk and better consumer protections since individual residential customers would not participate unless they are aggregated through a city or county under a contract with well-vetted terms."

"As the Commission prepares to lay a new foundation for energy markets in Arizona, we urge it to learn from other states' successes and mistakes. We believe a balanced analysis of benefits and impacts, and a commitment to uphold the public interest will point toward giving local and regional elected bodies the authority to determine when and how to transition from existing power procurement protocols to those that will better respond to the needs of energy customers. We suggest that Option B, with amendments, will further this aim better than Option A," the CCA letter said

The CCA letter touted that, "CCEs are structured as nonprofit public entities that are governed locally to serve local customers. They allow for local control over power supply through access to the wholesale energy market. So instead of pouring revenues into gold-plate salaries and shareholder profits, any gains realized by the CCE are re-invested back into the community in the form of local energy generation projects."

The CCA letter recommended a separate CCE docket, "to iron out specific details going forward."

An original copy of the letter filed with the ACC had erroneously included Direct Energy as a signatory; however, Direct Energy confirmed that it was not a signatory to the letter. An update striking Direct Energy from the signatory portion of the letter was filed with the ACC on March 5.

On February 21, Direct Energy had filed comments with the ACC concerning the draft rules. In such February 21 comments to the ACC, Direct Energy had said that, "Direct Energy supports the option developed under Draft A," (under which, after a brief transition period, utilities would not serve as default suppliers) and that, "Direct Energy does not believe that the utilities should remain in the business of providing retail service as Arizona moves to a competitive market as permitted in Draft B."

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