The Arizona Corporation Commission has passed landmark new energy rules requiring state-regulated utilities to get 100% of their power from carbon-free sources by 2050 — but the panel rejected any specific mandate for renewable energy like solar and wind.
The new rules — which still need to go through a final rulemaking process before a new commission in January — also set new requirements for energy storage and energy efficiency gains for power-generating utilities including Tucson Electric Power Co. and Arizona Public Service Co.,
Prior to the final 4-1 vote, the regulators deleted a proposed mandate that the utilities get at least 50% of their power from renewable sources by 2035.
The rules count power from APS’s Palo Verde nuclear plant as a carbon-free “clean energy” source and replace the state’s current renewable-energy standard, which requires utilities to get 15% of their power from renewables by 2025.
The rules will bring Arizona more in line with other states that have significantly beefed up their clean-energy mandates since Arizona adopted its initial rules in 2006.
Commissioners Boyd Dunn and Sandra Kennedy said the new rules will also boost economic development in the state.
“It certainly addresses the environmental concerns we all have, but it’s also an economic driver for the state of Arizona,” said Dunn, a Republican who will step down from the utility panel in January.
Kennedy, a Democrat who was a prime mover in incorporating emission standards and other features backed by a coalition of environmental and consumer groups in the final rules, agreed.
“This is a job creator and economic engine for our state and will also benefit ratepayers,” she said.
But Commissioner Justin Olson, the sole “no” vote on the new rules, said the new rules will impose higher costs on ratepayers and need further consideration.
He said the former renewable-energy rules have cost ratepayers more than $1 billion in APS territory alone and cited huge increases in power rates in California since that state set a goal of 100% zero-emission energy by 2045.
“We should not be putting an additional burden on ratepayers with these mandates,” said Olson, who unsuccessfully pushed an amendment to limit excess spending by the utilities to comply with the rules to $2 million annually.
The rules require the utilities to cut their carbon emissions in steps to at least 50% by 2032 and 75% by 2040, reaching 100% by 2050.
The new rules also:
• Require the installation of energy-storage systems with an overall capacity of 5% of each utility’s peak demand by 2035, with 40% to be customer-owned or -leased systems.
• Require the utilities to implement enough energy-saving measures by 2030 to offset 35% of their 2020 peak demand, up from an existing requirement to use efficiency measures to meet 22% of their energy demand by this year.
• Replace the current resource-planning process with a new process that requires each utility, guided by an advisory committee made up of stakeholders including ratepayer representatives, and then open an “all-source” bid process to acquire enough power generation to meet forecast demand within the rules.
The rules still require a final rulemaking procedure and some elements could be changed by a new Corporation Commission that will be seated in January.
Though Kennedy will remain and Democrats gained a new seat on the commission with the apparent election of Anna Tovar, the panel's new Republican majority includes Jim O'Connor, who has said he opposes green-energy mandates.
