so many Arizonans are preoccupied with COVID-19 numbers, Presidential bids, a
destabilized economy and an uncertain school
year, the already obscure Arizona Corporation Commission
has quietly released their plan to impose California-style energy mandates in Arizona.
As drafted, the proposed energy mandate will lead to skyrocketing utility bills, ban future natural gas development and generation in Arizona, provide billions in subsidies and
corporate welfare for inefficient and costly
energy sources and ignores the will
of the voters that have
already spoken and oppose a statewide
Commission is intentionally pushing controversial policies during a crisis
Aside from the multiple policy concerns the Club has with this proposal, it is extremely
disconcerting and unfair to the ratepayers of Arizona that the commission is even considering
moving forward with such a sweeping proposal during the current pandemic.
It is hard enough during normal times for citizens to engage in the byzantine format at the
corporation commission. The entire process is confusing, lacks transparency and caters to the
lawyers, lobbyists and political insiders who know how to
use the system to their benefit.
Now, in the middle of a pandemic, the commission is forging ahead with sweeping new energy mandates while the public is focused on other critical issues. Even if the public was fully aware
of what the commission is considering, due to social distancing and other Covid-19 restrictions,
it is more difficult than ever for regular people to engage in the process. On the flipside, the
insiders at the commission benefit from this arrangement because it amplifies their voice and influence at the commission.
Mandate will lead to higher utility bills
No matter how proponents
attempt to spin this, imposing their own version of the Green New Deal will lead to higher utility bills for customers. This is because
the proposal punishes any
source of energy that does
not meet this “clean” definition, irrespective of cost.
As has been pointed out by Commissioner Justin Olson in the past, the current 15% mandate imposed by
the Commission in 2007 led
to ratepayers overpaying for their electricity by
over $1 Billion Dollars. This was caused largely by forcing utilities to adopt renewable energy sources with
little regard to the cost of construction or generation. It is inevitable that this new proposal will
suffer the same costly
This proposal does not require utility providers or the commission to prioritize affordability
regarding clean energy sources. Instead it imposes large scale mandates for clean sources and
ignores the cost implications for ratepayers.
The good news for supporters of clean energy technology is
can be prioritized while
developing some types of clean
example, industrial grade solar is now selling for as little as 3 cents/kilowatt when operating at
levels, beating other fossil fuel competitors and nuclear. Industrial grade solar could easily
be paired with other base load power sources (such as natural gas) that would be a win-win for
ratepayers and supporters of clean energy.
Proposal Bans Future Natural Gas Development
It is clear from the staff proposal that the long-term goal of this clean energy mandate is to ban
future fossil fuel use in Arizona, including the development and construction of natural gas power plants. Suffice to say this would
be a huge mistake and very
costly for ratepayers.
Natural gas has become one of the cheapest, most reliable and
clean energy sources
available in the United States. This is largely due to the fracking boom, which has guaranteed our energy security
and independence for
gas is by far the most affordable and
dependable fuel to
use in conjunction with
industrial grade solar. The idea
commission is going
to ban this source from future
expansion is a disastrous policy decision
that will damage both ratepayers and our economy.
Corporate Welfare for Rooftop
Included in the energy mandate proposal is a requirement for clean energy generation to come from rooftop solar. It is difficult to see how the inclusion of
this policy carve-out as a required clean energy source as anything more than a
special interest giveaway to a politically connected group at the Commission.
Lazard is a
nationally recognized firm that produces an annual report showing the true cost of energy production by different sources,
both subsidized and unsubsidized. Not surprisingly, the report shows that natural gas, industrial grade solar
and geothermal are the
most cost-effective sources of energy. The most expensive? Residential Rooftop Solar. And it’s
not even close.
Given the superior energy alternatives that exist (including various types of solar energy generation), it makes no
sense to force ratepayers to pay higher utility bills to subsidize more rooftop
solar. The only
this corporate welfare are
the rooftop solar companies
that will be
cashing in on the mandate.
