History of Retail Electric Competition in Arizona
In the Spring of 1994, California published its "Blue Book" on competition in the electric
utility industry, starting a trend in the United States leading to the evaluation by many states of the potential for competition in electric energy services. On May 20, 1994, the Arizona Corporation Commission established Docket No. U-0000-94-165 to investigate the introduction of retail electric competition.
Phase I: Information Gathering and Stakeholder Participation
As soon as the new docket was opened, the Commission Staff commenced the gathering of information and planning for the retail electric competition effort. Incorporated in the planning and information gathering process was an extensive schedule of stakeholder participation workshops, task forces, and working group meetings.
On September 7, 1994, an introductory retail electric competition workshop was held and a wide variety of interested parties and stakeholders were invited to attend. One hundred eighteen representatives from utilities, consumer organizations, other power suppliers, and others attended the workshop. The workshop was summarized in a Staff Report dated October 1994.
A series of nine working group and task force meetings were held in 1995, which addressed competition options, implementation of the options, and advantages and disadvantages of the options. Fifty-one groups were represented on task forces, which focused on system markets, regulatory issues, and energy efficiency and environmental issues. Members of the task forces included representatives from utilities, consumer organizations, other power suppliers, and others. This work was summarized in the "Report of the Working Group on Retail Electric Competition," dated October 5, 1995.
In February 1996, Staff issued a request for comments on how to implement retail electric competition in Arizona. Comments were filed by 31 parties on June 28, 1996.
Commenters included consumer groups, Arizona utilities, other suppliers, and other parties. Staff prepared a summary of the comments in July 1996.
Phase II: Initial Rulemaking (1996)
During the summer of 1996, the Commission Staff took into consideration all of the input, comments and suggestions from the public process and commenced the drafting of proposed Retail Electric Competition Rules.
On August 12, 1996, a workshop was held to explore and obtain feedback on a small number of options developed from the comments about introducing retail electric competition. There were 130 workshop participants including representatives from utilities, consumer organizations, other power suppliers, and others. Staff summarized the workshop in a report dated August 19, 1996...
On August 28, 1996, Staff issued a request for comments on a proposed rule that was drafted after the August 12 workshop. The requests were sent out and comments were due September 12, 1996. Comments were provided by 30 utilities, consumer organizations, and others.
On September 18, 1996, a workshop was held to discuss a revised draft rule. Ninety individuals attended the workshop including representatives from utilities, consumer organizations, other power suppliers, and others.
On October 1, 1996, the Commission Staff circulated a final version of the proposed Retail Electric Competition rules. By Decision No. 59870 (October 10, 1996), the Commission voted to commence the formal rulemaking process and directed the Hearing Division to schedule public comment sessions in Phoenix, Tucson, Yuma, Flagstaff, and Kingman, Arizona. The public comment sessions were held on December 2, 3, and 4, 1996.
On December 26, 1996, the Commission approved Decision No. 59943, which adopted the Retail Electric Competition Rules, A.A.C. R14-2-1601 through 1616.
Phase III: 1997/1998 Working Groups
In the 1996 Retail Electric Competition Rules order, the Commission recognized that the initial rules were merely a starting point and that future rule amendments would need to be made in order to improve the rules package. With that in mind, the Commission ordered that a number of working groups be established in order to work out the details needed to prepare Arizona for the commencement of competition in 1999. Those working groups were:
* Stranded Cost Working Group
* Unbundled Services and Standard Offer Working group
* Reliability and Safety Working Group
* Independent System Operator & Spot Market Development Working group
* Legal Working Group
* Customer Selection Working Group
Each of the Working Groups included a broad array of participants representing all of the stakeholders expressing interest in retail electric competition. Many of the working groups established committees and subcommittees to address specific issues. With the exception of the Reliability and Safety Working Group, which started its work in 1996, all other working groups commenced meetings in early 1997 and finished their work, including final reports, recommendations, and suggested rule wording changes and additions, by year end 1997.
