OVER: Arizona Commission Closes Investigation of Retail Choice, Maintains Current System

Citing insurmountable legal hurdles, the Arizona Corporation Commission yesterday voted 4-1 to close the Commission's investigation of retail electric choice, and to maintain the current system.

Specifically, Commissioners agreed to close the retail access investigation, and agreed to not pursue the issues again, until the Commission has "full" constitutional authority to implement retail choice.

Counsel for the ACC informed Commissioners that the Phelps Dodge Appeals Court decision presents insurmountable obstacles to implementation of retail choice by the ACC under its current state constitutional authority.

In particular, Commission counsel said that Phelps Dodge established that market-based pricing is unconstitutional, and that no mechanism to harmonize market-based retail rates with this finding has been found. Counsel also said that the Commission lacked authority to require the utilities to divest their generation.

Chairman Bob Stump said that his vote to close the docket was solely due to the legal obstacles. Commissioner Bob Burns cast a reluctant vote to close the investigation as well, and said that the opportunity to review pseudo-choice alternatives (see below), which do not face legal hurdles, in exchange for closing the full retail choice docket prompted his vote to close the retail choice investigation.

Commissioner Brenda Burns was the sole vote to continue studying the issues of whether retail choice could and should be implemented, calling the ACC's decision to end the investigation now premature.

In closing the retail choice investigation docket, Commissioners did agree to open new dockets investigating a variety of issues to give customers additional electric alternatives in the absence of full retail choice. One of these may be consideration of the expansion of the AG-1 wholesale buy-through program at Arizona Public Service, by expanding the cap on the program at APS, and expanding it to other utilities. The AG-1 program allows customers, for a fee paid to APS, to buy wholesale power from alternative providers other than APS, which APS then uses to serve the customer at retail.