COMMISSION NEWS

ARIZONA CORPORATION COMMISSION
1200 W. WASHINGTON STREET
PHOENIX, AZ 85007

TO: EDITORS, NEWS DIRECTORS

DATE: August 5, 1998

FOR: IMMEDIATE RELEASE

CONTACT: Perry Baker (602) 542-0844

Electric Deregulation Rules Approved

Today, the Arizona Corporation Commission approved rules that will guide the process of electrical deregulation and competition, set to begin January 1, 1999.

After gathering public comment and suggestions through an extensive schedule of open meetings across the state, the Commission has adopted a set of rules that will allow for a gradual, two-year phase-in of industrial and residential access to competition with all consumers included in the competitive market by January, 2001. In addition, the rules anticipate an immediate rate reduction for all Arizona consumers who do not participate in the initial competition phase-in. The phase-in schedule will allow the Commission time to monitor the progress of the competition process, and make any necessary revisions in the rules prior to the January, 2001 full implementation date. It will also allow consumers time to make an informed decision after investigating the various options that will become available to them.

Commissioner-Chairman Jim Irvin said, "As we enter this new era of electric competition, we must be careful to protect consumers even as we create a positive business environment. I believe these rules do just that. They help us move away from heavy government regulation, and create a system which emphasizes consumer choice and a free market approach."

In order to remain on course and meet the January 1st transition date without disrupting the safe, efficient and reliable provision of electric service, the Commission adopted the new rules on an emergency basis. "We not only have our roadmap in place, but the highway is now being built." The details resolved by theses rules will allow for a smooth journey for all affected parties," noted Irvin.

Some of the highlights of the electric competition rules include:

• A two-year phase-in for competition allowing all customers to have access to competitive electric service no later than January 1, 2001;

• A requirement for utilities to file a report to the Commission by September 15, 1998, detailing suggested consumer benefits, such as a rate reduction of 3 to 5% to those customers not eligible for competitive services during the transition period;

• The establishment of a solar portfolio that mandates the availability of solar power and offers a variety of credits and incentives for solar generation;

• A consumer protection program that provides protection against "slamming", sets minimum reliability standards for electric providers, and sets various rules for home meters; Safeguards that prohibit the sale of electricity below cost and institutes other protocols designed to provide for a safe and reliable atmosphere for competition;

"This is a reasonable order, that allows us to remain on track for our January 1st deadline for phasing in electric competition", noted Commissioner Renz Jennings. "This order will let us proceed with a program that will ultimately benefit all consumers in Arizona."