While so many Arizonans are preoccupied with COVID-19 numbers, Presidential bids, a destabilized economy and an uncertain school year, the already obscure Arizona Corporation Commission has quietly released their plan to impose California-style energy mandates in Arizona.
As drafted, the proposed energy mandate will lead to skyrocketing utility bills, ban future natural gas development and generation in Arizona, provide billions in subsidies and corporate welfare for inefficient and costly energy sources and ignores the will of the voters that have already spoken and oppose a statewide energy mandate.
The Commission is intentionally pushing controversial policies during a crisis
Aside from the multiple policy concerns the Club has with this proposal, it is extremely disconcerting and unfair to the ratepayers of Arizona that the commission is even considering moving forward with such a sweeping proposal during the current pandemic.
It is hard enough during normal times for citizens to engage in the byzantine format at the corporation commission. The entire process is confusing, lacks transparency and caters to the lawyers, lobbyists and political insiders who know how to use the system to their benefit.
Now, in the middle of a pandemic, the commission is forging ahead with sweeping new energy mandates while the public is focused on other critical issues. Even if the public was fully aware of what the commission is considering, due to social distancing and other Covid-19 restrictions, it is more difficult than ever for regular people to engage in the process. On the flipside, the insiders at the commission benefit from this arrangement because it amplifies their voice and influence at the commission.
Mandate will lead to higher utility bills
No matter how proponents attempt to spin this, imposing their own version of the Green New Deal will lead to higher utility bills for customers. This is because the proposal punishes any source of energy that does not meet this “clean” definition, irrespective of cost.
As has been pointed out by Commissioner Justin Olson in the past, the current 15% mandate imposed by the Commission in 2007 led to ratepayers overpaying for their electricity by over $1 Billion Dollars. This was caused largely by forcing utilities to adopt renewable energy sources with little regard to the cost of construction or generation. It is inevitable that this new proposal will suffer the same costly result.
This proposal does not require utility providers or the commission to prioritize affordability regarding clean energy sources. Instead it imposes large scale mandates for clean sources and ignores the cost implications for ratepayers.
The good news for supporters of clean energy technology is that ratepayer affordability can be prioritized while developing some types of clean energy. For example, industrial grade solar is now selling for as little as 3 cents/kilowatt when operating at peak levels, beating other fossil fuel competitors and nuclear. Industrial grade solar could easily be paired with other base load power sources (such as natural gas) that would be a win-win for ratepayers and supporters of clean energy.
Proposal Bans Future Natural Gas Development
It is clear from the staff proposal that the long-term goal of this clean energy mandate is to ban future fossil fuel use in Arizona, including the development and construction of natural gas power plants. Suffice to say this would be a huge mistake and very costly for ratepayers.
Natural gas has become one of the cheapest, most reliable and clean energy sources available in the United States. This is largely due to the fracking boom, which has guaranteed our energy security and independence for decades to come.
Additionally, natural gas is by far the most affordable and dependable fuel to use in conjunction with industrial grade solar. The idea that the commission is going to ban this source from future expansion is a disastrous policy decision that will damage both ratepayers and our economy.
Corporate Welfare for Rooftop Solar
Included in the energy mandate proposal is a requirement for clean energy generation to come from rooftop solar. It is difficult to see how the inclusion of this policy carve-out as a required clean energy source as anything more than a special interest giveaway to a politically connected group at the Commission.
Lazard is a nationally recognized firm that produces an annual report showing the true cost of energy production by different sources, both subsidized and unsubsidized. Not surprisingly, the report shows that natural gas, industrial grade solar and geothermal are the most cost-effective sources of energy. The most expensive? Residential Rooftop Solar. And it’s not even close.
Given the superior energy alternatives that exist (including various types of solar energy generation), it makes no sense to force ratepayers to pay higher utility bills to subsidize more rooftop solar. The only beneficiaries from this corporate welfare are the rooftop solar companies that will be cashing in on the mandate.
Proposed Rules Ignore the Will of the Voters
In November 2018, Arizona voters soundly rejected the idea of increasing renewable energy standards. Ratepayers recognized that increasing the renewable energy mandate would result in higher utility bills and potentially destabilize the power grid. That is why 68% of Arizona voters rejected the idea.
Yet the proposed energy rules and amendments being offered by Commissioner Burns and Kennedy are almost a carbon copy of what voters opposed. It appears they don’t care what voters think and that they know better.
Fortunately, we are still in the early stages of the rulemaking process at the Corporation Commission, which means voters still have time to have their voices heard. We cannot let the commission adopt their own version of the Green New Deal that will be disastrous for Arizona ratepayers and the economy.