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.”
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.
A coalition of grassroots advocacy groups is asking the Arizona Corporation Commission (ACC) to reject Environmental, Social, and Governance (ESG) efforts by energy companies, citing the impact to consumer well-being.
In a letter sent last week, representatives of Heritage Action for America, EZAZ, and Heartland Impact, led by the Arizona Free Enterprise Club (AFEC), expressed concern for the impact on utility rates and energy reliability that ESG implementation poses under plans submitted by APS, TEP, and UNS. The grassroots claimed that the three companies have deprioritized cost and efficiency in pursuit of voluntary climate goals.
“The Commission has a constitutional obligation to ensure just and reasonable rates and a statutory duty to ensure adequate provision of service,” stated the organizations. “That means ensuring reliable, affordable, and plentiful energy in the state, which should be the mission of this Commission. But these ideological environmental commitments do the opposite, and for that reason, they should be rejected.”
The grassroots leaders also expressed concern with the relationship between ESG and a greater political agenda to achieve “net zero” carbon emissions by 2050. In order to achieve net zero, companies would have to drastically reduce, if not eliminate totally, usage of coal, gas, and oil in exchange for renewable energies such as solar and wind.
In their letter, the organizations pointed out the intermittency — and therefore unreliability — of renewable energies. They referenced the power failures and high rates experienced by states and countries further along in their net zero journey, citing specifically California, Texas, and Germany.
The grassroots leaders maintained that ACC has the authority to prevent energy companies from quitting traditional energies and using ratepayer funds to subsidize renewables.
Utility companies previously rejected an increased reliance on renewable energies as recently as 2018, the letter noted, over concerns that such a move would greatly increase costs for ratepayers. They also cited 2021 ACC cost analysis, which found in part that a total transition to renewables could incur a $6 billion cost to ratepayers, averaging hundreds of dollars more a month, by 2050.
Last year, AFEC issued an analysis comparing the energy mandates of the 10 states with the highest electricity rates and 10 states with the lowest electricity rates. Per that report, nine of the 10 states with the highest rates had some form of mandates requiring renewable energy usage, while seven of the 10 states with the lowest rates had no mandates at all.
The report estimated that states with renewable energy mandates paid, on average, close to double what their peers in mandate-free states paid.
In a press release, AFEC President Scot Mussi blamed leftist politicians for the ESG push.
“Liberal activists and politicians in Arizona are seeking to harm our energy future, freedoms, and choices by forcing their radical and failed ESG policies on consumers,” said Mussi.
As AZ Free News reported last November, the executives overseeing those three companies have financial incentives to meet ESG criteria.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
If someone wants to own an electric vehicle (EV), it is perfectly within their right to do so. That’s what it means to have freedom. But EV owners should be the ones to bear the burden of any costs associated with the necessary infrastructure improvements. And they should absolutely be responsible for paying for any excessive demand placed on the grid.
But that’s not the way the left sees it.
As part of its Green New Deal dream, the left has been pushing an agenda that significantly increases the amount of EVs on the road despite slowing demand from consumers and companies like Ford losing billions on them just this year. And Arizona utilities have fallen right in line, planning for 1 million EVs by 2030 while APS alone plans to have a 100% “carbon free” vehicle fleet as part of its commitment to go “Net Zero” by 2050.
Immediately after the Steyer initiative failed at the ballot, the Arizona Corporation Commission began considering their own green energy mandate to completely ban fossil fuel generation in Arizona by 2050. The Commission’s plan was even more radical than the energy initiative, and this time the mandate was being pushed by our regulated utilities, not far left radicals. This caught most observers by surprise—the utilities were among the opponents of the Steyer initiative, and now they were cheerleading energy mandates.
Why the change of heart by our monopoly utility providers? The reason is simple—they knew that if the Commission adopted official policy requiring Green New Deal mandates, they would be guaranteed full cost recovery from their captive ratepayers. After fierce opposition from ratepayers and organizations like the Free Enterprise Club, this proposed mandate was rejected by the Commission in early 2022.
Unfortunately, this victory for ratepayers was short lived. Almost immediately after the Commission voted to reject costly energy mandates, the utilities announced that they would be implementing their clean energy agenda anyway, irrespective of what their captive ratepayers thought about it. This didn’t come as a total surprise, considering these utilities have gone all-in on Environmental, Social, and Governance (ESG) and the accompanying “Net Zero” commitments to ban fossil fuels in their SEC filings to shareholders, which our organization began advocating against at the Commission earlier this year.
