PHOENIX — A Senate panel voted along party lines Wednesday to strip the Arizona Corporation Commission of its power to set energy policy for utilities.
In doing so, it rejected arguments about economic development, clean air and constitutional issues.
The 6-4 vote by the Senate Appropriations Committee, with Democrats opposed, followed arguments by Rep. Gail Griffin that it was wrong of the independently elected utility regulators to propose that half of the state’s energy be generated by carbon-free sources by 2035 and that power be totally carbon-free by 2050.
Griffin, a Hereford Republican, said the commissioners failed to consider the cost implications for consumers of having to give up on coal- and gas-fired power plants.
That contention was questioned by several witnesses, some of whom represent those involved in solar technology, who said wind and solar are now less expensive.
But the real question is whether lawmakers have the power to wrest authority from the regulators.
Constitutional questions
Griffin is relying on a ruling last year by the Arizona Supreme Court dealing with a fight over control of Johnson Utilities.
In that ruling, the justices said the Arizona Constitution gives commissioners absolute power to set rates. But they said authority over health and safety questions is shared with the Legislature.
House Bill 2248 amounts to the Legislature asserting what it says is its right to overrule the regulators.
That legal conclusion, however, may not be entirely correct.
The 2020 case did not directly challenge the authority of the commission to determine renewable energy standards, said Amanda Ormond, a consultant who used to run the state energy office.
She said that issue was specifically addressed in a 2011 ruling of the state Supreme Court, which concluded the regulators were free to require utilities to buy or generate power from solar, wind and other sources — even if that costs more for ratepayers.
Also, Sen. Lisa Otondo, D-Yuma, said she has an opinion from legislative lawyers who say this bill — preempting carbon-emission standards enacted by the commission — would be unconstitutional.
APS opposes the bill
Of note is that none of the state’s major investor-owned utilities, the firms that have to live under the commission rules, have testified in support of the measure.
In fact, Arizona Public Service, the state’s largest electric supplier, is actively opposing HB 2248, saying it would create “legal and regulatory uncertainties” and arguing that “energy policy is within the purview of the Arizona Corporation Commission.”
In a formal statement of opposition, the company said the 2020 Supreme Court decision — the one on which Griffin is relying — is ambiguous.
APS already has plans to be carbon-free by 2050. Those plans include nuclear power.
And Tucson Electric Power, which has no stake in a nuclear power plant, said it will have 70% of its power from renewable sources by 2035.
Griffin was undeterred.
“Nowhere does it give the Corporation Commission the authority to make energy policy,” she said.
Griffin said the commissioners ignored key issues in adopting their latest goals.
“The commission adopted energy rules without producing or evaluating proposed financial impacts the proposed rules would have on its ratepayers,” she said, calling that “unacceptable.”
“That’s who we represent, the ratepayers,” Griffin said.
Health, economic issues raised
JoAnna Struther of the Arizona Lung Association said she sees the legislation through a different lens. She said the measure “will set back clean-energy programs that will improve air quality and create a healthy climate for all Arizonans.”
“This bill would reverse progress towards cleaner air and can have serious consequences on air quality standards and our health,” Struther said, saying it “endangers public health.”
Shelby Stults with Advanced Energy Economy, a trade group representing those involved in new technology, said scrapping the new standards would put more than 41,000 jobs at risk.
Griffin’s measure pretty much leaves in place the original standards adopted by the commission more than a decade ago. Her bill would require utilities to have 15% of energy from renewable resources by 2026.
But it would leave any further adjustments in the hands of future legislators.
It also would put Arizona behind many other states in the region, according to information from the National Conference of State Legislatures.
In California, for example, utilities are supposed to reach 100% clean energy by 2045.
New Mexico has a zero-carbon standard by 2045, with Nevada having that same goal in 2050.
But Utah has a renewable portfolio goal, essentially a voluntary target, of 20% by 2025.
Key GOP senator has concerns
The bill, which already cleared the House, faces an uncertain future when it goes to the full Senate.
Sen. Paul Boyer, R-Glendale, has publicly questioned the wisdom of having the Arizona Legislature, which has no full-time staff devoted to energy policy, in charge of reviewing future changes.
With all Democrats opposed, Republicans would need all 16 of GOP senators to support the measure to have it approved.