Proposed Rules Ignore the
Will of the Voters
In November 2018, Arizona voters
soundly rejected the idea of increasing renewable energy
standards. Ratepayers recognized that increasing the renewable energy mandate would
result in higher utility bills and potentially destabilize the power grid. That is why 68% of Arizona voters rejected the idea.
the proposed energy rules and amendments being offered by Commissioner Burns and Kennedy are almost a carbon copy of what voters opposed. It appears they don’t care what voters
think and that they know better.
we are still in the early stages of the rulemaking process at the Corporation
Commission, which means voters still have time to have their voices heard. We cannot let the commission adopt their own
version of the Green New Deal that will be disastrous for Arizona ratepayers and the economy.
It is difficult amid the chaos
and unpredictability surrounding our Country’s new COVID-19 reality to think
about what life will look like when this crisis subsides. Yet it is during the most difficult of challenges
when nations decide if they will surrender their fundamental
values in exchange for the promise of security.
Whether our leaders argue that
drastic times call for drastic measures, the ends justify the means, or promise
that everything will go back to normal after the crisis abates – it is
imperative that there are voices questioning, “what will our Republic look like
after the storm passes?”
Afterall, as reasonable or
necessary as some measures appear to a fearful populace, many in our ruling
class want to make sure to not let a good crisis go to waste.
The New York
Times recently highlighted several
chilling examples of major constitutional and human rights violations being
adopted in democratic nations with lightning speed and little resistance:
- Right to Privacy – Infringement Through
Draconian Surveillance: In Israel the Prime Minister has authorized
tracking citizens through cellphone data they developed for counterterrorism
efforts. They are tracing citizens’ every movements and can even throw people
in prison for up to six months for defying isolation orders.
- Right to Access the Ballot Box: Fair and
free elections are a cornerstone of any democratic republic. The “interim President” of Bolivia has
suspended their presidential election, unilaterally seizing a longer term and
denying citizens a basic right to choose their leader. Hungary’s Prime Minister has legislation
drafted that is likely to be passed which among many infringements also
includes the ability for him to suspend all elections and referendums. How his government ever peacefully wrest this
power away from him again is left unanswered in the legislative package.
- Freedom of the Press and Speech: Several countries are violating
basic free speech rights and persecuting journalists that publish “dissenting”
or “false” information contrary to the government. Hungary again is an offender, allowing the
public prosecutor to imprison people for up to five years for disseminating
what they consider false information.
- Right to Assembly: Our
friends overseas in Great Britain sprinted out legislation that allows their
ministries to ban pubic gatherings with little oversight as well as potentially
detain and isolate people indefinitely. In
the United States, democrats pushed hard to include language in the
COVID-19 relief package that would force non-profits and charitable
organizations to disclose
their donors, a practice that has been ruled unconstitutional
by the US Supreme court in NAACP VS
- Right to a Speedy Trial and Habeas Corpus: Israel
Prime Minister Netanyahu has shut down
courts supposedly in the name of public health. It also conveniently serves his own interests
as he was scheduled to stand trial for corruption charges. The United
States’ Department of Justice has tried similarly dangerous
tactics, requesting Congress give them the authority to indefinitely detain
someone during an emergency as well as suspend court proceedings pre and post
arrest and trial.
These infringements are hitting
close to home in Arizona. Shortly after
the crisis began, several mayors unilaterally declared a state of emergency
without notifying Governor Ducey or their fellow council members. Some used
these powers to close businesses and limit hours, often with no consideration
with how disruptive it would be for employers to comply with a patchwork of
restrictions varying city to city.
Even after Governor Ducey wisely
stepped in and established a uniform policy for the entire state, Coral Evans
of Flagstaff has willfully and publicly defied
state law. She has unilaterally
closed city salons and similar services in obvious defiance of the Governor’s
Executive Order which preempts cities from employing more restrictive orders
than outlined by his administration.
The bottom line is that citizens need
to keep a close eye on the trade-offs government officials will be asking us to
make. The fearmongering being stoked by
some politicians should be looked upon with suspicion, especially when their
solutions involve long term power grabs, endless bailouts or indefinite
shutdown orders. As scary as Coronavirus may be, ceding our rights and freedoms
to a permanent police state is a much bigger threat.
