Betting on 15

Posted on August 12, 2005
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Fifteen percent is the magic number, according to the Arizona Corporation Commission.

The ACC voted this week to require Arizona utilities to produce 15 percent of their energy from "renewable resources." Why 15 percent?

There's nothing magic about 15 percent. In fact, the number is arbitrary and expected to impose $50 million in surcharges on consumers every year.

Arizonans are naturally concerned about resource sustainability. But regulation is a poor approach to sustainability.

As Arizona Republic columnist Robert Robb puts it, "To be blunt, the politicians and staff at the commission have no particular insight about what will be the optimal energy mix for the production of electricity 20 years from now. Nor should it be their job to make such decisions."

The ACC might revisit Nobel Prize laureate Vernon Smith's  path-breaking research on how a deregulated marketplace can increase efficiency and sustainability, some of which the commission funded back in 1984. Deregulation experiments in other states have saved consumers as much as 15 percent on utility bills while reducing electricity consumption. Now that's a magic 15.

Key Links:
-Robert Robb: "Betting on renewable energy, with your $50 mil"
- Economist: "Economic man, cleaner planet"
-Vernon Smith: "Power to the People"
-Study: Hotwiring Deregulation

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