Arizona Opposes New Energy Price Controls, Blames California for Energy Problems

By GIOVANNA DELL'ORTO Associated Press Writer

PHOENIX (AP) - As federal regulators expanded price controls regionally in an effort to handle California's energy crisis, Arizona officials insisted that their neighbor's problems shouldn't become theirs.

“The bottom line is, this is intended purely for the benefit of California,” said Scott Celley, Gov. Jane Hull's energy adviser.

The Federal Energy Regulatory Commission voted unanimously Monday to expand price restrictions on wholesale electricity sales imposed in California to nine Western states, though it didn't promote the stricter cost-based controls sought by California.

The order also makes the restraints effective all the time, not only during peak demand, as was mandated by a similar order issued in April for California only. Monday's order is effective through September 2002.

Even while opposing the order, Arizona officials said it should have little impact on state consumers.

That's because most utilities here either generate their own energy or buy it through long-term contracts with fixed prices, Celley said.

Strengthened by the utilities' reassurance that Arizona will be spared California-style blackouts this summer, officials criticized the measure as a shortsighted step that might be detrimental in the long run.

“What we know is that we need more electricity generation in the West and recapping prices does nothing to encourage it,” Celley said. “In fact, it might inhibit it.”

Arizona's governor has been a vocal opponent of capping energy prices, joining seven Western governors in urging the Bush administration not to do so in February.

President Bush has opposed firm price controls, but he hinted Monday that he might support the commission's order.

Arizona officials said they doubted caps would help California's situation, where the order came at the same time as warnings of possible rolling blackouts Monday and Tuesday because of a heat wave.

“Price controls are really a short-term fix,” said Tucson Electric Power Co.'s spokesman Steve Lynn. “In the long-term, they won't have the effect to solve the problem.”

For the state's utilities, price capping might be good, if extreme summer demand pushes them to buy into the spot market, said Salt River Project spokesman Scott Harelson.

It would be bad if lagging demand allows them to sell on the spot market, Harelson said.

So far, utilities expect to have enough energy to cope with summer, Arizona's peak demand season.

“Short of a natural disaster, we'll be able to meet our demand,” Lynn said.

http://www.12news.com/headline/AZ_energy_price_controls.html

-- Martin Thompson (mthom1927@aol.com), June 19, 2001