Regulatory Updates by Region

Arizona regulatory update - September 11, 2013

On Wednesday, Sept. 11, 2013, the Arizona Corporation Commission (ACC) held a regularly scheduled Commission meeting that included an agenda item to discuss the retail competition docket (requested by the Commissioner Bob Burns). The agenda item was intended to open discussion among commissioners on a legal briefing held on Friday, Sept. 6—to clear the air of constitutional issues and move onto substantive matters. Instead, the commission adjourned to an executive (private) session for 90 minutes, then emerged to a hurried vote, with almost no discussion, resulting in a 4-1 vote being taken against moving forward with the retail competition proceeding.

What next?
Arizonans for Electric Choice and Competition (AECC), together with Freeport-McMoRan Copper & Gold, filed an Application for Rehearing on October 15, 2013 (which was the deadline to file for a "re-hearing") in the generic docket inquiry into retail competition, established by the Commission last May. As may be noted from the Conclusion, appearing on pages 7-8 of the application, the applicants are requesting, in the alternative, that the ACC either grant the application and the legal arguments set forth therein for further consideration or “issue a written order explaining why the Phelps Dodge decision bars the Commission from implementing market rates and developing a competitive electric retail market in Arizona—despite the fact that a competitive market exists in the area of telecommunication services, with providers offering a range of rates that do not violate the Arizona Constitution.”

The ACC will now have 20 days to act on the request. If the Commission does act, it will lead to an open meeting to discuss the docket and any lingering issues about how the docket was abruptly closed. In addition, this is also potentially where the notion of expansion of the current Pilot Program could take place. While it's unlikely that a re-hearing will lead to a reversal of the decision, it is theoretically a possibility.

If the Commission does not act on the re-hearing application within in the 20-day time frame, then the entity that filed the application (i.e. the AECC or other) will have the legal ability to request a "Special Action" of the Arizona Supreme Court. A Special Action

is a request for the court to take immediate jurisdiction of the issue—which could be a path to a decision by the court on the constitutionality of restructuring the utilities in Arizona.

The following is a sequential recap on the evolution of the Arizona Corporation Commission (ACC) considering opening the electric market to competition:

Late August 2013: Direct Energy Business, along with pro-competition market participants and organizations, presented very detailed and well-articulated opening and reply comments with the ACC and participated in more than 50 pro-con debates up and down the state while continuing to advocate at both the Commission and Legislature levels.

May 9, 2013: ACC VOTES 5-0 TO HEAR MERITS OF MOVING FORWARD WITH RETAIL COMPETITION
On May 9, the ACC voted unanimously to open a proceeding to allow all interested parties to file comments in response to 18 questions they posed assessing the benefits or risks in advancing Arizona toward a fully opened competitive electric market. They set the procedural schedule with initial comments due June 15th and reply comments due August 16th.

June 26, 2013: ACC ESTABLISHES AN AGENDA ITEM ON RETAIL COMPETITION
On June 26, the Arizona Corporation Commission (ACC) released notice of the following agenda item for their regularly scheduled monthly (June) Commission meeting. The agenda item, which addressed retail competition, included the following:

ITEM #7. Update and Commission discussion, consideration and possible vote concerning matters related to clarifying possible timeline and scheduling of Commission proceedings related to the Commission’s investigation into electric retail competition; and process for retaining consultant and clarifying role of consultant (Docket No. E-00000W-13-0135) – Commissioner Bitter Smith and Chairman Stump.

June 27, 2013: ACC MEETING RESULTS
The results of the retail competition agenda item at the ACC meeting on July 27 were as follows:

  • Deep discussion on how Arizona Public Service's (APS') delay of purchase of the Four Corners Coal units is impacted by the ACC's proceeding on retail competition.
  • An indication by all five Commissioners are that they want to move forward with a vote as soon as possible and this vote will signal Arizona’s absolute intent to move forward with retail competition.
  • Notice that the ACC will move forward with issuing an RFP for consulting work to assist with reviewing all comments filed on July 15 regarding the pros and cons of retail competition for the state of Arizona.

In terms of retail competition, the discussion and vote were a positive signal for our efforts and for consumers in the state.

JULY 15, 2013: WE RESPOND TO ACC'S QUESTIONS VIA COMMENTS FILED WITH THE COMMISSION
Direct Energy Business, along with pro-competition market participants and organizations, filed comments in response to the ACC's questions around whether or not Arizona should move forward with opening a competitive retail electric market. Ultimately, there are 62 parties who have intervened in the case and 42 of these actually filed comments.

JULY 16, 2013: WE ARE INFORMED OF COMMENTS FILED FOR AND AGAINST--WE BEGIN PREPARING REBUTTLE IN FAVOR OF RETAIL COMPETITION IN ARIZONA
Responses to the ACC's request for comments on retail competition included three neutral responses, eight opposed to retail competition and eight in favor of opening the market. The next steps include all interested parties filing comments, which are due by Aug. 14. Direct Energy Business and other market participants/joint filers who are in favor of retail competition will construct reply comments that rebut those made in opposition and focus on the benefits of a well-constructed competitive electric market.

DEB: YOUR VOICE WILL MAKE A DIFFERENCE
Direct Energy Business is more than just an energy supplier—we are also an advocate for our customers in the energy marketplace. We do this through our Government & Regulatory Affairs (G&RA) group—a dedicated team that works with state/provincial governments to encourage, advance and protect retail competition in North America and to protect the interests of our customers who have operations in deregulated regions.

We have been active in Arizona since the early stages of retail competition discussions and are now working alongside our partners in this market (advocacy groups, regulatory consultants and other suppliers) to provide the Arizona Corporation Commission with the evidence that demonstrates the benefits of electric choice, as well as outlines the appropriate market rules around full retail competition implementation.

INTERESTED IN MAKING A DIFFERENCE?
Direct Energy Business encourages you to visit the AECC website, AZelectricity.com, to learn more about the issue and to show your support for electric choice. Your support can and will make a difference. Legislators are keenly aware of the power of their constituents and the revenue that businesses generate for the state—and they are more likely to listen to and consider feedback in numbers. The more interest and support that businesses in the state show about electric choice, the more likely elected officials will listen.

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