Arizona Tempers Deregulating Power

Arizona regulators are joining the backlash against electricity deregulation, arguing that the state was poised to possibly repeat mistakes made next door in California.
by | October 2002

Arizona regulators are joining the backlash against electricity deregulation, arguing that the state was poised to possibly repeat mistakes made next door in California.

The Arizona Commerce Commission voted in August to back away from a key piece of the state's restructuring plan. The vote reversed a mandate that Arizona utilities divest their power plants--a process that was meant to create a competitive wholesale power market. Now regulators think divestiture would instead expose consumers to California-like price spikes and blackouts. "If we allowed divestiture to occur, we'd have no real ability to protect consumers," says commission chairman Bill Mundell.

While Arizona's action doesn't stop the deregulation movement, it is part of a spreading slowdown. Since California's power crisis, six states have gone a step further in postponing deregulation: Arkansas, Montana, Nevada, New Mexico, Oklahoma and West Virginia. In Montana, voters will decide next month whether the state should purchase a dozen hydroelectric dams. A private utility sold the dams to an out- of-state company in 1999 to make way for deregulation, but residents and businesses have complained of higher power prices ever since. California itself is re-regulating aspects of the industry and in August installed former Los Angeles utility chief S. David Freeman as the head of a new state power authority.