Phase IV: 1998 Rule Amendments & Proposed Settlements
During February 1998, the Hearing Division conducted hearings on generic stranded cost issues...
On June 22, 1998, the Commission issued Decision No. 60977, the Stranded Cost Order, in association with the Retail Electric Competition Rules. The order allowed Affected Utilities a choice of two options for stranded cost recovery: the Divestiture/Auction Methodology or the Transition Revenues Methodology.
During 1998, the Customer Education Working Group and the Low Income Working Group met and issued reports.
On August 10, 1998, the Commission adopted amended rules on an emergency basis (Decision No. 61071). The Commission accepted written comments on the rules and revisions through October 8, 1998, and held public comment hearings on October 7, 1998, in Phoenix, Arizona and on October 8, 1998, in Tucson, Arizona.
The Commission Staff negotiated with various utilities in the late summer and fall of 1998. On November 5, 1998, the Commission Staff entered settlement agreements with Arizona Public Service Company and Tucson Electric Power Company. On November 24, 1998, a Procedural Order set the matter for hearing. On November 25, 1998, the Commission established an expedited procedural schedule for evidentiary hearings on the settlement proposal, setting a December 3, 1998 hearing date.
On November 30, 1998, the Arizona Attorney General and the Residential Utility
Consumer Office filed Petitions for Special Action with the Arizona Supreme Court, claiming that the hearing schedule did not allow enough time for other parties to prepare.
On December 1, 1998, Vice Chief Justice Charles E. Jones issued an order staying the settlement proceedings and scheduled the matter for oral argument. On December 9, 1998, the parties withdrew the settlement agreements, making the Supreme Court proceeding moot.
On December 11, 1998, the Commission adopted the emergency rules on a permanent basis in Decision No. 61272.
On December 23, 1998, the Commission issued a CC&N to Eastern Competitive Solutions, Inc. (Decision No. 61302). On December 30, 1998, the Commission issued a CC&N to PG&E Energy Services, (Decision No. 61303). These were the first "Electric Service Providers" to receive CC&Ns under the Retail Electric Competition Rules.
On December 31, 1998, the Commission held an Open Meeting and issued Decision No. 61309, which denied numerous Applications for Rehearing of Decision No. 61272.
At midnight on December 31, 1998, the Retail Electric Competition Rules went into effect, opening Arizona to competition for electric services.
Phase V: 1999 Stay, Rule Amendments, and Settlements
On January 4, 1999, the Arizona Attorney General's Office and the Residential Utility Consumer Office filed a suggested procedural schedule for resolution of the remaining issues in the Retail Electric Competition Rules docket.. Docket No. E-00000A-02-0051 et al.
On January 5, 1999, the Commission voted to approve Decision No. 61311, which stayed the effectiveness of the Retail Electric Competition Rules and related decisions, including the Stranded Cost decision (Decision No. 60977). (Note: the Decision was signed and docketed on January 11, 1999.) The Commission directed the Hearing Division to solicit additional public comment about electric competition.
On January 6, 1999, the Chief Hearing Officer issued a Procedural Order that ordered all interested parties, including Staff and Affected Utilities, to file comments by January 20, 1999, on the following:
* What issues still need to be resolved in the electric industry restructuring;
* The order in which the issues should be resolved;
* The method (such as informal discussions by parties, hearings, combinations, etc.) and timing to resolve the issues identified; and
* Any agreements/disagreements/clarifications to the January 4, 1999, joint proposal by RUCO and the Attorney General of a procedural schedule.
The Commission asked the Attorney General's Office, RUCO, APS, and TEP to start new settlement discussions. In January 1999, a number of parties commenced settlement discussions with Arizona Public Service Company and Tucson Electric Power Company. The Commission Staff was not invited to participate in the settlement discussions.
