A recommendation in July by an administrative law judge (ALJ) for the Arizona Corporation Commission (ACC) that the state delay implementing a competitive wholesale market got the endorsement of the ACC chairman in a hearing on the state’s restructuring plan Tuesday.

Chairman William Mundell said that while he was not ready to “completely stop deregulation…I have grave concerns how deregulation will affect the consumers of Arizona.” He suggested the delay extend past the July 2004 date recommended by the judge.

The ACC held hearings on the generic structure of the proposed state plan on Tuesday, which followed a lengthy recommendation in July by an ALJ who called for a delay in the planned divestiture of generation assets by Pinnacle West Capital Corp.’s Arizona Public Service (APS) and Unisource Energy Corp.’s Tucson Electric Power (TEP) until at least July 1, 2004. The ALJ called the state’s wholesale market too unstable at the present time (see Power Market Today, July 25).

Mundell, who noted in his statement Monday that the states were in a better position to protect consumers than the federal government, said “circumstances have changed since I voted on deregulation.” He now supports a delay past that proposed by the ALJ. He said he wanted a “broader discussion of how deregulation will affect Arizona’s jurisdiction, and why Arizona is better equipped to protect consumers than the federal government.”

Criticizing the elected Arizona officials, as well as “all three branches of the federal government” for “attacking the sovereignty of Arizona,” Mundell said that the federal courts are continuing to “chip away at Arizona’s ability” to protect consumers. “We unknowingly gave up jurisdiction when we unbundled our rates,” he said. Since first voting for deregulation, Mundell noted that the Federal Energy Regulatory Commission had “issued a number of orders that pre-empt our jurisdiction,” including the “one size fits all” order of Standard Market Design.

“We are particularly concerned that many aspects of the FERC proposal impair our ability to effectively regulate utilities — our number one job is to protect consumers, and we feel that FERC’s proposed rules prevent us from doing so,” Mundell said. The ACC chairman said that FERC’s ruling on having exclusive jurisdiction over “significant aspects” in siting transmission lines’ interconnections “is an unprecedented power grab and will have a chilling impact on our ability to customize orders so that Arizona consumers are protected.”

Arizona, he said, does “not want to rely on FERC to insure [sic] the reliability of our transmission grid. We have seen how FERC failed to protect Arizona consumers in the El Paso natural gas capacity case.”

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