Arizona regulators may impose big boost in energy requirements — 100% clean energy by 2050

Ryan Randazzo
Arizona Republic
A television ad states: "California tried the clean energy mandate and their rates are increasing three times the national average." AZ Fact Check takes a look.

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.

APS generally supportive, but some detractors

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 that 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 customer-owned 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 clean-energy policy for Arizona."

"The draft rules are fair, balanced, and achievable," TEP said, though it had not filed comments specifically addressing the Burns-Kennedy proposal by Wednesday.

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 Burns-Kennedy 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.

Batteries are an increasingly important component for adding more renewables to the power grid in Arizona and elsewhere. Batteries can store electricity made by solar panels during daylight hours to be used when the sun sets.

A group of solar interests, including Sunrun, the Arizona Solar Energy Industries Association, Solar United Neighbors, Vote Solar and Coalition for Community Solar Access, said the Burns-Kennedy proposal should include a requirement for a percentage of energy to come from distributed energy storage, which means small batteries owned by customers rather than large ones owned by utilities.

A day ahead of the vote, On Semiconductor in Phoenix, the Arizona Technology Council, which has 750 members in the state, aluminum manufacturer Ball Corp. and nine other large companies issued a joint endorsement of energy requirements like those in the Burns-Kennedy proposal.

They cited research from sustainability nonprofit Ceres that indicates Arizona utility customers saved $2 billion from 2008 to 2018 because of the existing renewable-energy rules, which spurred many solar and wind projects in the state.

"A growing number of companies, both large and small, have set goals to reduce greenhouse gas emissions, procure renewable energy, and invest in energy efficiency," their letter said. "Clean energy helps businesses save money, hedge against volatile fuel prices, and stay competitive."

RUCO, petroleum group opposed

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.

"Prematurely choosing what resources should service Arizona will eliminate the ability for utilities to choose the most cost-effective option, thus leading to higher rates for customers in the future, and may ultimately impair reliability," the petroleum group wrote to the commission.

The group is proposing that utilities be allowed to continue using natural-gas fueled power plants.

Clean-energy advocates warn that building new natural-gas plants today will make it harder to meet goals such as a 100% clean-energy supply in 2050, because once built, power plants are expected to remain in service for decades.

Falling in line with other Western states

The proposals would bring Arizona's clean-energy requirements more in line with its neighbors.

Here are the requirements in other Western states:

  • California: 60% renewables by 2030 and 100% carbon-free by 2045. Approved by the Legislature.
  • Colorado: 30% renewables by 2020, passed by voter initiative, plus governor's intent to go 100% renewables by 2040.
  • Idaho: No requirements, but more than half the state's power comes from renewable hydropower.
  • Montana: 15% renewables by 2015, passed by Legislature.
  • Nevada: 50% renewables by 2030, passed by Legislature, with a goal of 100% carbon free by 2050.
  • New Mexico: 50% renewables by 2030, passed by Legislature, and 100% carbon free by 2045.
  • Oregon: 50% renewables by 2040, passed by Legislature,
  • Utah: 20% renewables by 2025 if it is cost effective, passed by Legislature as a goal and not a mandate.
  • Washington: 15% renewables and efficiency by 2020 and 100% clean by 2045, passed by ballot initiative and reinforced by Legislature.
  • Wyoming: No state requirement, but wind projects in this state aim to supply other Western states.

What do Burns, Kennedy propose?

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.

Energy efficiency is widely recognized as the least expensive way to meet energy demand because rather than generating electricity to serve customers, such efforts help customers avoid the need to use as much electricity as they otherwise would.

The proposal also would require utilities to create incentives for people to install batteries on their property to store energy.

One of the biggest changes to the rules suggested by Burns and Kennedy is eliminating the special fees utilities use to recover the cost of investing in alternative energy.

Today, those fees are special line items on customer bills and must be approved by the regulators when they review the projects utilities invest in each year to meet the mandates.

Combined, the tariffs for renewables and efficiency add about $3.50 to the average monthly residential bill for APS customers. Each utility has separate fees based on their own renewable and efficiency programs.

If the commissioners approve the Burns-Kennedy plan, or any substantial variation to the current rules, it will require a hearing process before an administrative-law judge to ensure the rules are appropriate before they take effect.

A proposed schedule by the commission includes hearings in September and a final report from the commission staff in October before the new rules would be finalized.

How might commissioners vote?

With five commissioners, a simply majority vote of three in favor of the changes is all that is needed to enact new rules. For major policy decisions such as this, they might seek a unanimous vote, or at least a stronger referendum than a simple majority, but it's not necessary.

The current renewable rule passed in 2006 on a 4-1 vote with one Republican dissenting.

Commissioners generally decline to discuss pending matters before them because their role is quasi-judicial and if they are accused of prejudging an issue they may be asked to abstain from voting on it.

The latest proposal comes from the chairman and the only Democrat on the commission, so their votes in favor of raising the renewable-energy standard seem likely.

That leaves them in need of at least one more vote.

Commissioner Boyd Dunn at previous hearings on the subject has said he supports a clean energy standard of 85% by 2050.

Now that APS has pledged to go beyond that with a 100% clean energy portfolio by 2050, without a directive from the regulators, Dunn seems most likely to join Burns and Kennedy to support the latest proposal.

Dunn is in the final year of his four-year term and can't run for re-election this year because he did not get the required signatures to run again.

Commissioner Lea Marquez Peterson also has previously said she supports raising the renewable-energy requirements, but has been hesitant to vote for such issues, being the newest member of the commission after Ducey appointed her a little more than a year ago.

Marquez Peterson is running for election this year, which may play into her vote.

Commissioner Justin Olson has said he supports competitive bidding from power plants to provide customers the cheapest electricity, not further mandates on the type of electricity utilities need to provide. Olson won his seat in 2018 and is not on the ballot this year.

Based on his prior statements it seems unlikely he would support a prescriptive plan to increase the use of renewables.

Reach reporter Ryan Randazzo at or 602-444-4331. Follow him on Twitter @UtilityReporter.

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