Arizona energy regulators find compromise to revive 100% clean-energy requirements

Ryan Randazzo
Arizona Republic
Arizona utility regulators voted to require electric companies to get all of their electricity from carbon-free sources like solar, wind and nuclear power plants in 2070.

Arizona utility regulators voted Wednesday to require electric companies to get all of their electricity from carbon-free sources like solar, wind and nuclear power plants in 2070.

It has been a whipsaw year for the rules, which were pushed out 20 years from an earlier plan.

The bipartisan compromise at the Arizona Corporation Commission came just three weeks after the rules were killed following an initial approval last fall that was widely celebrated by environmental advocates.

Even though she supported the rules in the fall, Chairwoman Lea Márquez Peterson backed a change earlier this month to set simple "goals" for emissions reductions rather than "requirements" as supported by a host of advocacy groups.

The two Democrats on the five-member commission wouldn't go along with weakening the rules, which sunk them after years of effort to boost Arizona's use of renewable energy.

But Democrat Anna Tovar and Republican Jim O'Connor worked out a compromise to maintain the new energy rules as requirements while pushing back the date when utilities must get 100% carbon-free energy to Dec. 31, 2070, from the initial 2050 date proposed.

That compromise was good enough to bring in Democrat Sandra Kennedy for a 3-2 vote, with Márquez Peterson maintaining her opposition to requirements and Republican Justin Olson unmoved in his opposition to any rules dictating what type of energy is used to power the state.

The rules now will require utilities to reduce carbon emissions 50% in 2032, 65% in 2040, 80% in 2050, 95% in 2060 and 100% by Dec. 31, 2070.

O'Connor, who was elected to the commission last year, actually broke the stalemate over the new energy rules after the meeting when they failed on a 3-2 vote, when he said in a letter to fellow commissioners he was willing to support the rules being requirements if the dates could be moved.

“I think 100% is a smart target to shoot for, but I really believe the industry needs more time to get there," O'Connor said Wednesday before the vote. "That implies flexibility and again most importantly leaves the utility companies in control of how they construct their energy portfolios."

Along with several observers, O'Connor noted that electric companies like Arizona Public Service Co. and Tucson Electric Power are expecting to easily reduce emissions in the short term, while future generations will have to figure out how to get to 100%.

APS announced in January 2020 it would boost renewables and have carbon-free energy by 2050. TEP last year said it will retire all its coal plants in 12 years and be 80% carbon free by 2035.

"Let’s have them shooting high," O'Connor said. "Hopefully in the decades to come there will be very smart public servants in these jobs holding utilities accountable."

Kennedy didn't want to push out the 100% clean-energy date beyond 2050 but did so to prevent the rules from dying for the second time this month.

“I believe waiting until 2070 to achieve carbon free is completely unacceptable and ... is really out of step with known and accepted science," Kennedy said during Wednesday's meeting.

Later she added that she would support extending the date "to move the process along so we can move Arizona along.”

Olson has maintained throughout all hearings on the issue that he does not support any energy requirements on utilities because, he said, there is too much potential that they increase costs to consumers.

“Our primary goal, our primary constitutional mandate on the commission, is to ensure utilities are not charging rates that exceed a just and reasonable rate of return," Olson said.

Márquez Peterson said she simply couldn't support setting requirements rather than goals, even though she gave a yes vote for clean-energy requirements, with a 100% clean date of 2050, in November.

Prior to her vote in November, Márquez Peterson said she could not support the rules if they had a requirement for how much energy must come from renewable sources like solar and wind versus carbon-free sources, which includes renewables as well as efficiency and nuclear energy. The other commissioners supporting the rules accepted that change to ensure Márquez Peterson's support for the final vote earlier this month, but when that vote came around, she had new demands. 

Rules not final until vote in fall

The new rules update the Renewable Energy Standard and Tariff that an all-Republican commission passed in 2006 and requires utilities to get 15% of their power from renewables by 2025, as well as the 2010 energy-efficiency requirements for them to use efficiency measures to meet 22% of their energy demand by this year.

Also included in the rule package are requirements for how utilities plan and build new power plants or make deals to buy power from others. The changes make those plans more transparent.

The rules also include provisions for battery storage and efficiency projects.

The rules are not yet effective. Because the amendments made to the initial rules passed in fall, the commission now will accept public comments through Aug. 20 and will have additional hearings in the fall, when the commission can vote to finalize them.

Among those watching Wednesday's vote was Ceres, a nonprofit that works with large corporations to push for sustainability measures. More than 24 members had called on Arizona regulators to boost clean-energy requirements.

Ball Corp., Google, Microsoft, Salesforce and the Arizona Technology Council were among those encouraging stronger requirements in the state.

“These businesses have made bold commitments to reduce greenhouse gas emissions and transition to clean energy — and they know that to meet these goals they need smart, supportive policies,” Alli Gold Roberts, director of state policy at Ceres said in a statement after the vote. 

“While today’s decision is a step in the right direction, there is room to strengthen the clean-energy rules to ensure Arizona is in a position to capture these corporate clean energy investments," Gold Roberts said. "We look forward to continuing to work with the commission to further strengthen the state’s clean-energy policies in order to bring much needed cost saving and job benefits to Arizonans.”

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