APS Straddles the Line on Controversial Securitization Bill

House Bill 2679 is facing increasing scrutiny as concerns mount regarding its implications for Arizona’s utility consumers. Ostensibly presented as a financing tool beneficial to both utilities and their customers, the bill encounters substantial opposition from a range of stakeholders. Notably, the Arizona Corporation Commission, the Arizona attorney general, and former Arizona Corporation Commission chair Bob Burns have all articulated serious reservations in letters addressed to the Legislature.

Despite its contentious nature, the bill has garnered bipartisan legislative support, even from state representatives who typically advocate caution against granting unchecked power to monopoly utilities. Arizona Public Service (APS) appears to be employing a dual strategy, suggesting to Democrats that the bill pertains to tribal sovereignty, although the legislation specifically applies to public power entities and municipal utilities, leaving tribes unaddressed.

A similar scenario unfolded in 2021 when the Public Service Company of New Mexico (PNM) sought to divest its interests in the Four Corners power plant by offering it to the Navajo Transitional Energy Company (NTEC) for a mere $1, coupled with an additional $75 million incentive. PNM claimed that this deal would ultimately save New Mexico ratepayers between $30 million and $300 million, underscoring the plant’s high operational costs.

The underlying goal of APS appears to mirror PNM’s strategy: to dispose of its interest in this economically unviable plant while passing the associated financial burden onto consumers. Ironically, this positions some Democrats in the paradoxical situation of backing a bill that may prolong the operational life of inefficient coal plants, which not only consume excessive water but also contribute significantly to air pollution. Governor Hobbs has stated her commitment to exploring how various proposals can reduce energy costs while promoting a clean energy economy. Unfortunately, HB2679 seems contrary to this vision.

APS has been able to sway Republican lawmakers by framing the bill as beneficial, despite its potential to undermine principles typically upheld by conservative parties. This subsidy effectively transfers the financial responsibility of offloading uneconomic power plants from NTEC back to Arizona ratepayers, contradicting traditional Republican ideals concerning market freedom.

While securitization can serve as a useful mechanism for fostering innovation within the electric grid, HB2679 does not fulfill that role. As currently structured, the bill extends support to keep coal plants operational for a longer duration, with Arizona consumers footed the bill for APS’s financial maneuvering. It is advisable for lawmakers to reject HB2679 or amend it to eliminate provisions for both the sale and securitization of assets. The current framework primarily benefits the shareholders of APS’s parent company.

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