On January 26, 1999, the Chief Hearing Officer issued a Procedural Order that ordered
all interested parties to file no later than January 29, 1999, additional proposed changes to the Rules, including any proposals for additional rules. In addition, parties were ordered to list the rules that the parties agree need not be amended and to list modifications to the RUCO/Attorney General's January 4, 1999, proposal regarding a procedural schedule for hearings on stranded costs and unbundled tariff issues.
On February 5, 1999, and March 12, 1999, the Hearing Division issued draft notices of proposed rulemaking for consideration by the Commission.
On April 23, 1999, the Commission adopted modifications to the Retail Electric Competition Rules and ordered that the proposed rule amendments be forwarded to the Secretary of State and that public comment hearings be scheduled (Decision No. 61634).
On April 27, 1999, the Commission issued Decision No. 61677, which amended Decision No. 60977, the Stranded Cost decision. The decision also ordered the Hearing Division to issue a Procedural Order setting dates for consideration of stranded cost and unbundled tariffs for each Affected Utility.
The revised Retail Electric Competition Rules were published in the Arizona Administrative Register on May 14, 1999. Public comment sessions were scheduled and held in Phoenix on June 14, and 23, 1999, and in Tucson on June 17, and 21, 1999. Interested parties..were ordered to file written comments to the revised rules no later than May 14, 1999, and to file responsive comments no later than June 4, 1999.
On May 18, 1999, Arizona Public Service Company filed for approval of a settlement agreement. The agreement was signed by APS, Arizonans for Electric Choice and Competition, the Arizona Community Action Association, and the Residential Utility Consumer Office. The Commission held six days of evidentiary hearings during July 1999. After the hearing, the hearing officer issued a proposed order, which was scheduled for Commission consideration at an Open Meeting. Various parties filed exceptions to the proposed order. The Commission held a daylong Open Meeting on the settlement on September 23, 1999. The Commission adopted modifications to the proposed order and then approved the order as modified in Decision No. 61973 on October 6, 1999.
On June 9, 1999, Tucson Electric Power Company filed for approval of a settlement agreement. The agreement was signed by TEP, Arizonans for Electric Choice and Competition, the Arizona Community Action Association, and the Residential Utility Consumer Office. The Commission held a three-day evidentiary hearing in Tucson in August of 1999. After the hearing, the hearing officer issued a proposed order, which was scheduled for Commission consideration at an Open Meeting. Various parties filed exceptions to the proposed order. The Commission considered the proposed order on November 30, 1999, at a daylong Open Meeting. The Commission adopted modifications to the proposed order and then approved the order as modified in Decision No. 62301.
During June and July 1999, Staff scheduled a number of workshops to address "technical issues" as requested by the Chief Hearing Officer. Those workshops were:
* Interconnection and Distributed Generation June 28, 1999
* Metering Issues July 1, 1999
* Load Profiling July 12, 1999
* Direct Access Services Requests July 13, 1999
* Metering: EDI Formats July 16, 1999
On September 29, 1999, the Commission issued Decision No. 61969, which approved the revised Retail Electric Competition Rules. In the decision, the Commission ordered the establishment of the Process Standardization Working Group and set a deadline for creation of Standardized Operating Procedures to be used by all market participants.
Phase VI: 2000 Revisions to the Electric Competition Rules
The Process Standardization Working Group met regularly in late 1999, 2000, and 2001.
The Working Group developed a number of recommendations that were designed to correct inconsistencies among the various rules and further define and clarify the intent of the rules.
On April 28, 2000, Commission Staff requested interested parties to file comments for clarifying revisions to the Retail Electric Competition Rules...
On July 5, 2000, the Commission Staff forwarded to the Commission proposed revisions to the rules. The Notice of Proposed Rulemaking was published in the Arizona Administrative Register on August 11, 2000. A public comment hearing was held on September 15, 2000. On October 10, 2000, in Decision No. 62924, the Commission approved the revised rules.
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