Common Sense Institute’s Arizona Energy Competitiveness Index Carries A Warning

August 1, 2024

By Matthew Holloway |

Arizona’s Energy Competitiveness Index was released Friday by the Common Sense Institute of Arizona (CSIA) and despite skyrocketing electrical rates, Arizona’s energy reliability and competitiveness have reportedly fallen since 2022. With businesses and families buckling under the strain of higher rates passed by the Arizona Corporation Commission in March, the state and nation are pivoting further away from reliable natural gas and nuclear power toward more intermittent solar and wind solutions. And the outcome seems to be hurting Arizona families.

According to the report, “Arizona’s relative affordability has improved compared to other states. The state now ranks 21st in residential electric affordability, up from 28th in 2011.” But legislators and regulators shouldn’t celebrate much. This isn’t simply because Arizona has gotten better, but also because almost every other state has gotten much worse.

The CSIA report found in part, “The reliability of energy grids across the country is on the decline, although Arizona remains one of the more reliable grids in the country. On average, a user of electricity in Arizona faced 136.9 minutes of interruption in 2022 – up from 73.9 minutes in 2013, and nearly 59% less than the duration faced by the average customer across the U.S. (333 minutes). Despite falling slightly in the two reliability competitiveness indices, Arizona still ranks 5th in reliability.”

However, the report added, “Both the electricity and natural gas prices faced by residential, commercial, and industrial customers in Arizona have increased in the last 13 years, but have also become more competitive as other states experienced larger increases. Arizona now ranks 21st in residential electric affordability, up from 28th in 2011.”

The report shows in detail that since peaking in 2022 at a score of 82.9, Arizona’s competitiveness index has dropped precipitously ending at 79 in 2023.

As noted by the Common Sense Institute: “Arizona’s Energy Competitiveness Index was 77 in 2011, peaked in 2022 at 83, and then declined to 79 in 2023. An increase in the Energy Competitiveness Index is a positive qualitative change – i.e., the state is more competitive as the index approaches one hundred. While the headline index extends through 2023, data for some of the individual component metrics are not available for the entirety of the period covered. For those metrics, we present the results through the latest year of data available.”

In regard to capacity, the report reveals that Arizona’s generating capacity, referred to as “nameplate capacity” increased from 2019 to 2022 but has barely kept pace with population increases and has declined considerably since peaking in 2012. The report noted, “Arizona has experienced a large increase in its population in recent years due to high levels of net migration. Because power plants typically take several years, if not a decade or more to complete, nameplate capacity has not increased as much, thus the decrease in nameplate capacity per 100,000 residents.”

The Common Sense Institute offered a stark warning that, “While the goals of implementing a more environmentally friendly energy system have merit, policymakers should take caution not to recklessly transition their energy grids to renewable sources too quickly, and without appropriate supporting infrastructure. Renewable transition elsewhere, namely in states like California and Texas, has proven to be both costly and at a detriment to reliability and competitiveness.“

Should Washington and Phoenix continue to plunge headlong down this path, it seems unlikely that Arizona’s energy outlook will remain sunny.

Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.

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