Arizona Corporation Commission Defies Will of the Voters With Green New Deal Proposal

While 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 energy mandate.

The 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 result.

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 that ratepayer affordability can be prioritized while developing some types of clean energy.  For example, industrial grade solar is now selling for as little as 3 cents/kilowatt when operating at peak 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 decades to come.

Additionally, natural gas is by far the most affordable and dependable fuel to use in conjunction with industrial grade solar. The idea that the 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 Solar

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 beneficiaries from 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.

Yet 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.

Fortunately, 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.

Protecting Ourselves From Government Abuse During COVID-19 Pandemic

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 Alabama.
  • 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.

Arizona Should Follow Trump’s Lead by Pushing for Transparency in Healthcare Costs

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 ACA.  In the summer of 2018, they loosened rules to allow for short term health plans.  A measure Republicans rightfully codified 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.

Video Service Providers Take on Government Extortion—and WIN

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.