Deregulation: Can We Afford It?

July 29, 2013

Right now, Arizona electric rates are lower than most deregulated states and below U.S. averages. We must be cautious about any proposal that jeopardizes affordability in our state.

Proponents of deregulation claim it will help Arizona’s citizens save money in the long run. But consider these facts:

  • Of the 16 states with the highest electricity rates in the country, 13 are deregulated markets.
  • Residential rates in deregulated markets are 26% higher than in regulated markets.
  • Rates have risen more, and more quickly, in deregulated markets (60%) than in regulated markets (approximately 48%) from 1990 through 2011.

Controls designed to shield customers from drastically increasing market prices have not been successful. For example, despite efforts by the Maryland Public Service Commission, residential customers of Baltimore Gas & Electric saw their rates increase by 69%. In Illinois, rates climbed by as much as 92%.

Volatile markets and hidden costs
Deregulated markets rely more heavily on natural-gas generation. While natural gas prices are low today, they have been volatile over time. This exposes customers to increased volatility in their bills.

There are also significant costs associated with deregulating Arizona’s utilities – in the billions of dollars range. Those costs ultimately will be passed on to consumers in the form of higher rates.

Let’s keep rates affordable.