"Paramount" State Law Compels Arizona Commission To Open Electric Utilities To Choice, ACC Commissioner Says, Citing Recent Court Case

August 5, 2021

Email This Story
Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com

Citing recent court precedent concerning the Arizona Corporation Commission's lack of plenary authority outside of ratemaking, Arizona Corporation Commissioner Justin Olson in a memo urged the ACC to comply with "paramount" state law, which requires that the ACC direct the electric utilities to open their territories to electric choice, and requires the ACC to adopt rules for electricity competition

"In light of last year's Arizona Supreme Court Johnson Utilities' decision [a water utility case], I believe it is incumbent upon the Commission to comply with state law and adopt retail electric competition rules," Olson wrote

"The legislature has spoken clearly on this issue: 'It is the public policy of this state that a competitive market shall exist in the sale of electric generation service' A.R.S. § 40-202(B). In Johnson Utilities, the Court unequivocally states that the legislature retains power to govern Public Service Corporations ('PSCs') in matters outside of the Commission's ratemaking authority, and that in such cases, the Commission's authority is subject to the 'paramount' authority of the legislature," Olson wrote

"In the decision, the Court discusses the difference between the Commission's ratemaking authority and its permissive authority found in article 15 section 3 of the Arizona Constitution. The Court concludes the Commission's ratemaking authority is plenary, exclusive, and self-executing, but limited to 'ascertaining the 'fair value' of PSCs and prescribing classifications, rates, and charges.' Therefore, the legislature has no power to enact statutes to ascertain the value of PSCs nor 'prescribing rates or charges, nor may it regulate the timing, procedure, or methods the Commission uses in calculating rates,'" Olson wrote

"In contrast, the Commission's permissive authority -- its power to regulate PSCs for the convenience, comfort, health and safety of its employees and patrons -- is not plenary nor exclusive, but rather shared with the legislature. Though held concurrently, the Court makes clear their respective authority is not equal: 'when there is a conflict between a Commission regulation and a statute, the legislature's police authority is 'paramount,' meaning it has the authority to override the regulation of the Commission,'" Olson wrote

"In addition, even if there is no conflict between a Commission rule and statute, the Commission's permissive authority is nonetheless 'subject to the paramount authority of the legislature.' As an example, the Court notes that although the Commission has the permissive authority to appoint an interim manager [for a utility], the Commission would be subject to laws enacted by the legislature related to the appointment and power of interim managers. The Court further notes that 'several provisions in article 15 state that the Commission's authority over PSCs is 'subject to law,' or 'as may be prescribed by law,'' which means that these additional enumerated constitutional powers are also 'subject to statutes enacted by the legislature.' These examples suggest that outside of the Commission's exclusive and plenary ratemaking authority, the Commission is otherwise subject to the statutes of the legislature," Olson wrote

"Whether the electric industry in Arizona is structured as a system of regulated monopolies or as a competitive market does not squarely fit within the Commission's exclusive ratemaking authority as described in Johnson Utilities. At the very least, this means the Commission and the legislature share the authority to structure Arizona's electric industry. However, as with other non-ratemaking powers, the legislature's authority is paramount. Therefore, the remaining issue to explore is whether the legislature has established what the structure of Arizona's electric industry should be," Olson wrote

"As noted above, the legislature has already established that Arizona's electric industry should be structured as a competitive market: 'It is the public policy of this state that a competitive market shall exist in the sale of electric generation service.' A.R.S. § 40-202(B). The legislature did not stop with this broad policy statement however, rather, it directs the Commission to order PSCs to open their territories: 'The commission shall order on a nondiscriminatory basis that public service corporations open their distribution territories to competition by public power entities to the same extent and under the same terms and conditions as authorized electricity suppliers are granted access through commission Niles or orders' A.R.S. § 40-202(E). In addition, the legislature affirmed the Commission's authority to take various necessary steps to enact retail electric competition (A.R.S. §40-202(B)( l-8)), enact consumer protection rules (A.R.S. §40-202(C)), and develop and oversee a consumer outreach and education program regarding retail electric competition (A.R.S. § 40-1 13)," Olson wrote

"The state law on this matter is unambiguous and the Johnson Utilities decision makes it clear that the Commission is subject to this state law," Olson wrote

"I look forward to discussing this issue with my fellow Commissioners and hope that a majority of the Commission can support moving forward with appropriate compliance with this state statute," Olson wrote

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Senior Account Operations Analyst -- Retail Supplier
• NEW! -- Energy Procurement Manager
• NEW! -- Natural Gas Retail Analyst -- Retail Supplier -- Houston
• NEW! -- Associate Director of Market Strategy -- New York/Anywhere
• NEW! -- Energy Risk Professional -- Retail Supplier -- Houston
• NEW! -- Energy Customer Support Specialist -- Retail Supplier -- Houston
• NEW! -- Business Development Account Executive - Indirect Broker Sales -- Retail Supplier -- Houston
• NEW! -- Customer Engagement Manager -- Retail Supplier -- Houston
• NEW! -- Energy Customer Service Specialist
• NEW! -- Energy Sales Executive
• NEW! -- Senior Energy Intelligence Analyst
• NEW! -- Energy Advisor

HOME

Copyright 2010-21 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.