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Arizonan Siesta

Several more of these plants will soon dot the Arizona skyline.
courtesy of Tom Cole

I hope Mexico's statesmen are enjoying the sweet irony of it.

They've spent their whole political lives being called whores for America's bottom-feeding industries.

But here was this odd little shill named Jane Hull, down from the American state of Arizona, offering up her state for the filthy job of powering northern Mexico.

A few years ago, Arizonans were told that deregulating electricity would give them cheaper, cleaner power.

Instead, it's now clear that the real plan is to use Arizona's air, water and tax loopholes to build a power farm for Mexico.

How deliciously corrupt. How stereotypically Mexican. "Hey, gringo, if Mexico is Third World, does this make Jane Hull governor of the Fourth World?"

Last week, Hull and representatives of Arizona power companies were in Mexico City asking President Vicente Fox if they could build high-voltage lines to the border and sell Arizona electricity to Mexico.

At the same time, back in Phoenix, an attorney for Southwestern Power Group stood before the Arizona Corporation Commission begging approval for a power plant twice the size of Sun Devil Stadium. He said his company needed to build on the site halfway between Phoenix and Tucson, which happens to sit on an aquifer next to two scenic and ecological treasures, Ironwood Forest National Monument and Picacho Peak State Park.

If approved, both Picacho Peak and Ironwood National Monument would offer stunning, skybox-like views of the plant and its plumes.

The $1 billion, 1,800-megawatt Toltec plant, he claimed, would serve the fast-growing electric grids of Tucson and the East Valley of Phoenix. He said it was power produced by Arizonans to meet the critical needs of Arizonans.

It was an elegant job of lying. In reality, the attorney was the local hired gun for some Louisiana tycoons buried in an Enron-like Delaware limited-liability company that's clearly searching for the cheapest spot in the world to sell power to Mexico.

SRP, APS and Tucson Electric, the major electric providers in those areas, said they won't be buying Toltec's power. They won't need it because all three have gone hog wild overbuilding their own plants.

Thirteen power plants have been approved since 1998. Five more await approval, and three others will soon apply. Several existing plants plan expansions.

Other companies are watching to see how Arizonans take their raping.

In three years, Arizona likely could be producing three to four times more power than it needs.

Shell-shocked by blackouts and price spikes, California has continued its own mad scramble to cut peak demand, build power generation facilities and secure affordable long-term power. That market is no longer absurdly profitable for Arizona suppliers.

Mexico, on the other hand, is in a terrible bind. It is at least 5,000 megawatts short of the electricity needed in the northern part of the country and unable to come up with the $2 billion or $3 billion it would take to build the plants to meet that demand. And that demand is growing at a 7 percent per year clip. Mexico could be short 7,000 megawatts in five years.

Fox would like to solve this problem by opening up the state-controlled Mexican power grid to American power.

Hull, the power industry marionette who covets a Bush appointment, would love to oblige.

This is not what Arizonans were promised when they agreed to deregulation.

They were told breaking the power monopolies would promote competition to provide power to this state, not Mexico. As supply spurted ahead of demand, prices to Arizonans would drop, we were told. For the environment, market forces would cause dirty, inefficient power plants to be replaced by cheaper, cleaner natural-gas plants.

It was touted as a major win-win, and it might have all come true if Hull and power execs hadn't concocted a different plan.

Earlier this month, the corporation commission okayed construction of a massive 62-mile transmission line from near Tucson to the border of Mexico. Another company, Public Service Company of New Mexico, or PNM, wants to build a 1,000-megavolt line from the Palo Verde Nuclear Generating Station to Santa Ana, Sonora.

These proposed lines would connect to the proposed Toltec plant as it passes through much of southern Arizona's most scenic lands.

The general manager for the Toltec plant, Tom Wray, worked as a consultant for PNM. As a New Mexico senator, Wray also led the push to deregulate New Mexico's power grid to the benefit of PNM.

