Saturday, June 02, 2007

Arizona Energy Exports

The Arizona Corporation Commission voted down a proposal by Southern California Edison to run more high voltage power lines from Arizona to California. Califonia is a net electricity importer while Arizona is a net exporter. Arizona currently supplies about 30% of California's electicity imports. As always, there were arguments for and against.

Edison executives argued that would be good for Arizona because it would generate jobs and increase the state's ability to transmit energy. Other utility-related businesses spoke in favor of the plan...

"I don't want Arizona to be the energy farm for California. That's my bottom line," said Bill Mundell, commission member...

Corporation Commission staff members said Arizona taxpayers could lose up to $292 million because the plants could sell their electricity to the California markets, driving up energy costs for Arizonans.

Arizona also will need those plants as the state continues to grow at a rapid rate, said Kris Mayes, commission member.

"You (Southern California Edison) are trying to drop a giant extension cord into Arizona, the fastest-growing state in the country," she said.

A couple of points. Anytime you export something the local price goes up. In return, you increase local economic activity and grow the local economy. The jobs and economic growth are the reasons that, most of the time, governments encourage exports. In this case, the commission is more concerned about the potential price increases.

Also note something else about our energy usage.

Most energy use fits into a couple of broad categories - fixed site and transportation. Most fixed site usage in Arizona is electricity although we also use a bit of natural gas for heating. Most transportation usage is liquid - gasoline, diesel, jet fuel and whatnot. While Arizona is a net exporter of electricity, we import essentially all of our transportation fuels. About 70% of those come from California.

The commission also chided California for not building enough power plants in their own state. Note that Arizona Clean Fuels has been trying to get approval to build a refinery in Arizona for over a decade.

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