Guest ContributorThis column by Arizona Chamber of Commerce & Industry General Counsel Mike Bailey was originally published at azcentral.com.
The Arizona Republic’s recent article on utility company securitization quoted a parade of the usual suspects gnashing their teeth over legislation that will reduce volatility in electricity costs.
To these activists, an energy strategy that is environmentally responsible, consumer oriented and economically viable goes two steps too far. Instead, they demand an extreme energy agenda, regardless of its impact on consumers or the economy.
We need reliable, affordable energy — and smart tools to help manage the cost of building and maintaining the infrastructure that delivers it.
That’s why the Arizona chamber and a broad coalition of business leaders support House Bill 2679, which gives state regulators another tool to keep energy costs in check and protect customers from sudden rate hikes.
HB 2679 gives the Arizona Corporation Commission authority to approve the use of securitization, a well-established financing method used in more than 30 states.
Securitization allows utilities to recover certain extraordinary, one-time costs — like retiring outdated plants or repairing damage from wildfires or other natural disasters — through the issuance of low-interest bonds.
Rather than getting slammed with large, immediate cost increases, consumers would see costs controlled and recovered over a longer period, resulting in lower and more stable monthly bills.
Moreover, because the bill prevents the utility companies from earning a return on securitized costs, the consumer is the principal beneficiary of the stability.
Some other opponents, including state Attorney General Kris Mayes, have expressed constitutional concerns for HB 2679, suggesting it might unduly limit the corporation commission’s authority. To the contrary, the bill enhances the commission’s oversight of utility providers.
The commission has the exclusive discretion to approve, modify or reject any proposed securitization in the first place. Then it monitors, audits and enforces the terms of all approved securitized transactions.
Notwithstanding her concerns, the attorney general acknowledged in a recent letter to the Legislature that securitization “has merit and could lower utility — and utility customer — costs as Arizona’s economy booms over the next decade.”
That’s exactly right.
This isn’t a novel idea. Securitization laws across our nation have protected ratepayers and stabilized energy markets. Arizona should not be the last state to adopt a solution that works.
HB 2679 is constitutional. It’s common sense. It puts consumers first. Lawmakers should pass it.
Mike Bailey is the general counsel for the Arizona Chamber of Commerce & Industry
Joseph Kavetsky
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