State clean-energy goals may get biggest boost since 2006
Arizona utility regulators are proposing a substantial increase in renewable energy requirements, mandating that utilities eventually get all their power from carbon-free sources.
The proposal, unveiled late Friday, captivated the environmental interest groups that have long sought to bolster the state’s renewable-energy rules, which were imposed in 2006. It also would put Arizona more in line with many of its Western neighbors.
The Arizona Corporation Commission — five elected regulators who set rates and policies for utilities — already was considering one proposal to boost the standard, then two commissioners, Republican Chairman Robert Burns and Democrat Sandra Kennedy, submitted their own proposal for an even more ambitious increase. Both proposals could be voted on Thursday.
They propose 50% of the state’s electricity come from renewables by 2030, that 100% be carbon-emission free by 2050 and that 35% of Arizona’s electricity demand is met with energy efficiency measures by 2030 and thereafter.
Arizona already has a requirement that electric utilities get 15% of their power from renewables like solar and wind by 2025. It was enacted in 2006, with interim steps to get there. This year, they are required to get 10% of their energy from such sources.
A subsequent rule passed in 2010 by the Arizona Corporation Commission requires utilities to meet 22% of energy demand by this year through energy efficiency measures.
Arizona’s requirements were keeping up with the times when they passed, but California, Colorado, Montana, Nevada, New Mexico, Oregon and Washington all have more ambitious renewable or carbon-free energy targets today, passed by their lawmakers or by voters.
Corporation Commissioners began moving to increase the standard four years ago, and those efforts eventually led to the staff proposal that is scheduled for a Thursday vote.
Arizona voters rejected a clean-energy ballot initiative in 2018, and more often, state lawmakers in the Republican
majority Legislature have sought to undo the existing renewable requirement, rather than boost it.
The Burns-Kennedy proposal has nearly everything clean-energy advocates could ask for, said Amanda Ormond, director of Western Grid Group, a clean energy advocacy organization.
Her group submitted a proposal to boost the clean-energy requirements to the Corporation Commission 18 months ago, and that proposal now has 32 signing organizations, representing environmental, faith-based, public health, Hispanic, tribal, voter-rights, solar, efficiency, economic-development and youth groups.
“For Western Grid Group, we are thrilled with this development,” Ormond said Monday on a conference call with reporters. “It has most all the elements the joint stakeholders asked for. We are going to be supporting this amendment.”
The idea has the support of some large utility customers in the state and does not appear to have substantial opposition from the state utilities, either, which were instrumental in defeating the 2018 ballot initiative.
Arizona Public Service, the largest utility in the state with about 1.2 million customers, offered general support for the commission staff proposal and said in a letter to commissioners it would be prepared to discuss the more aggressive Burns-Kennedy proposal Thursday.
The staff proposal calls for 50% renewables by 2035, rather than 2030 in the Burns-Kennedy plan, but the plans have various other differences in the details, with the Burns-Kennedy plan being more prescriptive in which resources need to be used. Both plans call for 100% clean energy by 2050, but the staff plan has a carve out for customerowned batteries.
APS has already pledged to offer 100% carbon-free energy by 2050 and to substantially ramp up its renewables beyond the current state mandate. It made this pledge after helping defeat the 2018 ballot initiative.
APS runs the Palo Verde Nuclear Generating Station west of Phoenix, the biggest nuclear plant in the nation and the biggest power producer of any kind in the country. (The Grand Coulee Dam on the Columbia River can make more power at once, but the output is seasonal, and Palo Verde generates more power over the entire year.)
APS co-owns Palo Verde with other utilities but owns the biggest stake. As such, APS has long supported counting carbon-free nuclear energy toward clean-energy goals.
“APS also believes focusing on carbon emissions and overall carbon reductions is the most effective way to make progress towards a clean energy future,” the company said in response to the staff proposal.
While APS generally supports the direction towards more renewables and clean energy, the company has concerns about how the commission might approve what power sources get built and whether it will allow the utility to recover the cost of meeting higher renewable-energy goals.
Tucson Electric Power Co. and its gas and electric affiliates in the state endorsed the staff proposals for more clean energy, saying they “provide a flexible glide path for advancing cleanenergy policy for Arizona.”
Small electric cooperatives in the state, which get most of their electricity from a large coal and gas plant in southern Arizona, have said they generally support the staff’s plan, but have not had enough time to consider the BurnsKennedy
proposal.
And they are concerned the plans may be too rigid for them to meet the requirements.
The rooftop solar industry endorses the Burns-Kennedy plan but has asked for the inclusion of additional incentives to help people buy residential solar and battery systems.
The Residential Utility Consumer Office, a state agency created by the Legislature to intervene in such cases on behalf of customers, has taken issue with the staff proposal, and is likely to have the same concerns with the Burns-Kennedy proposal.
“The commission should not put a proverbial thumb on the scale and engage in regulatory favoritism,” Director Jordy Fuentes wrote to the commission.
He said he was concerned with provisions that help specific industries and the potential costs to consumers. He said specific targets for renewable and clean energy are “unneeded and engages in regulatory favoritism towards specific energy technologies.”
Gov. Doug Ducey appointed Fuentes to his position last year.
Opposition to the proposals also comes from the Western States Petroleum Association, which represents natural-gas companies, counting Shell, Chevron, Exxon and Valero among its members. The group said the commission should not pick winners and losers in the energy industry, and is predictably frustrated that its products would be left out of the 100% clean-energy goal.
In addition to increasing the use of renewables, the Burns-Kennedy proposal essentially overhauls how utilities plan for customers’ future electricity demand and how they will supply that power.
Instead of a special tariff to fund renewables and another for energy efficiency, the investments in alternative energy would simply be rolled into each utilities’ rates.
What this means is that planning for renewables would be central to how utilities meet customer demand, not a one-off side project to that responsibility.
Regulators still would review the investments to determine if they are prudent and necessary.
The Burns-Kennedy proposal also is detailed in how utilities can meet the requirements.
Along with solar and wind, the proposal includes energy sources such as biogas from landfills and trees cut from forests, so long as they are less than 12 inches in diameter.
Nuclear energy is not considered “renewable,” but it is considered a “clean energy resource” in the Burns-Kennedy plan to recognize it’s ability to provide energy without carbon emissions, which contribute to climate change.
Arizona has seen myriad disputes in the last decade over many of these alternative energy sources.
A portion of the renewable energy would need to come from “distributed” sources such as rooftop solar, rather than centralized power plants. That requirement tops out at 10% of the renewable portion of the supply by 2030 and thereafter.
And finally, the amount of power needed to supply a utility’s customers would need to be reduced by “cost effective” energy efficiency measures, such as helping customers acquire programmable thermostats or low-power light bulbs.
The proposal also would require utilities to create incentives for people to install batteries on their property to store energy.