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ACC Staff Statement of Position on Retail Electric Competition
The following represents Staff's position on several significant issues related to retail
electric competition. Implementation of most of these positions will require revisions to the
The goals of the Arizona Corporation Commission are:
To avoid vertical and horizontal market power;
To provide Affected Utilities an opportunity for full recovery of stranded
To accurately assess the value of stranded cost;
To ensure fair and reasonable treatment of all consumers; and,
To ensure the financial viability of all Affected Utilities.
In order to accomplish these objectives, it is the policy of the Arizona Corporation
Commission to encourage full divestiture of generation assets. Generation assets include,
but are not limited to, generating plants, power purchase contracts, and fuel contracts.
Affected Utilities that voluntarily divest all generation assets shall have the opportunity to
recover 100% of unmitigated stranded cost. However, Affected Utilities are not required
to divest generation assets.
AStranded Cost@ means the verifiable net difference between:
The value of all the prudent jurisdictional assets and obligations necessary
to furnish electricity (such as generating plants, purchase power
contracts, fuel contracts, and regulatory assets), acquired or entered
into Y under traditional regulation of Affected Utilities; and
The market value of those assets and obligations directly attributed to the
introduction of competition.
Unmitigated stranded cost shall include reasonable costs necessarily incurred to effectuate
divestiture. In addition, unmitigated stranded cost shall include reasonable employee
severance and retraining costs necessitated by electric competition, where not otherwise
provided. Unmitigated stranded cost shall include reasonable costs associated with sale of
Each Affected Utility choosing divestiture must, no later than October 1, 1998, file a