When regulators grant changes to utility rates of return, they estimate growth on the basis of gross domestic product (GDP). But do utilities have any chance of growing at the same pace as GDP?...
Gov./ACC Squabble Over Arizona's Restructuring
Utilities in the Western Systems Coordinating Council, especially those in Arizona, found out last summer what it's like when 600,000 consumers lose power. This event, however, was just a warmup for the fireworks that followed and then promptly fizzled.
The outage prompted a series of highly publicized letters between Arizona's Republican Gov. Fife Symington and Renz Jennings, the Democratic chairman of the Arizona Corporation Commission (ACC), which has been investigating retail electric competition since 1994.
A September 13 letter from the Governor reads: "The outage illustrates the need for indepth study of issues related to the reliable provision of power both at the state and regional level."
Jennings registered disappointment at the Governor's lack of confidence in the ACC's ability to deal with the issue: "Reliability of the electric system is of paramount importance whether or not the industry is restructured."
Jennings claims that Symington (em indicted June 13 on fraud and other charges (em tried to divert media attention from himself by accusing the ACC of overstepping its constitutional rights and moving too quickly to finalize rules on retail electric competition.
"I am concerned that the proposed rules go beyond ratemaking," the Governor's letter reads. Symington added that he doesn't believe it's responsible public policy for the ACC to consider a rule change without cooperation from the state's legislative and executive branches.
Jennings fired back: "Only once have I seen representatives from the Governor's office related to restructuring. ... I only wish that you had studied this issue with the same intensity the Commission has the past two years. If you had, I am sure you would agree that it's time to open the market to customer choice."
"California will begin to open its markets to competition by 1998," Jennings writes. "California utilities are large and so are the industrial users. If we are to advantage Arizona customers, large and small, we need to position Arizona for [a] timely entrance into the competitive market."
Gary Yaquinto, ACC utilities director and chief architect of the rules, explains: "The ACC wants to make sure that Arizona gets its fair share of the cheapest available power before it vanishes into that 'black hole' known as California."
The ACC proposes phasing in competition over the next four years:
s January 1, 1999. Utilities make 20 percent of their peak 1995 demand available to all customers, including small business and residential customers. At least 15 percent would be reserved for residential customers. (At least one-half of one percent of power sold competitively could come from photovoltaic or solar sources. That percentage would increase to one percent after December 31, 2001.)
s January 1, 2001. At least 50 percent of peak 1995 demand would be available, with 30 percent reserved for residential customers.
s January 1, 2003. All retail demand becomes competitively available.
All classes of consumers would participate in the competitive market from the outset. No one consumer, such as a large industrial company, could dominate the available competitive service. Utilities would be required to take all measures to avoid stranded investments, but will be allowed