Many Arizona energy consumers are about to see some savings in their bills in time for the holidays.
This month, the Southwest Gas Corporation sent a notice to the Arizona Corporation Commission about a rate decrease to consumers effective at the start of October.
The statement from Doran A. Miller, a Regulator Manager, said, “Pursuant to Decision Nos 74595 and 79038, Southwest Gas is providing notice that the Gas Cost Balancing Account rate will decrease from $0.30911 per therm to $0.00 per therm effective October 1, 2024. This results in a decrease of approximately $7 per month for the average single-family residential customer.”
In an exclusive comment to AZ Free News, Republican Commissioner Kevin Thompson responded to the notice from Southwest Gas, saying, “Any significant savings for the ratepayer should be welcomed, particularly in this economy. The cost of natural gas fuel is required to be passed along to ratepayers as a monthly surcharge that the Commission regularly reviews to make sure customers are paying the actual cost. This helps ensure utilities don’t over collect or earn a profit on this necessary resource.”
Thompson added, “As volatility in domestic and international markets have subsided, and the cost of natural gas dramatically decreases, most Southwest Gas customers will see a noticeable decrease in their monthly gas bill beginning in October.”
Earlier this year, the Corporation Commission shared a report from WalletHub, which showed that Arizona had the second-lowest energy cost out of the 50 states in the North American union with a $400 bill.
According to the Corporation Commission, there were a handful of factors separating Arizona from other states:
“Diverse generation sources – Arizona relies on a mix of generation sources, from nuclear, natural gas, hydropower, renewables, and battery storage.
“Self-Sufficiency – Arizona is not dependent on imported power. We tap into the market if needed, but our utilities’ focus is providing Integrated Resource Plans to guarantee future readiness. The Commission diligently oversees upgrades and construction.
“Proactive maintenance to ensure reliability – The Commission prioritizes daily maintenance and line work leading up to the summer to ensure the grid is ready for the extreme heat and high load.”
Republican Commissioner Lea Marquez Peterson reacted to the report from WalletHub, writing, “The data released in the report reflects the priorities of our Commission – reliable energy at the most affordable rates. I’m proud of the service and affordable rates we work hard to provide to ratepayers throughout the state.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
The Corporation Commission recently unanimously voted to support Tucson Electric Power’s (“TEP”) Midtown Reliability Project (“Midtown”). The Midtown project is a much-needed improvement for the City of Tucson’s antiquated and overloaded 46kV sub-transmission system. The equipment will be upgraded to a 138kV system in the area adjacent to the University of Arizona and Banner University Medical Center. The project would also replace a portion of the 4kV distribution lines located in the Midtown neighborhoods. These systems are over 50 years old and no longer meet the needs and demands of the area as the system has become increasingly overstrained and unstable.
Fragile wooden poles that are susceptible to damage will be replaced with larger capacity metal poles and more powerful transmission lines. Up to eight 46kV existing substations and 19 miles of current 46kV line will be removed, resulting in a reduced number of substations and overhead power lines in Midtown Tucson. The upgrades will benefit all of TEP’s customers; the transmission lines will improve system redundancy and grid resiliency, allowing power to bypass lines and areas that might be down or overloaded. In supporting the proposal, the Commission rejected calls by the City of Tucson leadership and neighborhood groups who demanded the new lines be “undergrounded” as opposed to the standard more affordable above ground installation.
Tucson voters overwhelmingly rejected Prop 412 in March 2023, which was supported by Tucson’s Mayor and TEP. The proposition would have extended TEP’s franchise agreement with the city, and in return would have established additional fees to fund the undergrounding of the Midtown project and establish a “Climate Action Fund.” The defeat left the franchise agreement renewal in limbo, but it also required TEP to move forward with an alternative plan to complete the needed and already delayed improvement. City leaders continued to call for the undergrounding of equipment, a beautification effort where costs would have been picked up by all TEP ratepayers, not just the customers who will benefit from the Midtown project improvements.
During the Commission proceedings, some claimed the incremental cost difference between underground and above ground lines was negligible, and that the historic nature of the area and neighborhoods called for a greater standard of beautification. There are two important responses to those viewpoints. First, the region already has above ground power lines. Any sort of undergrounding would be a luxury the area currently doesn’t enjoy. And as previously noted, the above ground upgrades will actually reduce the total number of transmission lines and substations. Second, there is a huge price difference. Project estimates for the cost difference between underground and above ground are $64 million dollars. An additional $64 million that would have to be funded by all TEP ratepayers, the far majority of whom live nowhere near Midtown.
Last year, the Commission adopted a transmission line policy statement that utilities under the Commission’s jurisdiction should avoid incurring higher costs from underground installation of transmission lines unless it was necessary for reliability or safety purposes. Undergrounding lines for purposes such as stakeholder or community preferences are not valid reasons on their own. And concerned third parties such as cities or neighborhood groups can still seek to cover the cost difference to underground through other means such as forming an improvement district.