Strong hospital and insurance lobbies have long strived to block efforts in the state to give consumers more information about what health care services cost. Just last year, there was a bill at the legislature to require hospitals to provide the relative costs of services to a database that would allow consumers to discern high cost versus lower cost providers in the market and therefore make more informed decisions about their healthcare.
House Bill 2603 would have
been particularly helpful for businesses and organizations that are
self-insured and engineering their networks for employee insurance plans. Armed with even just the weighted average
payor rate and the annual rate of growth would have facilitated major shifts in
behavior by these more sophisticated insurance plan architects, forcing
premiums down over time and saving the end user money.
This bill was killed last
year by the healthcare lobby in the legislature.
Just a couple months after, President
Trump filed his executive order requiring Health and Human
Services set regulations requiring the disclosure of the secret rates insurers
pay hospitals. Since then his
administration has been promulgating
rules to prevent “surprise billing” as well as requiring
hospitals to share the discounts they give cash-paying patients.
This isn’t the only step
Trump has taken to administratively unwind the massive red tape of the
the summer of 2018, they loosened rules to allow for short term
health plans. A measure Republicans
in Arizona in the 2019 legislative session.
What Trump understands that
Republican lawmakers should learn in Arizona – is without a repeal of Obamacare
– policymakers must find alternative ways to empower choice and
flexibility in the marketplace.
Without incremental changes
that put consumers in the drivers’ seat, the ratchet will only turn more toward
government run, single-payer healthcare, accompanied by the price controls and
rationed care that comes with it.
Luckily, Arizona lawmakers
will have an opportunity to redeem themselves next session when an updated
version of HB 2603 will be introduced. We will see once again who supports
price transparency and who will carry the water for the healthcare lobby.
With the 2020 elections
looming, healthcare is on the mind of voters.
Absent a major righting of the ship in the way of repealing Obamacare,
Republicans must provide market and consumer-driven solutions to lower costs
and increase choice and quality. The
President has the right idea. Hopefully lawmakers
in Arizona continue to follow his lead.
One of the most underreported problems with local government in Arizona is how cities use their almost unfettered permitting, licensing and land use approval powers to exact goodies from businesses and private citizens.
Most of the time the person asking for city approval plays along, and it’s difficult to blame them. If your business or project is dependent on council or staff approval (or future approvals), you have little choice but to meet their demands.
That is what makes it very surprising/refreshing when businesses decide to fight back. That is what happened with SB 1140, which significantly rolled back the video service provider (VSP) franchise licensing scheme deployed by cities throughout the state.
The original purpose of VSP franchise licenses was to make sure companies such as Cox Communications and CenturyLink were meeting certain standards when expanding or improving their video service. For example, VSPs must access public rights of ways in order to cut into streets to lay cables and serve customers, and the VSP license is designed to make sure it is done properly.
Unfortunately, many cities discovered how much fun it was to demand “sweeteners” in exchange for these licenses. Some of the demands included free cable boxes for city employees, requirements that certain channels or cable packages be provided, that roadway improvements and beautification be performed that had no connection to the installation of cable lines, and even that these companies provide sponsorships for local community events.
One particularly egregious example well documented in the public testimony of the bill, was in Yuma City. The major cable provider in Yuma City, Charter Common, took over the license franchise of Time Warner after they acquired the company. The City of Yuma required in this agreement that Charter Common provide the city with both internet and intranet services for free, as a condition of their license. This was particularly baffling considering internet has nothing to do with video and cable service. Despite the questionable legality of this arrangement, businesses find themselves between a rock and a hard place as to how hard they will push back.
Luckily, SB 1140 ended the VSP extortion racket by making the process of granting a franchise license to a VSP non-negotiable. Instead, cities will be allowed to require all the same assurances such as posting bonds and insurance to ensure proper repair of streets, but they will not be able to use their coercive regulatory power to hold licenses hostage for free stuff.
It is almost absurd that legislation was needed to end a practice that would be illegal if attempted in the private sector. Yet that is the double standard that exists in Arizona and must be confronted at every turn.