THE IMPACT OF UTILITY DEREGULATION IN ARIZONA

Brian P. Macfie

Contemporary Economic Policy, 2008, vol. 26, issue 2, 335-350

Abstract: This analysis assesses Arizona’s short‐run price response to utility energy deregulation in the commercial and industrial sectors and the long‐term response to deregulated industrial utility prices. Using a standard utility industry approach, ordinary least squares regression confirms commercial/industrial utility prices remain inelastic and Arizona’s deregulation efforts have not effectively promoted short‐run price competition. Moreover, widening differences in utility rates could be a response to a stronger long‐run price elastic effect across states. The findings suggest states not aggressively deregulating utility price to narrow artificial comparative price advantages could be at a competitive disadvantage for interstate manufacturing investment. (JEL Q41, Q48, Q40)

Date: 2008
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