With most rate design, there’s a degree of “subsidization” that exists, wherein equipment upgrades or power line installations are spread out across an entire ratepayer base for that utility’s customers. However, when a project or proposal clearly only benefits a small subset of customers, it is our duty as a Commission to look out for all ratepayers. We must ensure the desires of a few do not adversely impact the pocketbooks of the many.
It’s not uncommon for the Commission to review proposals that subscribe to what some refer to as “luxury beliefs.” Ideas and opinions that benefit a group of people who are better off while often inflicting greater costs or more harm on less fortunate classes. We see this most frequently amongst climatism promoters, who advocate to end the use of hydrocarbons and rapidly transform our electric grid, with no concerns for the price tag to ratepayers. It’s akin to advocating for ratepayers to subsidize electric vehicle charging stations that benefit a small set of utility customers, while the far majority of other customers either do not want an electric vehicle or can’t afford one.
During the hearing, proponents of line undergrounding attempted to rationalize the cost increase due to the unique history and beauty of the area. They argued the monthly cost to underground the Midtown project is negligible when spread out across the entire customer base. While I am sympathetic to the preferences of property owners, how can I as an elected official possibly rationalize to ratepayers in South Tucson that their neighborhood isn’t worthy of receiving the same special treatment?
With this vote, the Commission honored the will of Tucson voters and protected the pocketbooks of TEP ratepayers. We also took big steps to improve the long-term reliability and durability for all TEP customers in the Tucson area.
Kevin Thompson was elected as a member of the Arizona Corporation Commission in 2022. He previously served as a member of the Mesa City Council for eight years, representing the fastest-growing area of the city.
During its meeting on September 5th, the Arizona Corporation Commission (ACC), led by Republican Commissioner Nick Myers, voted unanimously to approve a Certificate of Environmental Compatibility (CEC) allowing the Midtown Reliability Project of the Tucson Electric Power (TEP) company to move forward.
The project is a comprehensive upgrade to the now-overloaded 46 kV high-voltage transmission lines that run through midtown Tucson to a “more flexible, higher voltage” 138 kV monopole line above ground, according to a press release from the Commission.
A major controversy unfolded with some in Tucson calling upon the ACC to select a partially underground routing that would increase the cost of the project by millions of dollars and meet the expense through an end-user fee.
The proposed Midtown Reliability Project would add up to 12 miles of overhead power lines to our local grid and, in turn, remove 19 miles of older lines in the same area. Senior Vice President & Chief Legal Officer Todd Hixon shares some of the benefits: https://t.co/DhWnCYX9UMpic.twitter.com/N5Jxip5J24
Commissioner Myers commented after the vote, “I understand why some Tucson residents would want this project constructed below ground. However, constructing the project below ground is not needed for safety, reliability or other utility operational reasons; therefore, it is not acceptable for all TEP customers to shoulder the $67 million cost for undergrounding the project.”
He added, “I am pleased the Commission approved this important grid-reliability project, while at the same time protecting TEP customers from unnecessary undergrounding expenses.”
In a corresponding press release, TEP explained, “The ACC voted unanimously today to authorize above-ground construction along TEP’s preferred route for the project, which primarily follows West Grant Road, North Park Avenue, Euclid Avenue and East 36th Street to link two TEP substations to the planned Vine Substation north of the University of Arizona campus. The ACC also authorized construction along an alternative route. An interactive map of the approved corridors can be viewed online.”
The utility added a timeframe saying, “With growing energy demands nearly reaching the capacity of existing, lower-voltage facilities, TEP will work to complete the transmission line and substation by the summer of 2027 to maintain service reliability.”
Myers’ fellow Republican, ACC Chairman Jim O’Connor, told KOLD, “A big kudo to the parties for finding a solution that will enable this project to move forward. This transmission project will further enhance reliability and modernize a critical portion of our electric grid in Tucson.”
The local outlet noted that a sticking point for the project has been pushback from the midtown community and many advocating for subterranean lines. In 2023, KOLD’s Jack Cooper wrote in a post to X that the opposition to the above-ground routing were “worried about property values and want the lines buried.” However, as the ACC noted in its release, “The Commission unanimously decided to protect ratepayers from that financial impact.”
Arizonans are using a lot of energy throughout this hot summer in the Valley of the Sun.
Last week, the Arizona Corporation Commission issued a press release to alert readers that Arizona electric utilities had “set new records for peak energy demand.”
According to the communication from the state government agency, the record for peak energy was reached on Sunday, August 4, between 5-6pm, when the high temperature for that day was 116 degrees Fahrenheit.
