1,000 Foot Free Power Line Extension

Nov. 23, 2009

Transcript:

Ted Simons: An administrative law judge recommends that APS be allowed to raise its rates about $6 a month. The Arizona Corporation Commission is set to hear the case in early December. APS reached a settlement agreement on the rate hike with 22 of 24 parties in the case. One thing not included in the settlement is a request to return to the days of free powerline extensions. David Majure has more.

David Majure: Getting electricity to your property used to be free. As long as the property was within 1,000 feet of existing powerlines and the cost of a line extension was $25,000 or less, Arizona Public Service would make the connection at no cost to the landowner. The policy was an effort to promote growth. But in 2007, the Arizona corporation commission changed the policy that had been in effect for decades. The Arizona capital times quoted corporation commission chairman Kris Mayes as says we decided to eliminate the free footage allowance because we were concerned that utility rate payers were subsidizing log splitters and sprawl. Now the landowner must pay the entire cost of extending a powerline to its property. The expense is no longer passed on to our ratepayers. Critics say it's created a disincentive for growth because many landowners can no longer afford to build on their property. They say the policy is hurting the market for construction jobs, negatively impacted local tax revenues and causes property resale values to plummet.

Ted Simons: Joining me to talk about the free line extension policy -- Bobby Miller, a west valley Realtor who's representing Arizonans for Fair Power Policy, an organization that's pushing to reinstate free line extensions, and Sandy Bahr, director of the Grand Canyon chapter of the Sierra Club. Good to have you on "Horizon". 2007, power policy is reversed. Why is that a good idea?

Sandy Bahr: Because it ends a subsidy for urban sprawl. Something that's in place for a long time. Arizona has a lot of subsidies for sprawl and development. And finally, the corporation commission decided, look, the ratepayers should not be paying for the people who wanted -- the people who want the line extensions should pay for it.

Ted Simons: Why is it a bad idea?

Bobby Miller: It has a domino effect into too many areas of the community. The people who were subsidizing were paying 20 cents approximately per household, but the policy benefited an extreme number of rural Arizonans, as well as those who intend to go to rural Arizona and there's a domino effect that begins from the construction industry through 50 trades on down to mortgage industry, engineering, surveying, all the way into federal and state lands and the values of those.

Ted Simons: Let's start with the economic impact of this. You just heard Bobbie, this sounds like a killer as far as construction development is concerned. They have to be concerned.

Sandy Bahr: First of all, there's no indication that this has affected construction in anyway. The economic downturn has affected it, and the bottom line is if you already have a markets that is overbuilt, we have thousands and thousands of empty houses and thousands of lots that have been platted but that haven't been built on and so the argument that we need to encourage more building by subsidizing it, that doesn't hold much water. You know, yes, there has been an economic downturn, but I think if you ask most, they'll say growth ought to pay for itself, we've been subsidizing it for too long. This is a small way begin the process of paying for itself.

Ted Simons: The concept of growth paying for itself. That makes sense.

Bobby Miller: But it always has been there. Look at the industry we have in Arizona and discuss exactly what would be the largest industry. Is it semiconductors, anything beyond growth? I'd say no. I've been here my whole life since 1951 and watched growth be the most dominant industry and this has affected growth substantially and has the potential to stymie growth.

Sandy Bahr: There's no indication it's affected growth at all and so that is not an accurate statement. They presented their case to the corporation mission commission. The administrative law judge reviewed and they found no indication that this policy has affected growth at all.

Ted Simons: Doesn't it make sense if it's going to cost a homeowner, a developer, whomever, $20,000 more than what they're already paying, especially in rural areas, doesn't that sound like a chilling effect, even in areas that are already developed but not to 1,000 feet?

Sandy Bahr: Well, first of all, in most places it's not going to cost that much. If you have them pay for the sewers, it gets incorporated into the cost of the home and the mortgage. And there were, by the way, other provisions in the rate case, there was an impact fee under consideration and several things that APS backed off on and the bottom line, it's a basic question of fairness. Should all of the APS ratepayers have to subsidize someone's mansion in the woods?

Ted Simons: That's the basic question. Should everyone pay for a powerline extension for that other person? Why should I have to pay for that?

