Rebuttal to Daniel Dempsey’s Op-Ed

An op-ed by Daniel Dempsey was published in the June 19th edition of the Arizona Daily Star and can be found at this link. He claimed that Southern Arizona and Tucson pay more for electricity because they get power from investor-owned Tucson Electric Power instead of a public-owned utility.

He also claimed that this has held back the city and region economically.

His expertise? My understanding is that he is a former Wall Street utilities analyst who moved to Tucson to be near his mother.

I don’t see myself as an electricity rate expert, although I did consult years ago with the power company in Reno, Nevada as it was trying to merge with a power company in Washington State, in order to get access to cheaper hydro power. I traveled to Reno from Phoenix for a year and stayed in Reno most weekdays.

I know enough to know that examples can be found of investor-owned utilities having lower rates than public-owned utilities, and vice versa. There are many moving parts and variables in such comparisons, including whether generation is separate from distribution, what state regulations say about the separation, and what costs are imposed on power companies in the name of sustainable energy.

But let’s assume that Dempsey was correct about public-owned utilities having lower rates on average, and let’s compliment him on his desire to improve the laggard economy of Tucson.

I don’t have a rooster in this cock fight of TEP versus a city-owned utility. But I do take issue with some of Dempsey’s statements.

For example, he cited the Salt River Project in Phoenix as an example of the lower rates that come from public power utilities. But he didn’t mention the history of SRP—that much of SRP’s infrastructure was built by the federal government and then the state government, beginning with the construction of the Roosevelt Dam and its turbines and power lines. A case can be made that it was federal money that put Phoenix on the map, and that SRP got somewhat of a free ride.

Dempsey went on to say that investor-owned Arizona Public Service has higher rates than SRP and similar rates as TEP. I’ll take his word for it, although I didn’t see a noticeable difference in rates when my wife and I lived south of Shea Blvd. in Scottsdale for 25 years before moving to Tucson. We were on APS, but neighborhoods just to the south of us were on SRP. Whatever the rate difference was, it wasn’t enough to influence where people chose to live or where companies chose to locate.

On the last point, it’s not as if the huge part of metro Phoenix served by APS is an economic laggard while the part served by SRP is the only booming part of metro Tucson. All of metro Phoenix is booming, unlike Tucson.

In fact, Taiwan Semiconductor Manufacturing Company is building its advanced semiconductor plant in north Phoenix, for a total capital investment of approximately $165 billion. The plant, which will consume as much electricity as 30,000 homes, will get its power from APS, not SRP.

Depending on how one looks at it, APS is either burdened or blessed by its Palo Verde nuclear plant. As nuclear power fell out of favor in the US, it became a burden due to regulatory issues and the lack of disposal sites for spent fuel. Now, however, nuclear power is making a comeback, being seen as the best green alternative to power generation from fossil fuels, and as a critical power source for the staggering power needs of data centers.

Dempsey made a claim that made me gasp. He said, “The City of Tucson already excels at delivering water, sewer, and waste services.”

Not to kick a city when it’s down, but it’s difficult to find anything that Tucson excels at, including those services. It can’t even get its landfill right and is facing a $300 million fine for releasing too much methane gas.

If you want to see a city that gets things right, go to the website for the City of Scottsdale and then compare the information on that site to the website for the City of Tucson. Particularly telling is the section of Scottsdale’s website that gives performance metrics and graphs on how its public works are performing, including its water department, which built a state-of-the art treatment plant that surpasses what Tucson has built.

I’ve written volumes on the reasons for Tucson being an economic laggard and having high poverty, high crime, low K-12 test scores, bad roads, and poor upkeep. The top reason is the political monopoly that has been misgoverning the city and county for decades. TEP being investor-owned is so far down the list of reasons that it almost falls off the list.

Mr. Cantoni can be reached at craigcantoni@gmail.com.