On Wednesday, the Arizona Corporation Commission (ACC) voted to
close its docket on electricity deregulation, based on concerns
over the constitutionality of a deregulated electricity market in
Arizona. The issue had been on the table since May, when the ACC
opened a docket to explore the possibility of allowing consumers to
choose their electricity provider in a competitive market.
The all-Republican Commission presumably supports the idea of
deregulated markets but was constrained by Arizona's
constitution and prior court opinions on the
issue. Specifically, Article 15, Section 3 of the state
constitution requires the ACC to set electricity rates: "The
corporation commission shall have full power to, and
shall, prescribe ... just and reasonable rates and charges
to be made and collected, by public service corporations within the
State for service rendered therein ... ." In a 2004 decision
dealing with the ACC's prior attempt to deregulate electricity
markets, the Arizona Court of Appeals held that deregulation was
essentially an abdication of the ACC's constitutional
responsibility to set rates. Phelps Dodge Corp. v. Arizona Elec.
Coop., 207 Ariz. 95 (App. 2004).
Supporters of deregulation, including service providers,
out-of-state utilities, and certain large consumers; claim it would
lower prices through competition among providers. Opponents claim
it would create uncertain and potentially volatile electricity
prices and argue that it has failed to benefit consumers in states
that have implemented some form of electricity deregulation.
The vote was not unanimous. Commissioner Brenda Burns voted against the
action, preferring that the ACC continue exploring options for
deregulation and whether it could be done constitutionally.
Arizona Public Service Co. (APS) issued a statement in support of the Commission's
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