State on track for electricity deregulation

Opinion editorial
September 24, 2003
RICHARD LEHFELDT

Richard Lehfeldt is senior vice president of external affairs for TECO Energy Inc., the energy company that owns the 2,145-megawatt Gila River Power Station in Gila Bend.

In a series of recent editorials (including "Regulatory power grab," Aug. 2), the Tribune has taken the Arizona Corporation Commission to task for failing to embrace the deregulation of telecommunications and electricity. The commission has "backed away from a plan to deregulate the state's electricity industry," the Tribune opined.

With apologies to Mark Twain, I believe reports of the death of deregulation in Arizona are greatly exaggerated.

My company, TECO Energy Inc., owns and operates one of the largest merchant power plants that are "springing up like wildflowers" in Arizona. We invested $1 billion to compete to serve Arizona's growing power needs with our clean, efficient natural gas plant.

When California's flawed experiment in deregulation collapsed in 2001, the ACC called a "time out" and embarked on a comprehensive reexamination of whether to proceed with restructuring in Arizona.

The ACC's conclusion was that the retail part of deregulation could wait, but that the citizens of Arizona would see immediate and tangible economic and environmental benefits from proceeding full speed ahead with wholesale competition. That means that Arizona Public Service, Tucson Electric and the state's other utilities will now look to the wholesale market to meet their power needs.

The results of the first request for proposals in this new regime, conducted earlier this year, have been promising. We and other competitive power generators were awarded contracts with APS and TEP, and we are ready for more.

The ACC is to be praised for avoiding the pitfalls of either ignoring what had occurred in California or taking the potentially worse course of throwing out the baby with the bath water and denying Arizonans the benefits of these state-of-the-art plants that were built to serve their needs.

Investment is also being made in the transmission lines to move bulk power reliably as it is generated, more good news in the wake of the recent monster blackout in the Northeast. Nationwide, spending on electric power lines is at early 1960s levels and much of the national grid is more than 30 years old. Arizona is doing much better than that.

Arizonans should be congratulated for making some good decisions on electric deregulation and for pursuing the best of that plan. We are also grateful to the East Valley Tribune for being an early and articulate supporter of competitive markets. And high praise is also due to the Corporation Commission for advancing a competitive vision that will benefit Arizona for decades to come.