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Utility bill surcharge unlawfully burdens consumers

November 8, 2014

With Arizonans reeling from high gasoline prices and other economic woes, how do our statewide government officials respond? By slapping on a surcharge in essence, a new energy tax—that adds one million dollars per month to residential utility bills and millions more for businesses.

The officials who imposed the tax are not the governor or legislators, but members of an obscure body with limited powers but grandiose ambitions: the Arizona Corporation Commission.

The Commission decided it would be a good thing for more energy to be generated from alternative sources. Thats hardly a disputable idea in light of soaring gasoline prices and the unstable Middle East regimes that harbor much of the worlds supply. So the question is not whether we will increase power sources such as wind and solar, but when and how.

The Commissions mandate under the Arizona Constitution limits it to establishing rates for utilities and related regulations. But the Commission, acting over the strong dissent of chairman Mike Gleason, decided to leapfrog its constitutional boundaries and set itself up as the states energy czar. And now all of us as ratepayers are picking up the tab.

The Commission decreed that all utility companies must generate a minimum amount of power from renewable resources by 2025, no matter the cost to consumers, the reliability of alternate power sources, or the market conditions for energy during that time. Moreover, it mandated that a certain percentage of renewable energy come from distributed sources such as residential or business solar panel seven though neither the Commission nor utility companies can assure such sources will exist.

Utility companies already are shifting to alternative sources. The Commissions costly, top-down, bureaucratic approach forces them to shed considerations of efficiency, reliability, and cost that are crucial in a rapidly changing and uncertain energy marketplace.

The Commissions rules are a power grab from the Legislature, which has exclusive authority and responsibility over energy policy. The Legislature can delegate those powers to the Commission, but it has not. To the contrary, the Legislature has adopted such policies as tax credits for solar panels, which of course the Corporation cannot provide.

Compelling reasons exist for the separation of government powers in the Arizona Constitution. The deeply flawed renewable energy rules illustrate why it is dangerous for a Commission of five members, whose constitutional role is circumscribed, to usurp that power, even if the goal is one on which we all agree. For that reason, the Goldwater Institute, representing consumers and taxpayers, has asked the Arizona Supreme Court to strike down the rules and utility surcharge and prevent the Corporation Commission from establishing itself as a fourth branch of state government.

This newspaper has applauded the fact that the Commission and APS both back the rules and surcharge. It is a typically cozy relationship between the regulators and the regulated industry. But it leaves out one important part of the equation: the consumers. It is their interests that the Arizona Constitution seeks to protect.

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



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