Monday, November 10, 2008

Goldwater Institute: How high will utility rates go with new Corporation Commission?

by Clint Bolick

Business interests who supported the Arizona Corporation Commission's power grab over energy policy may be having second thoughts after the election of at least two self-described liberals to the five-member body. Combined with holdover Commissioner Kris Mayes, they will give the Commission a solid majority favoring more government control in the energy business.

The Commission last year approved rules that will lock in renewable energy mandates for most of the next two decades. In an unprecedented intrusion into legislative prerogatives and private business decision-making, the rules force utility companies, regardless of cost, efficiency, or reliability, to generate specific percentages of energy from renewable resources. The extra costs-which the Commission conservatively estimates at $2.4 billion-will be passed along to residential and commercial consumers.

Under the Arizona Constitution, the Commission's authority is limited to ratemaking and related procedural issues, along with whatever additional powers the Legislature might delegate. The Legislature has taken steps to promote renewable energy, but in a less prescriptive and more flexible manner, given the uncertainties surrounding renewable energy technology and gyrations in the cost of conventional fuel. The Commission's rules throw caution to the wind (no pun intended) and leave the consumer with a hefty tab.

The Goldwater Institute filed a special action on behalf of consumers challenging the rules as exceeding the Commission's limited authority and violating separation of powers. The Arizona Supreme Court declined to accept jurisdiction, so we will re-file the case shortly in a different court.

By asserting unconstitutional authority, the current Commission has handed its successors a blank check to pursue even more draconian energy policy, making the Institute's lawsuit all the more important. As the court case moves forward, the Legislature should reclaim its authority over energy policy from an agency that has proven too susceptible to special-interest pressures.

Clint Bolick is the director of the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

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