Arizona regulator warns that APS, Tucson Electric renewable overbuild could cost customers

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Diving letter:

• The Head of the Arizona Corporation Commission (ACC) warned fellow commissioners that utilities run the risk of overbuilding renewable resources at the cost of the fee payers and urged them to consider the risk when reviewing their pending Integrated Resource Plans (IRPs).
• In a letter on Wednesday, ACC Chair Lea Márquez Peterson wrote that the Commission’s actions over the past four years could be seen as “a relentless effort to expand renewable energies regardless of cost to consumers or actual grid demand”. Recognizing or approving renewable energy, proposed in the 2019 utilities IRPs “without first taking action to protect tariff payers,” would amount to “giving utilities an unrestricted license to overbuild,” she said.
• Adam Stafford, Personnel Attorney for the Clean Energy Program at Western Resource Advocates, said the letter “misunderstands” the goals of the IRP process, particularly given Arizona’s growing population and business base. Instead of restricting the expansion of renewable energies, ACC could focus on enabling competitive tenders for new power generation that would reduce the impact on tariffs for customers, according to Stafford.

Dive Insight:

In May the ACC voted against a proposal that would have set a 100% clean energy target for the state by 2050 and is now taking into account a longer term until 2070 for the clean energy benchmark. A decision on this plan could be made this month.

However, the state utilities have their own plans. The Arizona Public Service (APS) says it will achieve it 100% clean energy by 2050 and Tucson Electric Power (TEP) says it will come 70% of its performance from renewable sources by 2035.

However, Peterson’s letter warns that utility investment in renewable energy “is likely to be the next iteration of utility overbuilding.” Utilities, she said, built too much coal in the 1970s, nuclear power plants in the 1980s, and most recently natural gas plants in the early 2000s. As a reminder that the main purpose of ACC in reviewing IRPs is to “protect fee payers from the adverse effects of overbuilding on utilities,” Peterson said commissioners should be vigilant over the 2019-2021 planning cycle.

“Since it is likely that utilities will adapt previous superstructure practices to align them with the prevailing public policy objectives of our time, rather than discontinuing such superstructure practices altogether, the utilities and financially interested stakeholders who might benefit from the superstructure can seek advantages draw the 2019-2021 planning cycle as an opportunity to expand renewable energies in the name of a “cleaner energy mix” or “transition” to a “clean energy economy,” ”she wrote.

APS and TEP did not respond to inquiries about Peterson’s letter before press time.

A Analysis of Ascend Analytics The estimate, released in August, estimated that a clean energy mandate in Arizona could add about $ 60 a month to utility bills by 2050, though it conceded that new technology could lower overall costs.

The letter also comes a little over a month later ACC refuses APS from repaying some utility investments in a decision to lower GSP rates. The utility described the decision as “short-sighted” and threatened legal action as customer costs would increase in the long term.

Ellen Zuckerman, utility program director for the Southwest Energy Efficiency Project (SWEEP), said her organization was “very attentive to the issues that the Chair raised”. Zuckerman referred to analyzes of the PULSE and APS Resource plans by Strategen Consulting on behalf of SWEEP, who found that increasing renewable capacities is the most cost-effective and sustainable way for any energy company.

“The good news is that these analyzes underscore that expanded investments in clean energy, including energy efficiency and solar power, are in the best economic interests of all Arizonans and are significantly cheaper than continued investments in fossil resources, which are a significant stranded risk for all of us Represent costs. ” “, Said Zuckermann.

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