Up, Up, and Away!

Posted on April 06, 2006
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Arizona Public Service Company (APS) has said that if the Arizona Corporation Commission doesn’t approve its requested 11 percent electricity rate increase, its bond rating could be at risk.  Combined with APS’ January increase of five percent, the net effect on APS electricity customers will be a 16 percent increase in the first few months of the year.

APS executives cite rising fuel and power costs across the nation as the reasons for the rate increases. These justifications may be legitimate, but it begs the question, why leave rate determinations in the hands of state regulators in the first place?

The Arizona Corporation Commission “sets rates that provide [an electric] company a fair rate of return while balancing the needs of ratepayers.”  Balderdash.  As witnessed in other industries, like airlines and telecommunications, as deregulation increases, service improves while costs decline.  A Mercatus Center study confirms that prices paid by consumers in these deregulated industries dropped by four to 15 percent in the first two years of deregulation.  Within 10 years, prices were ordinarily 25 percent lower.

It’s time to examine Arizona’s requirement for a Corporation Commission. Allowing competitive providers to meet Arizona’s growing demand for energy will be better for consumers and businesses.

Key Links:

-Goldwater Institute: “Hotwiring Deregulation:  How SRP Can Lead the Way to a Competitive Electric Market”
-Mercatus Center: “Deregulation and the Electric Industry” 
- Wall Street Journal: “Power to the People” 
-Arizona Corporation Commission

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