Investors liked commission vote
Panel voted to end consideration of opening power sales to competition
The investment community clearly liked the decision out of the Arizona Corporation Commission last week to end its exploration of opening electricity sales to competition, predicting it would be good for utilities such as Arizona Public Service Co. and Tucson Electric Power Co.
They rewarded APS parent company Pinnacle West Capital Corp. stock with a quick boost the day after the vote.
It’s worth noting that stockholders’ interests don’t always align with electricity customers’. For example, stockhold-
ENERGY ers cheer hot weather, which costs customers money.
In this case, some large customers wanted competition, although residential customers generally were not drawn into the debate the way they have been with other issues such as solar.
Opening Arizona’s electricity sales to competition would have given APS, Tucson Electric Power and other utilities competition because other companies would have been allowed to enter the market and sell power to customers.
The big utilities still would have owned the power lines and transmission system delivering power to customers, and charged fees for it, but other companies could have used the system to deliver power to customers.
Shares of Pinnacle closed Wednesday at $52.32. That was before the five regulators sat through a long executive session with their attorneys that afternoon. When they emerged, the lead attorney for the commission said the constitutional concerns with deregulating electricity sales in Arizona were too great to overcome.
That prompted the vote to end the foray into considering deregulation. The next morning, Pinnacle shares opened at $53.66 and closed just a bit lower than that, gaining $1.13, or 2.16 percent, for the day. They went up another 40 cents Friday.
The stock has been steadily rising since 2009, though it experienced a minor decline this year after the commission’s decision to open a docket on deregulation in May.
Just to clarify that the rebound Thursday was related to the commission vote, Credit Suisse issued a note to clients predicting Pinnacle stock would regain 4.5 percent, and shares of UNS Energy Corp., the company that owns Tucson Electric Power, would pick up 1.5 percent.
Bank of America also upgraded Pinnacle stock to a “buy” rating from “neutral.”
Shares of UNS closed before the vote at $44.44. The next day they gained 33 cents, or 0.74 percent. They gained another 30 cents Friday.
Those shares have seen a similar rise since 2009 with a dip this year about the time the deregulation action began in Arizona.