The Arizona Corporation Commission has launched an interesting and important discussion of electricity deregulation. But it has started the discussion by asking the wrong question.
The commission opened a docket inviting interested parties to answer a series of questions. The first is: “Will retail electric competition reduce rates for all classes of customers – residential, small business, large business and industrial classes?”
This is, indeed, the grounds on which the debate about electricity deregulation largely takes place. Supporters claim that it brings about lower rates through competition. Opponents say it leads to price spikes, market havoc, and a cost shift from large industrial customers to residential and small business ones.
But the true benefit of electricity deregulation isn’t that it lowers prices. And the true benefit doesn’t go away if it results in higher prices.