About four months ago, at a conference at Stanford University’s Center for International Development, the economist and utility industry expert Frank Wolak turned heads with a not-so-new but very...
Utilities File Suit Against Arizona
Arizona Public Service Co. has filed a lawsuit in the Superior Court of Maricopa County to challenge rules adopted by the Arizona Corporation Commission in December 1996 to open the state's electric industry to competition over a four-year period starting in 1999. In addition, APS has appealed the commission's decision in the Arizona Appellate Court, as has Tucson Electric Power Co.
In the lawsuit, (as distinguished from the appeal) Arizona Public Service has challenged the authority of the commission, claiming that absent legislation, neither federal nor state law authorized the commission "to make its facilities available to competitors upon demand." Also, APS argued that other electric service providers would compete for its more profitable customers by undercutting its regulated rates. APS added that the rules enacted by the commission failed to address critical restructuring issues such as reliability, market structure, and compensation for vested certificate rights.
According to APS President and CEO Bill Post, the utility's focus is to work with the commission to "bring competitive benefits to Arizona." Post believes that formal hearings are needed, along with legislation, examination of federal, state and local tax implications, as well as state reciprocity, stranded costs, and the timing of phase-in of choice. "This is a huge and complex task," Post said. "It will benefit everyone to get it right the first time."
Tucson Electric Power assailed the rules for their vagueness, especially regarding system reliability, stranded-cost recovery and a level playing field for all types of utilities.
"We have taken this step to protect our customers and shareholders from the uncertainty that still surrounds the rules," said Charles E. Bayless, Tucson Electric Power chair, president and CEO. (em LB
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