The attorney for Toltec, Larry Robertson, is a founding member of another consortium proposing a power plant on the Mexican border. Robertson also served as legal adviser to the Undersecretary of the U.S. Department of Energy. One of his jobs was reviewing federal permits allowing energy trading with Mexico.

The fix is on. Jane Hull knows all this. She's just not telling you.

That's because she knows the truth of the deal would infuriate Arizonans. Besides, it's arguably illegal.

Part of the Arizona Corporation Commission's job is to approve power plants.

Under state law, it must balance Arizona's need for reliable, affordable electricity with the plant's impact on the environment and resources of the state.

While off-peak sales to out-of-state utilities are implied and necessary, the law says nothing about balancing the impact on Arizona with new plant owners' desire to, as cheaply as possible, make billions selling power to the new market of Mexico.

To their credit, Corporation Commissioners Bill Mundell and Marc Spitzer appear to be seriously weighing this issue of need versus impact. They've denied one plant. Both of these Republican commissioners were critical of the Toltec plant in hearings.

Still, it's easy to be critical in hearings. It's hard to go against the leadership of your party both on the state and national level.

(Toltec was to be voted on Wednesday, after New Times had gone to print.)

Why aren't all these plants going to Nevada, California, New Mexico or Texas? Because we're the cheapest date around.

We became cheaper in 1999, when legislators led by archboondoggler Jeff Groscost, architect of the alternative fuels debacle, approved sweeping tax loopholes for utilities and merchant power plants.

In essence, laws were changed so that power plants wouldn't be taxed until the year after they are completed (others pay taxes during construction). Also, power plants are taxed only a fraction of the normal rate for the first five years of operation.

I ran the numbers with Arizona Department of Revenue accountants. Toltec alone will dodge $28 million in state taxes over the next seven years, we figured.

If all the plants that have approval are built, state coffers could lose about $300 million over the next five years.

And it could get even worse. The new tax laws regarding power plants are so vague regarding devaluation that revenue officials are bracing for a barrage of appeals on the taxable worth of these plants.

Can you say "Alt Fuels II"?

Basically, if Arizona's regulatory and tax structures are kept in place with a merchant-plant puppet as governor, Arizona is the most likely spot to become the power farm for the Northern Hemisphere.

See Jane salivate. She'd finally earn her wings in the Bush administration. And if she lands an appointment in time for Betsey Bayless to be appointed governor before the elections, all the better for pro-Bush, anti-McCain, anti-Sheriff Joe Arpaio Republicans.

Instead:

• The Arizona Legislature should place a one-year moratorium on the construction of power plants in Arizona. The people of Arizona and their leaders need to stop and rethink electric deregulation as well as the criteria by which merchant plants are allowed to be built in the state.

• The corporation commission staff needs more funding to pay for independent consultants to evaluate projects. The staff is overwhelmed and, regarding environmental issues, underqualified. This leaves the state at the mercy of consultants hired by the people seeking approval. Also, as Tim Hogan with the Arizona Center for Law in the Public Interest has argued, the commission must establish quantifiable guidelines to measure the power needs of Arizonans.

• Pay for commission consultants with money earned by closing the tax loopholes for power plants. Use the $60 million a year extra for schools and pay raises.

• Any new plants approved should be restricted to using "dry-cooling," a process that cools generators with fans rather than water. It's a proven technology that reduces emissions and saves water. The corporation commission has already forced one plant to use the process. All new plants in Nevada are dry-cooled.

If all the plants are allowed to be built, and the tax loopholes aren't filled, that's the fault of Arizonans. Maybe they deserve to live in a giant industrial park.

At that point, I'll just be concerned for Vicente Fox and the people of Mexico.

Caveat emptor, Señor Fox. Our governor's friends had a feeding frenzy in California until the meat ran out. I'd imagine northern Mexico is the next victim.

After all, as you know, sharks gotta swim to stay alive.


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