A Victory for Common Sense in Arizona

As the old saying goes, “there is nothing more uncommon than common sense.” So, let’s take a moment to recognize Arizona officials who just applied a healthy dose of it by rejecting electricity deregulation in the Grand Canyon State.

Signed into law only days ago, Arizona HB 2101 repealed a dated statute that left open the possibility that state regulators could adopt Texas and California-style electricity deregulation. Deregulation efforts in Arizona had largely been left for dead the past decade, but NRG, a large Texas-based retail electricity company and one of the few Retail Energy Oligarchs that reigns over the deregulated Texas market, had recently made waves by pressing the Arizona Corporation Commission to adopt Texas’ electricity policies. Given Texas’ experience with deregulation – particularly during Winter Storm Uri resulting in extensive power outages, widespread destruction, and the tragic loss of life - NRG must operate under the belief that misery loves company. But Arizona lawmakers were having none of it.

Supporters of deregulation proclaim it as a free-market paradise, where utility consumers receive affordable, green, reliable power, at rates far below what they’d pay with a regulated utility. But 20 years of experience with electricity deregulation reveals its real outcomes. Expensive, volatile energy prices, consumer protection problems, and reliability disasters are electricity deregulation’s legacy. In California, where the legislature forced utilities to sell their generation facilities, local energy companies now scramble to find sufficient electricity to provide 24/7 power. In Texas, deregulation planted the seeds of the state’s massive blackouts and price spikes, by undervaluing the importance of reliability. And all of this happened while consumers paid billions more<https://www.wsj.com/articles/texas-electric-bills-were-28-billion-higher-under-deregulation-11614162780#:~:text=Texas's deregulated electricity market, which,Street Journal analysis has found.> than they would have with a regulated utility.

Arizona policymakers saw deregulation for what it is: a failed experiment. They did what anyone who uses common sense does: they looked at the facts as they are, they applied the lessons of history, and they made a pragmatic decision in the best interests of their constituents. Kudos to you, Arizona.