Coyote Blog

Taking the economically illiterate but apparently politically powerful notion that it is important that commerce across arbitrarily selected geographic boundaries be minimized, some Arizona politicians are taking the argument to the next, ridiculous level:  Not content to blame perceived problems in the state economy (which has outperformed most other states) on NAFTA, Mexico, or Mexican immigrants, Arizona politicians are now blaming them on New Mexico.

An Arizona energy regulator is frustrated that Arizona Public Service
Co. is passing up in-state wind-energy for power from New Mexico and
Utah....

The state's largest utility buys 90 megawatts of energy from the
Aragonne Mesa Wind Project near Santa Rosa, N.M., and officials have
informed Corporation Commissioner Kris Mayes of plans to buy more
renewable energy from out of state, including from a Utah
geothermal-power plant.

"I am concerned that such out-of-state purchases hinder the development
of renewable energy here in Arizona, and potentially deprive our state
of much needed economic development," Mayes said in a letter to APS,
echoing concerns she raised at a regulatory meeting last week.

Of course, everyone knows that silly government energy mandates have much more growth potential than, say, low electrical rates.  So obviously the power company is just being treasonous in buying power from the cheapest sources:

When APS [one of our electric utilities] chose to buy power from the Aragonne project in New Mexico, it
rejected a similar proposal from a company that wanted to build a wind
farm in northern Arizona, which wasn't built because of the decision
from APS, Mayes said.

Brandt said the New Mexico project was better for customers.

"We put all these projects out with a competitive bid," Brandt said.
"Then we select the resource that comes out the best. It's not always
the cheapest. It's a combination of price, reliability and do-ability,
all the things a common businessperson would look at."

He said APS would rather support Arizona power projects, but so far those that have bid on power have not been competitive.

Of course, all of this, even taking the cheapest source, is more expensive than electricity would be without these mandates:

When the Corporation Commission approved the renewable-energy standard
in 2006, officials estimated it would raise an existing monthly tariff
on customer bills from less than 50 cents to $1.05 to help APS meet the
goal, but those projections have gone up. Regulators are expected to
set a new limit on the tariff in the next month, according to Mayes and
APS officials, with some proposals nearing $2.

The protectionist argument is summed up:

"This is Arizona ratepayer money that is currently going to other
states that ought to stay in Arizona," she said. "We are in an economic
downturn. It's a terrible time to be investing out of state."

Yes, yet another blow is struck against economic literacy and the concept of division of labor.  Just how arbitrarily small does a geographic area have to be before protectionists will accept that this area does not need to be self-sufficient of all products and services?