Andy Tobin and Navajo Nation: Energy Providers Need Regulatory Certainty

| July 31 2013
Joint Statement of Arizona Speaker of the House Andy Tobin and Speaker of the Navajo Nation Council Johnny Naize Regarding Restructuring of Arizona’s Electric Market

As Speakers of the Arizona House of Representatives and the Navajo Nation Council, we share a deep reverence for our mutual commitment to our respective elected institutions and the people they represent. Out of that same concern for the wellbeing of our constituencies, we both have great concerns over the possible implementation of a restructured electric market in the state of Arizona.

Energy is a critical sector of Arizona’s economy and our state provides a perfect example of what cooperation can produce. For many years, the Navajo Nation and the State of Arizona have worked closely with private sector partners to create low cost electric power for all users. Arizona’s current electric regulatory low cost model has historically insulated electric and water user rates. This is partly due to the investment in long-standing coal assets. In fact, the long-term resource planning of utilities via Commission Regulators has historically contributed to a stable electric market. We also believe that the operational attributes of Arizona’s utilities, with strong generating portfolio objectives, have promoted price stability, fuel diversity, technological innovation, and environmental improvements for all to enjoy. The result has been a low-cost, reliable, cleaner energy source that fulfills our current needs and will fuel those of the future.

Long-term investments in Arizona energy resources and base load energy agreements have already been jeopardized by the uncertainty of this regulatory exercise. Areas like the Navajo Nation, one of nation’s most economically vulnerable communities, as well as a region with critical resources for the entire State of Arizona, are being destabilized. The Arizona Corporation Commission’s inquiry is yet another regulatory uncertainty piled upon federal permitting requirements, leases, reviews, consultations, capricious regional haze proposals and generally the regulatory effects of the “war on coal”. In fact, the retail electric competition discussion has had a chilling effect on resource decision making for long-term investments that directly impact base load energy planning at large scale coal generating stations like Coronado, Cholla, Apache, Navajo and Four Corners. Aside from the detrimental effects the loss of jobs associated with those facilities could have on the Navajo Nation, there will be impacts to the communities surrounding the Navajo Nation. According to the Navajo Economic Development Report of 2010, 64% of the income earned by Navajos on the reservation is spent outside the reservation, which is an indispensible source of revenue for northeastern Arizona.

What is so fundamentally broken with our electric model that needs to be fixed at a time when so many investment and resource decisions are on the line? This could not come at a worse time. To that end, we strongly urge the Commission to provide regulatory certainty to energy providers by issuing a decision to not pursue retail electric restructuring at this time. Doing so would, among other negotiations, allow the Four Corners Power Plant (FCPP) transaction with the Navajo Nation to finalize, ensuring cleaner and affordable coal-fired power generation for Arizona consumers. This will protect Arizonans from losing a stable energy resource, and it will prevent the certain economic instability that is sure to follow in the wake of this proposed restructuring.

In Arizona, coal generation provides a significant number of jobs and economic benefits for the Navajo Nation and the Hopi Tribe. The billions of dollars of revenue generated as a result of this industry not only provide for regional economic stability, but it also fosters a stable energy market for the entire state of Arizona. Let us concentrate on the development and promotion of a diverse electricity portfolio, robust economies with regional economic significance, the maximization of Arizona natural resources and the enhancement of incentives for utilities to invest in reliable energy for all Arizonans.

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