Arizona State Senator Carlyle Begay is looking to introduce a bill (read the draft copy) to create a new power district in Navajo County, Arizona.  For more insight, we spoke to Skyler Careaga, Chief Executive Officer of SEC Power.  He had this to say about the pending legislation:

This legislation is designed to form a power district in Navajo County, creating a new source of revenue for the county, as well as jobs.  This legislation should also help with spurring the local economy, creating new business development with a redundant, secure source of power and infrastructure for businesses to operate.  All of this would be achieved WITHOUT increasing local taxes — it will be privately funded and developed with no added tax bonds.

Mr. Careaga was able to provide us with an Excel file featuring a long list of power outages within Navajo County from 2006 to 2009 — 64 pages of outages that could be avoided with the power redundancy that Mr. Begay’s bill is designed to provide.

Mr. Careaga continued with the benefits of this bill:

Residents all over the state of Arizona are a mere step away from easily averted crises due to the fragile nature of the power grid, especially as it thins to a near whisper in the rural counties like Navajo.  Redundancy of power supply is a major component to protecting against weaknesses which could be exploited by bad actors or simply natural occurrences like heavy storms and interference by wildlife.

The weakness in the grid and other vital services such as 9-1-1 service has resulted from decades of perverse incentives to upgrading or creating of redundant systems/providers.

A quick scroll through the report provided by Mr. Careaga validates his assessment.  The report lists dozens of seemingly innocent sounding instances of “squirrel/bird on line” causing hours of outages for dozens, if not hundreds of people at a time — just in 2009 alone.

Cumulatively, electricity customers in Navajo County were without power for 6,443,753 minutes in 2009 — nearly 4,500 combined days without electricity.

Lastly, as our conversion with Mr. Careaga was coming to an end, he wanted to highlight one more important fact to us — this bill was not deregulation:

It’s very important to understand that this bill is not deregulation, which has been a bridge too far in Arizona. It’s about community choice.  If the community comes together to ask for this option, we want them to have it. Local control, it’s as simple as that.

Why Empowering Arizona’s Counties is Different than Deregulation

This bill appears to allow individual counties (as opposed to individual citizens) to make choices (such as creating an independent power district) that could improve quality, reliability and redundancy, and cost for their constituents’ power service.

In general, individuals that live in regulated electricity markets deal with one big company, also known as the utility. In a deregulated energy market, there is a third entity involved. In regulated states, the utility purchases electricity from generation companies and then distributes that power to, bills and finally collects from customers.

When energy deregulation was introduced to many states, there were a few key drivers that were used to promote deregulation. Some of the main ?pro? driving forces included promises for new technological advancements, including new generating facilities, customer choice for those who did not like utilities operating as monopolies and savings passed on to customers as there was no longer a need for the two-step regulatory process that often increased energy prices.

As deregulated and semi-deregulated states began creating these energy markets, many consumers saw the benefits of this model being passed on first hand. There are a few key perks that most states have seen with electricity deregulation after this model has been in action for several years.

– It limits the control that the government has in the energy market.
– It limits monopolies from controlling entire electricity markets.
– It boosts competition among suppliers.
– It helps lead to lower energy prices for consumers.
– It gives customers the power to choose where they buy their energy.

Major Deregulated Markets

Not every state operates with a deregulated energy market. In fact, even some of the states that are deregulated still have some regulated areas in them. Some states have deregulated natural gas as well, while others just offer deregulated electricity services.

Each state?s journey to and experience with deregulation has been different, but for most of the major states in the U.S. that have adopted this energy model, the results have been nothing short of a success.

Texas

Texas has the oldest, and arguably the most successful, deregulated energy marketplace in the United States. It has been over 15 years since Texas adopted their model and since then they have seen a great deal of growth and positivity in their market.

Texas? wind energy market has grown more than ten times its original size since deregulation first took place. This growth created more than 10,000 jobs in Texas. From 2002, when deregulation started in the state to 2011, renewable energy grew by nearly 8 percent.

Just six years after deregulation hit the Texas market, 80% of voters favored the market, and the number on continued to grow.

Illinois

In the first 16 years of deregulation in the Illinois, a study estimated that electric deregulation saved customers as much as $47 billion. Deregulation began in Illinois in 1998, and in 2014 a report found that the average household paid about $240 less per year on their electricity plans, thanks to deregulation.

This report, which was issued by the Illinois Manufactures? Association, Illinois Retail Merchants Association, Illinois Chamber of Commerce and the Illinois Business Roundtable., also found that when deregulation began in 1998, Illinois had the country?s 13th highest average electricity prices, in 2013, their rates were among the lowest in the country.

New York

While New York still struggles with having some of the highest overall electricity rates in the country, electric deregulation has vastly improved the state?s wholesale energy prices. The deregulated energy market, which stated in 1998 in New York drastically reduced wholesale electricity prices. The state is currently experiencing record low wholesale electricity prices, which unfortunately only makes up 30 percent of energy bills in the state.

However, New York?s decision to stay with a deregulated energy market has proven to be the key to keeping their energy rates as low as possible, even if delivery costs, taxes and public policy fees are causing their bills to sky rocket.

The Success of the Deregulated Market

As deregulation and limited deregulation continue to thrive in many states across the country, the benefits for customers only continue to grow. In a recent 20-year study from COMPETE Coalition, it was discovered that consumers in deregulated energy markets, experience better prices, investment and reliability in deregulated energy markets.

The study also found that between 1997 and 2014, prices in deregulated energy markets rose by 4.5% less than inflation. Meanwhile, prices in regulated states rose by 8.4% more than inflation. The study also found that the power produced in deregulated states was produced more efficiently than regulated ones, and that electricity counted for a smaller percentage of customer?s total cost of living than it did for customers who live in deregulated states.

Customers in these deregulated marketplaces not only get to experience the benefits that come with the freedom to choose their own energy provider but the economic benefits and personal savings that this type of marketplace can also bring.