Republican Corporation Commissioner Kevin Thompson told AZ Free News, “Our utilities have done an exceptional job of keeping the lights on and air flowing through new record setting peak demand this summer. There’s no coincidence to the fact that despite our extreme heat and load growth, Arizona hasn’t suffered the same crippling energy pitfalls of California. Arizona regulators have focused on an ‘all of the above’ generation approach bolstered with dispatchable baseload to keep our grid reliable and affordable. This Commission has worked relentlessly to do away with energy mandates that cost ratepayers more money and get in the way of what utilities should be primarily focused on: generating electricity.”
“Our utilities continue to deliver reliable power in the face of excessive temperatures and ever-increasing electricity demand. Arizona continues to be ranked in the top ten of states with the most reliable power—a critical statistic for which each of us is thankful during these record-breaking temperatures,” said Chairman Jim O’Connor.
Arizona Public Service (APS) used 8,212 MW on August 4 (compared to 8,162 MW on that date in 2023). Salt River Project used 8,219 MW in 2024 (compared to 8,163 MW in 2023). And TEP / UNS just barely missed out on the record, finishing with 2,917 MW on July 8 (compared to 2,969 MW in 2023). On August 4, TEP’s peak demand reached 2,661 MW.
“Our utilities are facing unprecedented challenges in balancing the needs of our energy demands during this hot summer while ensuring energy reliability at the most affordable rates,” said Commissioner Lea MárquezPeterson. “Their summer preparedness planning for peak demand is vitally important to keeping our families safe and cool in the summer.”
The Commission shared that these utilities have made assurances “that they are prepared to produce a combined total of more than 23,000 megawatts of electricity to meet customers’ daily summer demands.” APS has 1.3 million customers; SRP, 1.1 million customers; and TEP / UNS, 719,000 customers.
At the end of its release, the Commission “encourages Arizonans to be mindful and help reduce electric demand during peak hours. Actions, such as lowering energy use during peak hours and signing up for demand response programs can contribute to reducing overall customer demand and reducing monthly electric bills.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Arizona Corporation Commissioner Nick Myers hammered home the necessity of reliability and affordability to Arizona energy providers including Arizona Public Service Company (APS), Tucson Electric Power Company (TEP), UNS Electric, and Arizona Electric Power Cooperative during a workshop for the development of an Integrated Resource Plan or ‘IRP.’
The IRP is required by the commission every three years.
According to the Commission, the providers represented at the workshop gave presentations that highlighted the projected load growth in the state and analyzed their resource portfolios and their estimated revenue requirements.
Both APS and TEP discussed plans to decommission their coal-fired power plants, APS’ at Four corners in 2031 and TEP at various locations by 2032. Both of the utilities told the commission they intend to replace the coal-fired plants with natural gas generation “that can ramp up quickly during the day when customers need electricity the most and make use of existing infrastructure to maintain customer affordability as they transition to renewable energy, battery storage and potentially new technology.”
Myers reportedly pressed the utilities represented on whether they had completed their analysis based on the lowest cost and most technologically neutral means without imposing their politically-driven mandates to reduce emissions on the state as required by Commission rules. He pointedly questioned if their differing goals “may have resulted in the selection of a more costly or less reliable resource portfolio,” per the commission.
Myers said, “IRP planning is a complicated process that involves the analysis of various scenarios, multiple iterations, and complex projections. It is critical that the Commission understands what a utility’s plan is going forward and addresses any possible discrepancies or inconsistencies so that Arizonans can feel comfortable that their air conditioning will remain on and at an affordable rate.”
— Arizona Corporation Commission (@CorpCommAZ) August 2, 2024
The commission reported that it is now reviewing the IRPs from the utilities and should bring a memorandum and proposal for review by the end of the month. In closing, Myers told the workshop, “Reliability and affordability will continue to be my highest priorities. We absolutely cannot afford to have blackout and brownouts in Arizona.”
ACC is holding its Integrated Resource Planning Workshop- this is when regulated electric utilities present their IRP's and how they plan to power Arizona's future. Commissioners asking tough questions and assessing the IRP's, prioritizing electricity reliability & affordability. pic.twitter.com/mWHz8Kjxrt
— Arizona Corporation Commission (@CorpCommAZ) July 31, 2024
In a July press release reported by KTAR, Chairman Jim O’Connor expressed similar concerns saying, “Hotter temperatures and monsoon winds put even more pressure on our electric grid, as we demand increasing amounts of power each year from our utilities. Thankfully, Arizona has top notch utilities with dedicated employees that coordinate to keep our power reliable across our state.”
O’Connor and the utilities at that time called upon Arizonans to reduce electrical usage by adjusting home thermostats and pushing heavy appliance usage and EV charging later into the evening.
