Bill to stem power company competition goes to Ducey
A bill to prohibit competition among electric companies in Arizona is heading to Gov. Doug Ducey after passing the state Senate on Tuesday.
House Bill 2101 and its identical counterpart, Senate Bill 1631, languished for weeks as backers rounded up the needed votes to move the legislation. Tuesday’s vote was 17-11, with two senators not voting.
When it was last considered in March, the bill was defeated.
Major Arizona electric companies supported the legislation, especially as a New Jersey-based energy provider moved to compete with Arizona Public
Service Co. and Tucson Electric Power Co.
Arizona utility customers don’t have a choice in who provides their electricity, though state law has allowed competition since 1998.
Green Mountain Energy Co., a subsidiary of New Jersey-based NRG Energy Inc., applied to provide that competition last year by offering customers of APS and TEP an option for 100% renewable energy, with some caveats.
Green Mountain proposed a cap on prices. Its tariffs would benchmark to the power generation costs of the competing utilities and wouldn’t be more than 35% lower or higher, according to the company.
Green Mountain doesn’t own any of its own power plants but purchases renewable energy and renewable-energy credits from others.
The plan for 100% renewable energy in Arizona would rely on power purchased from other plants.
Green Mountain would use renewable-energy certificates to ensure that every unit of energy used by customers was associated with a unit of renewable energy generated at a solar, wind or other alternative-energy plant.
Utilities argued that such a competitor would simply seek out the most lucrative large business customers, thus financially harming the existing utilities and forcing higher rates on their remaining customers.
Green Mountain Vice President and
General manager Mark Parsons issued a statement after Tuesday’s vote stating the company was disappointed in the action and urging Ducey not to sign the law. It said the company already was seeking to procure power from a solar project planned in the state.
“Monopolies do not like competition,” Parsons said. “HB 2101 would close down our opportunity to receive a license to operate under state law without even a hearing in Arizona. We regret that outcome.”
Parsons also said consumers want choices in their power providers and his company offered a way to boost renewable energy in the state considering regulators’ recent vote to kill new clean energy requirements.
“Arizona has avoided aggressive governmental mandates for clean energy, and this creates a landscape where consumers, acting on their own, are able to transform the energy economy through their own choices — but only if they have access to products like the ones Green Mountain offers,” his statement said.
Bill could help SRP solar case
While Green Mountain didn’t propose competing with Salt River Project, that utility also supported the legislation. The bill likely would benefit SRP in a court case where its rates for rooftop solar customers were found to violate state rules favoring competition.
The final ruling is pending in that case but the bill strikes the language a panel of judges cited in determining SRP’s solar policies were unfair.
Utilities favoring the bill also argued that having a competitor that could add or lose customers in a given year would make it more difficult for them to plan adequate energy supplies to meet customer demand and therefore threaten the reliability of the power grid.
Some consumer groups also oppose the concept of competition. Namely, AARP Arizona, which said the organization representing retired people opposes such competition nationwide because other states where it is allowed are rife with consumer problems related to billing.
Lawmakers largely echoed those concerns when voting for the bill Tuesday.
“This idea that somebody in the middle can just by energy from whoever they want and sell it to whoever they want without ever producing (power) and without ever laying the wire is not in my personal or business opinion a reliable market,” Mesa Republican Sen. Tyler Pace said Tuesday before his vote. “Because when something does go bad there are some issues with that business model.”
Pace was one of the legislators who changed his mind about the bill over the course of the session, allowing it to finally pass.
Sen. Vince Leach, R-Saddlebrooke, referenced the possibility of the state facing power-supply issues with such competitors operating, forcing the existing, or incumbent, electric companies to provide service to the competitor’s customers.
“Who isn’t for competition within the retail market?” Leach asked rhetorically before his vote for the bill.
“This case is different. What it would allow is if the new retailer in the market did not perform or wished not to perform or didn’t have power ... when you flipped the switch there was no electricity, the incumbent power company has to supply (customers). That is not free choice in the market. That forces the incumbent companies to raise their prices.”
Among the “yes” votes Tuesday, 13 were Republicans and four were Democrats, while eight Democrats and three Republicans voted against the bill. The two members not voting were Democrats.