Arizonans Overpaying For Unreliable Energy Due To Renewable Mandates, Commissioner Tells Congress

by Corinne Murdock | Feb 20, 2024 | News

By Corinne Murdock |

Arizona ratepayers are overpaying by up to four times more than they should for unreliable energy due to renewable energy mandates — and stand to pay even more in the future — according to congressional testimony by Nick Myers, commissioner for the Arizona Corporation Commission (ACC). 

Myers testified to the House Energy and Commerce Subcommittee last week that the whole renewable energy mandate movement not only constitutes bad policy, but defies common sense. 

“Our ratepayers are paying three times for the same generation and retiring reliable generation in favor of unreliable generation is just bad. It’s common sense: you have to have a backup plan,” said Myers. “You have to create more dispatchable generation that sits there idle so that you can use it when the sun goes down or the wind doesn’t blow: we don’t have a whole lot of wind in Arizona, but you have to have that generation available to come online when it happens.”

Myers said that most of ACC’s current challenges stem from a lack of adequate infrastructure to replace the “early forced retirement” of coal plants. He said that ratepayers are having to pay three to four times more than they should because of this dilemma. 

“Personally, it pains me to have to prove accelerated cost recovery for early shutdown of coal plants while at the same time authorizing recovery on new purchase power agreements and then because the utilities are ultimately responsible for keeping the lights on, we also have to approve the building of reliable dispatchable generation in the form of natural gas,” said Myers. “That means our ratepayers are paying three times for the same energy generation that could be had by simply keeping our existing generation online until natural retirement or even better beyond that.” 

Additionally, Myers said that ratepayers pay four times more than they should for energy due to renewable energy mandates forcing utility providers to invest in “premature technology” under long-term contracts. Myers said that the cost burden is projected to worsen over the next two decades as the price of solar energy drops. The commissioner disclosed that additional problems concerned delayed development and commercialization of newer technologies, namely small modular reactors.

According to Myers, ACC has approved nearly 2,000 megawatts of solar plus battery connections and hundreds of megawatts of thermal generation in the past year. 

Myers further noted that a “one size fits all” approach to regulation was impossible due to Arizona’s diverse topography and climate, citing the disparities between the northern and southern parts of the state. 

The commissioner also clarified that Arizona lacks the infrastructure to supply natural gas and that the state can’t allocate much more to turbines for intermittent renewable resources. 

Instead, Myers said that they have turned to alternative solutions, such as hydroponic basins — an initiative that he says won’t come to fruition in the next decade — as well as salt caverns for natural gas and possibly hydrogen storage. That latter proposal, he said, may provide buffering for the entire west coast and parts of Mexico. 

Another solution in the works concerns an increase in the number and size of pipelines laid from Texas to California. 

Myers said that ACC has been active in Day-Ahead Markets (DAMs), which matches energy buyers and sellers, a tool they view as a possible stepping stone for a Regional Transmission Organization (RTO). He said that DAM simulations have yielded net savings for utility customers, with or without the inclusion of Washington and California. 

“While Arizona has many transmission lines in development, it is important to work with our neighbors to determine what is best in regard to long-term transmission suitable for our region,” said Myers. 

When asked whether it was an ideal solution to have California govern the grid for western states, Myers said no. He cited California’s inability to secure power for its own residents and its legislative primacy clauses prioritizing its own interests above that of other states.

“Should we have a problem, California will only make a change if it benefits California, and that is a huge problem for us,” said Myers. “Just look at how much of a bang-up job they’ve done at keeping their own lights on.”

Rep. Debbie Lesko (R-AZ-08), who sits on the subcommittee, commended ACC for rolling back renewable energy mandates earlier this month. Lesko said that the retraction was a “reasonable approach” that she felt attracted more businesses to the state, in contrast with the steady bleed of businesses from neighboring California. 

Lesko asked about the reliability and potential problems posed by carbon capture technology and storage outlined by the EPA proposal to reduce carbon emissions by 90 percent by 2030. Myers agreed that the technologies were purely “aspirational” and a threat to reliability. He, along with other state public utility commissioners testifying that day, expressed a desire for the EPA to take back their proposal.

“Those technologies are so much in their infancy that they are extremely expensive, the timeline is extremely rushed, and there is absolutely no infrastructure in place to handle either one of those technologies,” said Myers. “It would absolutely increase costs dramatically to Arizona utilities if we had to do that; it might also accelerate the closure of certain plants because of these requirements.”

As an example of the high cost to ratepayers, Myers explained that hydrogen would have to be converted to ammonia en route since it can’t be piped in long distances.

Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.