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Do you live on the wrong side of the power line?

November 5, 2014

In choosing where to live, Arizonans generally consider school district boundaries, relative property tax rates, crime statistics, and the like. One factor that ought to figure into the decision is which utility company supplies the power.

Two of the biggest players, Salt River Project (SRP) and Arizona Public Service Co. (APS), are on divergent paths. Ordinarily, private companies like APS are more nimble and responsive to market forces than their public counterparts. But in Arizona, the converse is true, at least in terms of renewable energy.

While SRP is carefully evaluating its renewable energy policies in light of cost and technology, APS is locked into a rigid renewable energy mandate for the next 15 years in which cost is no object and technology no obstacle. Not surprising, tariffs APS charges to meet its renewable energy mandate are already one-third larger than SRP’s, and the gap is growing. The added charges run about $6 each month for APS residential customers and into the hundreds of dollars for small businesses.

Why the difference? APS is subject to regulation by the Arizona Corporation Commission, while SRP, a quasi-governmental agency, is not. So while SRP is free to respond to dynamic energy market forces, APS’s renewable energy decisions are subject to the political dictates of a remote agency that is highly responsive to special-interest groups ranging from environmental activists to subsidy-seeking solar companies.

But don’t feel too sorry for APS—every dollar of the costs associated with complying with the ACC’s renewable energy rules is passed along to consumers in the form of higher rates.

The Goldwater Institute is challenging the renewable energy rules on the grounds that the ACC has no legal authority to set energy policy. But until a favorable court decision or legislative action, consumers unlucky enough to be on the wrong side of the APS/SRP boundary can get used to ever-higher power bills.

Clint Bolick is director of the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

Learn More:

Goldwater Institute: Miller v. Arizona Corporation Commission

Arizona Republic: SRP to review policy on renewables



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