Arizona Commissioners’ Views on a Non-jurisdictional Utility’s Cost-Cutting Plan

Michael Giberson

The Salt River Project is, among other things, a fairly substantial electric utility serving customers in the state of Arizona. As it is a state-chartered entity, not an investor-owned utility, it is not subject to regulation by the Arizona Corporation Commission. But that didn’t stop a couple of Arizona state commissioners from opining against the SRP’s consideration of a plan to outsource 40 or 50 computer services positions.

Commission Chairwoman Kris Mayes said that because SRP doesn’t have to report to her commission like other state utilities, the company faces less scrutiny over such decisions.

She would be concerned if one of the utilities under her oversight outsourced, “particularly in this down economy,” she said.

… when the commission approved an emergency rate increase for [regulated utility Arizona Public Service] in December, commissioners directed the utility to cut at least $20 million in expenses and do it without layoffs.

“I would be very concerned about (outsourcing) at APS, TEP or UniSource (Energy Services),” Commissioner Gary Pierce said. “There would be quite a grilling over that. It would be very hard for the folks we regulate to outsource.”

Pierce, at least, was quoted as being willing to first consider if a state law or commission policy could be changed to reduce cost and eliminate the need for the company to outsource, and added that he felt a duty to ratepayers to ensure that the rates they pay are as low as possible.

Mayes is not quoted as admitting of any tradeoffs or other limits to her “concern” about outsourcing.

HT to Scott Gustafson at Arizona Economics; quote is from the Arizona Republic.

(And what’s this about an emergency rate increase? Fuel costs are down all over, right?, and demand is down as well. And rates are going up??? What sort of crazy regulatory logic justifies… Oh never mind.)