Bobby Miller: I have been since 1954, and I didn't hear anyone complain. All of the relatives in the industries I spoke of related to growth from any way are affected by that. She says it has no impact. She doesn't sell land. I sell land. I'm not selling land.

Sandy Bahr: You cannot blame an economic downturn on this policy. It does not pass the laugh test.

Ted Simons: Go ahead, respond to that, please.

Sandy Bahr: I thought you were done.

Bobby Miller: I'm not done. This is not an economic downturn effect.

Bobby Miller: There's a lot of people who have lost their homes but own a piece of property that would gladly put a rural home or a manufactured home on that land and make that move out to rural Arizona. They cannot do it. Quite frankly, we've had four quotes for an 800-foot extension, it was $25,400, to 130 foot extension, it was 11,800. And for property line power just delivered to a home that used to be free, all of these were free in the past, it now costs $7,800 for property line power. The fact of the matter is this has been major effect for my clients, the people I see every day. I don't lobby at the state capitol. I talk to people who want to buy, sell and live in Arizona.

Sandy Bahr: The Realtors lobby at the state capitol and for a very long time, the Realtors, and the Realtors' association, the homebuilders association, have opposed any efforts to have growth pay for itself. There's more money in their pocket if the rest us pay for it. It's a basic issue of fairness. And maybe at one time, there was a good reason for it, but there are a lot of policies that don't make sense. One would say we don't need to subsidize growth anymore. Continuing to focus purely on growth and having an economy that relies too heavily on it, has brought us to this situation and it's going to take a long time to dig out.

Ted Simons: This particular situation suggests if one person is hit with this, regardless of the cost, it's going to cost something to get the power out there, 1,000 feet, more or less, if they pay for it, aren't they subsidizing for everyone else that comes after them?

Bobby Miller: That's correct, Ted. That person intends to keep doing things but having the power grid completely growing and gives everybody else an opportunity to tie in. Which has always been the case. That's one of the reasons rural Arizona has done so well, when you go to the mountains, there are beautiful communities that have paid their way and beautiful communities up at Anthem and the southwest valley, all the way down to Buckeye that have filled in those communities with power at their own expense that has worked for the last 50 years.

Sandy Bahr: And the ratepayers and taxpayers have heavily subsidized those communities in many way, not just with extension of electric lines but roads and other service services and the people of Arizona have said repeatedly we think that growth should pay for itself. We need to turn this around. This is one small step to do that. You know, we -- we need to begin now to move this back and have -- and have development pay for itself and -- and you know, I would again argue that the economic downturn has more do with a lot of land speculation and over-supply and the problems with the mortgages and foreclosures and this is just a really small piece of the pie but it's an important one if you're an APS ratepayer. By the way Tucson electric power ended this and Unisource and all those other utilities have ended this policy. And it's a basic issue of fairness and, yes, the Realtors want us to continue to pay their freight.

Bobby Miller: That's not true. Salt River project --

Sandy Bahr: They're not regulated by the corporation commission.

Bobby Miller: And quite frankly, a lot of statements she made were erroneous. I grew up on Bethany home road when there was nothing beyond my home. If the policy that the Sierra club presented back in 2000, prop 202, would have gone through, which is a lot like this policy, I would have seen no growth in Phoenix in my lifetime. We grow here and develop here and so much of our industry depends on the continued growth and continueddevelopment which this policy has been snuck under the radar in 2007. We at this table may have been aware of it, but the common people in the general populace weren't aware of what happened with the corporation commission diminishing this particular policy. And it needs to brought forth and let the people decide. Which was a 2-1 vote against the Sierra club.

Ted Simons: Very quickly, we don't have much time left. Is there compromise on this issue? Can you cap a fee? Doing something halfway? Kansas and Iowa and these other places which seem to have less than the cap we have here.

Bobby Miller: By all means, common sense will always prevail. It's something that we need to sit down and make sure that all have the opportunity to see, rather than having a small sector sneak it under the radar.

Sandy Bahr: Talk about a small sector, the Realtors are professionals at this. We have subsidized this for far too long. The corporation made a wise decision in 2007. They should keep it in place. It's a good settlement for the ratepayers of APS.

Bobby Miller: I respectfully disagree.

Ted Simons: We have you both on camera and record. Thank you for joining us on "Horizon."