We told the Commission that if the utilities are allowed to operate under ESG, every downstream policy decision would be shaped by it—ultimately resulting in massive ESG rate hikes for Arizona ratepayers. Based on the energy resource plans submitted by the utilities last month, it appears our predictions have been proven correct…
A coalition of Arizona’s Corporation Commissioners have reached out to the state’s governor over concerns of rising prices for a subset of constituents.
Last month, four state commissioners wrote a letter to Governor Katie Hobbs to ask her to address the overwhelming price increases for electricity customers of the San Carlos Irrigation Project (SCIP). The signatories to the letter were Kevin Thompson, Lea Marquez Peterson, Nick Myers, and Jim O’Connor – all Republicans. Commissioner Anna Tovar, the lone Democrat on the panel, did not add her name to the letter.
The commissioners asserted that the change in costs was “purportedly related to the U.S. Department of Interior Bureau of Indian Affairs’ application of new purchased Power Cost Adjustment agreements which soared to $0.056 per kilowatt hour,” adding that “neither the Arizona Corporation Commission nor the State of Arizona has any regulatory authority over SCIP.” These added costs – on top of the customers’ electric power rates – has more than doubled the payments for many within this jurisdiction.
The lack of state jurisdiction in this matter means that the federal government would need to come to the table to resolve the crisis at hand – something that the commissioners asked Hobbs to facilitate. According to the commissioners, former Congressman Jim Kolbe had attempted to take care of this issue in the early nineties, when he introduced the San Carlos Indian Irrigation Project Divestiture Act to “complete divestiture and free SCIP customers from federal authorities.” Though this legislation passed the U.S. House and Senate and was signed into law by then-President George H.W. Bush, the policies apparently “never manifested into reality,” leading to this current unraveling of financial security and stability for these ratepayers.
In an exclusive statement to AZ Free News, Commissioner Kevin Thompson, who led the letter to the governor, said, “SCIP ratepayers are facing a terrible situation that is going to require officials at every level of government to work together like adults and find a solution for Arizonans that have been abandoned by the federal government.”
Thompson added, “Access to affordable electricity in a state like Arizona is a matter of life or death for too many and shouldn’t be a partisan issue. While the Commission has no authority over SCIP, I feel it is important to urge our leaders to explore meaningful solutions and act. These four Commissioners are willing to do whatever we can in our individual capacities to encourage our delegation and state government to put aside partisanship and get the federal government out of the business that private enterprise should be providing.”
The commissioners, in their communication to Hobbs, shared several potential solutions to the matter, which include exploring “divestiture of SCIP with the end goal of transferring generation, transmission, and customer responsibility to regulated Arizona utilities,” requesting “federal funds to provide necessary maintenance and improvements to the SCIP grid,” and researching “financial protections that can be provided to SCIP customers to increase the safety net and protect vulnerable ratepayers.”
They ended their letter with a plea for the governor and her team to do everything in their delegated authority to assist the afflicted Arizonans, saying, “It should be acknowledged that we recognize the vast majority of potential long-term solutions are outside of your control and authority as governor. However, like us, we know you are looking for meaningful solutions, and we would appreciate your willingness to advocate for Arizona ratepayers.”
This situation affecting SCIP customers has also attracted the attention of Senate Pro Tempore T.J. Shope, who issued a press release on October 23 to announce his “extreme frustration” with Hobbs’ “lack of care, concern, and action with skyrocketing power bills detrimentally impacting residents living in the SCIP.” Shope was less diplomatic in his statement than the commissioners were in their letter, writing that “Governor Hobbs is displaying she’s nothing more than an accomplice in Biden’s scheme to impose a radical energy agenda with attainable environmental goals, all for political gain, by ignoring the financial pain our citizens are experiencing.”
Before Shope went public with his comments about Hobbs’ handling of this situation, he led an October 3 letter to the governor, along with Senate Majority Whip Sine Kerr, House Majority Whip Teresa Martinez, and House Energy Committee Chair Gail Griffin, asking the state’s chief executive to “find a way to provide relief for the negatively impacted residents of the SCIP and push back against the Biden-Harris Administration on behalf of the ratepaying citizens of our state held hostage to the federal government.” The legislators’ letter echoed some of the sentiments from the commissioners’ letter, including the fact that “the legislature and Corporation Commission do not have the authority to remedy this crisis for residents because SCIP is a rare utility wholly managed by the federal government.”
As of October 23, Shope and his signatories had not heard back from the Governor’s Office about their letter. This lack of response by Hobbs led the Senator to believe that she was complicit “with Biden’s radical environmental agenda jeopardizing the financial security of Arizonans.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
