AZ Senate Panel Votes To Strip Arizona Corporation Commission Power Over Utilities
By Howard Fischer
Capitol Media Services
PHOENIX -- Rejecting arguments about economic development, clean air and even constitutional issues, a Senate panel voted along party lines Wednesday to strip the Arizona Corporation Commission of its power to set energy policy for utilities.
The 6-4 vote by the Senate Appropriations Committee followed arguments by Rep. Gail Griffin, R-Hereford, that it was wrong of the independently elected utility regulators to propose that half of the state's energy be generated by carbon-free sources by 2035 and have power be totally carbon free by 2050. She said the commissioners failed to consider the cost implications for consumers of having to give up on coal- and gas-fired power plants.
That contention was questioned by several witnesses, some of whom represent those involved in solar technology, who said that wind and solar are now less expensive.
But the real question is whether lawmakers have the power to wrest from the regulators to set energy policy.
Griffin is relying on a ruling last year by the Arizona Supreme Court dealing with a fight over control of Johnson Utilities.
In that ruling, the justices said the Arizona Constitution gives commissioners absolute power to set rates. But they said that authority over health and safety questions is shared with the legislature.
HB 2248 amounts to the legislature asserting what it says is its right to overrule the regulators.
That legal conclusion, however, may not be entirely correct.
Amanda Ormond, a consultant who used to run the state energy office, said that 2020 case did not directly challenge the authority of the commission to determine renewable energy standards. She said that was specifically addressed in a 2011 ruling of the state Supreme Court which concluded that the regulators were free to require utilities to buy or generate power from solar, wind and other sources -- even if that costs more for ratepayers.
And Sen. Lisa Otondo, D-Yuma, said she has an opinion from legislative lawyers who say that this particular bill -- preempting carbon-emission standards enacted by the commission -- would be unconstitutional.
Of note is that none of the state's major investor-owned utilities, the firms that have to live under the commission rules, have testified in support of the measure. In fact, Arizona Public Service, the state's largest electric supplier, is actively opposing HB 2248, saying that it would create "legal and regulatory uncertainties'' and arguing that "energy policy is within the purview of the Arizona Corporation Commission.''
And in a formal statement of opposition, the company agreed that the 2020 Supreme Court decision -- the one on which Griffin is relying -- is ambiguous.
What is also true is that APS already has plans to be carbon-free by 2050. That includes nuclear.
And Tucson Electric Power, which has no stake in a nuclear power plant, said it will have 70 percent of its power from renewable sources by 2035.
But Griffin was undeterred.
"Nowhere does it give the Corporation Commission the authority to make energy policy,'' she said.
What's worse, Griffin said, is her contention that the commissioners ignored key issues in adopting their latest goals.
"The commission adopted energy rules without producing or evaluating proposed financial impacts the proposed rules would have on its ratepayers,'' she said, something she called "unacceptable.''
"That's who we represent, the ratepayers,'' Griffin said.
JoAnna Struther of the Arizona Lung Association said she sees the legislation through a different lens. She said the measure "will set back clean energy programs that will improve air quality and create a healthy climate for all Arizonans.''
"This bill would reverse progress towards cleaner air and can have serious consequences on air quality standards and our health,'' Struther said, saying it "endaners public health.''
And Shelby Stults with Advanced Energy Economy, a trade group representing those involved in new technology, said scrapping the new standards will put more than 41,000 jobs at risk.
Griffin's measure pretty much leaves in place the original standards adopted by the commission more than a decade ago. Her bill would require utilities to have 15% of the energy from renewable resources by 2026.
But it would leave any further adjustments in the hands of future legislators.
Unadjusted, it also would put Arizona behind many other states in the region according to information from the National Conference of State Legislatures.
In California, for example, utilities are supposed to reach 100% clean energy by 2045.
New Mexico has a zero-carbon standard by 2045, with Nevada having that same goal in 2050.
But Utah has a renewable portfolio goal, essentially a voluntary target, of 20% by 2025.
The measure, which already has cleared the House, faces an uncertain future when it goes to the full Senate.
Sen. Paul Boyer, R-Glendale, has publicly questioned the wisdom of having the Arizona Legislature, which has no full-time staff devoted to energy policy, in charge of reviewing future changes. With all Democrats opposed, Republicans would need all 16 of its senators to support the measure to have it approved.