Arizona Commission Opens Study of Retail Electric Market Opening
NEM, Stakeholders Discuss Benefits of Competitive Markets
On December 3, evidencing a movement in the Western states to examine retail energy competition, the Arizona Corporation Commission held a special open meeting. The purpose of the three-hour meeting was to begin to discuss in detail the possibility and ramifications of opening a competitive retail electric market in Arizona.
The Commission heard from a number of stakeholders addressing topics such as the potential advantages (or drawbacks) of competitive energy for each customer class, the structures and rules that would need to be considered and implemented, the example of the more than two dozen states that have introduced competition into their energy markets, and the results of competition in these states.
Ultimately, the Commission has the goal of determining whether or not a competitive retail energy market would be in the best interests of the Arizona public.
One of the key presenters during this meeting, and a strong proponent of the benefits of competitive retail energy, was Craig Goodman, President and CEO of the National Energy Marketers Association (NEM).
NEM is a “non-profit trade association representing both leading suppliers and major consumers of natural gas and electricity as well as energy-related products, services, information and advanced technologies throughout the United States, Canada, and the European Union.”
Goodman’s presentation touched on the improvement in renewable energy offerings provided by competitive markets (choice states have produced 3.4 times more renewable energy than monopoly states) as well as the striking reduction in energy rates in Texas since deregulation (with price reductions ranging from about 57 percent to almost 66 percent).
However, the strongest argument he gave in favor of energy deregulation was a quantitative study of average weighted price changes in monopoly and choice energy markets between 2008 and 2018. The independent third-party study showed an increase in prices of more than 18 percent for monopoly markets during this time period, compared to an increase of just over 6 percent in prices for choice markets. Perhaps most impressive were the overall savings of $324 billion realized in those 10 years in choice energy markets.
According to Goodman’s presentation, these savings, while impressive, only tell part of the story, because the period between the beginning of energy deregulation in 1997 and 2008, the year the study begins tracking price changes, were marked by significant adoption of alternative energy suppliers by customers dissatisfied with their interactions with utilities. As a result, total savings, he says, are likely significantly more.
Today, said Goodman in his presentation, a similar “gold rush” away from monopolies and toward choice is gaining momentum.
“It has come to a point…that the Western United States is where the next gold rush is going to be,” he said in his presentation. “This [gold rush] is the ability to compete against extremely high utility rates in conventional and unconventional ways.”
According to Goodman, NEM brings to these new changes in the energy market more than 22 years of experience that touch on every state that has opened itself to energy competition. The organization also developed a Consumer Bill of Rights and Marketing Standards of Conduct that deregulated energy industries can use to ensure a respectful and effective relationship with customers.
So what is next for Arizona and energy deregulation? According to Goodman in an interview, the NEM has offered its expertise to the Commission to answer their questions about energy deregulation. NEM will be providing detailed answers to all of the Commission’s questions by the end of the week. And, Goodman is hopeful that big changes are on the way for markets in the Western United States.
“In my opinion, this is a great start to the beginning of a new and exciting market that will provide synergies for our members and our industry, because having Arizona opening at the same time as California presents a lot of synergies for the whole industry,” Goodman told Energy Pages.