By Corinne Murdock |
A vote by the Arizona Corporation Commission (ACC) earlier this week moved to limit energy companies’ push to meet Environmental, Social, Governance (ESG) goals.
The ACC voted 4-1 on Tuesday to draft rules to repeal existing rules and mandates for renewable energy as well as electric and gas energy efficiency: the Renewable Energy Standard and Tariff (REST) Rules and the Energy Efficiency Standards (EE), also known as the Demand Side Management (DSM). Per the commission, the rules and mandates for REST and EE/DSM resulted in incentives for renewable energy projects and services, since utilities were required to file proposals describing REST compliance.
Commissioner Ana Tovar was the sole “no” vote on the motions. The standards behind EE/DSM expired in 2020, but previous commissions didn’t repeal the rule.
The commission noted in Wednesday and Thursday press releases that the rules, tracing back to 2006 for REST and 2010 for EE/DSM, have cost customers nearly $3.4 billion through corresponding surcharges. REST surcharges have cost ratepayers nearly $2.3 billion, while EE/DSM surcharges cost nearly $1.1 billion.
Commissioner Nick Myers said in Wednesday’s press release that the rules and mandates were unnecessary and would result in a drastic cost increase to consumers.
“I believe it is time for the Commission to consider repealing these rules and mandates that appear to unnecessarily drive-up costs,” said Myers. “Utilities should select the most cost-effective energy mix to provide reliable and affordable service, without being constrained by government-imposed mandates that make it more expensive for their customers.”
In Thursday’s press release, Chairman Jim O’Connor — who filed the motion to repeal REST — said that the commissioners from nearly 20 years ago were “well-intentioned” in their vision for reducing the state’s carbon footprint through the REST rules, but that no cost controls were ever implemented, at the detriment of ratepayers.
“In 2006 when the REST rules supplanted the EPS rule, concerns by the dissenting Commissioner cited the lack of cost control measure that would negatively impact ratepayers, and the then-Chairman Hatch-Miller intended that the Commission review annually whether it was in the best interest of the ratepayers. Those reviews never occurred and costs were never considered,” said O’Connor.
O’Connor further remarked that contracts in pursuit of environmental mandates ultimately burdened the ratepayers.
“We began the steps needed to repeal a rule that has cost ratepayers billions of dollars in out of market priced contracts,” said O’Connor. “Mandates distort market signals and are not protective of ratepayers.”
Commissioner Kevin Thompson — who filed the motion to repeal EE/DSM — stated in the press release that the repeal marked a victory for ratepayers, and the end of “feel-good programs” that lack affordability and reliability.
“Arizona utilities have collected over a billion dollars in ratepayer surcharges for efficiency initiatives that have done little to avoid the need for new generation and have benefitted a select few,” said Thompson. “Energy efficiency programs are routinely pushed by vocal special interest groups where the economic benefits favor a small group of customers, and the large majority of ratepayers foot the bill.”
Prior to the ACC acting on the draft rules, the commission will open up multiple public comment opportunities. The draft rules and intake for public comment will be located on the following ACC dockets: gas utility energy efficiency, electric utility energy efficiency, and renewable energy.
The entire rulemaking process will take over a year, according to commission staff. The REST and EE/DSM repeal are part of a greater, five-year review of existing ACC rule packages.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
