The Arizona Electricity Market: Time for Competition

Open Arizona's electricity market to competition.  That’s the message from Andrew Kleit, a professor of energy and environmental economics at Pennsylvania State University, in an op-ed he authored this week for the Arizona Republic.

Like many states, Arizona is facing a demand crisis.  Some experts indicate that the state will need 3,000 megawatts of additional generating capacity by 2019, nearly a 50 percent increase in just 10 years.  In addition, Kleit notes that Arizona "has ambitious plans to make its electricity grid 'greener,' which will require significant investment in solar and wind power."

Kleit suggests that Arizona legislators look to their east to learn how competition has helped solve similar challenges in Texas.  He writes:

"Generation firms have flocked into the state, given the chance to be free of the dead hand of regulation. This has grown electrical capacity more than 35 percent in just eight years. Texas consumers now have dozens of retailers to choose from. Perhaps most surprisingly, Texas ' restructured electricity grid has shown itself to be most congenial to producers of green energy.  Texas is the nation's leader in the production of wind power."

Arizona and Texas are familiar territory to Kleit.  In addition to the op-ed, he is the co-author of the Goldwater Institute report, "Opening the Grid: How to Recharge Arizona's Electricity System," and the co-editor of the American Enterprise Institute book, "Electricity Restructuring: The Texas Story."

To read Kleit's full op-ed, click here.

Joel Malina | December 10, 2009