Monthly Archives: August 2010

The AZ Corporation Commission is meddling in the marketplace again and the Arizona Republic gives them a pat on the back.

In a recent editorial, “High Standards Will Save Us Millions,” the Republic argues that if consumers demand less energy, then our energy bills will be lower. In other words, if you spend less, you won’t spend as much. Thanks.

In support of the Arizona Corporation Commission’s recent 5-0 vote to require power companies to “achieve energy savings of 22 percent by 2020,” the editorial states:

Customers will save hundreds of millions of dollars as power companies avoid enormous capital expenses. Lower demand will reduce, and even eliminate, the need for new generating plants and transmission lines.

The piece argues that if customers take advantage of federal cash incentives (is this free money from the National Grants Conferences?) to purchase appliances or insulation, then they’ll save money on their electric bills. And looking down the road, the paper writes, “Future homes and businesses will likely be built to minimize power consumption.” And we thought low-flow toilets were bad; can’t wait to see “minimal power homes.”

I’m sure those homes will be cheap, too, like today’s energy efficient cars. The federal government has to bribe consumers $7,500 each to buy a Chevy Volt (60% of which is owned by the government), and even then, it will take more than 10 years of gas savings to recoup the premium on the four-seat hatchback.

But the kicker in the Republic’s editorial is here:

The one challenge is creating the right rate structure so power companies don’t take a financial hit for getting their customers to use less electricity. . .

. . . The Corporation Commission has been working on the issue and can certainly come up with a fair solution.

But I thought “customers will save hundreds of millions of dollars.” Where will those millions come from if they don’t come from the very companies from which we buy electricity?

You can be sure that to maintain the “right rate structure” any savings consumers would realize from a decrease in demand from electricity would be eaten up by being forced to further subsidize renewable energy. So while we might save millions in electricity consumption, we’ll spend on other sources of energy.

Why else would the newspaper be concerned about power companies taking a “financial hit” if people use less electricity? Because there would be less capital available to subsidize expensive alternative energy sources. If the true goal was a reduction in the demand for electricity, the paper wouldn’t worry about the financial hit to APS or TEP. They’d simply adjust. After all, the Republic has over the years argued for higher taxes on tobacco without worrying about the financial hit befalling tobacco companies. Are RJ Reynolds shareholders less important than Pinnacle West shareholders?

The “fair solution” being considered by the Corporation Commission should frighten anyone paying attention to the commission. The Corporation Commission has already instituted a rate hike to pay for the commission’s mandate that power companies obtain more renewable energy. The Republic also endorsed an increase in the statewide property tax, which nailed the state’s largest property taxpayer Pinnacle West (a direct financial hit to their bottom line).

This is the problem with government do-gooders. Not only is it ripe with hypocrisy, but there’s seldom regard for the eventual unintended (and often expensive) consequences. So what if the Chevy Volt has to be subsidized by a federal government with a $1.5 trillion budget deficit. Who cares if property taxes go up or if Arizona ratepayers have to pay more for solar? As long as solar panels and batteries displace nuclear and gasoline, what’s the big deal?



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The Arizona Free Enterprise Club is a free market policy and advocacy group dedicated to promoting a strong and vibrant Arizona economy.