Ignoring threats by a company to pack up and leave, a House panel voted late Tuesday to overturn the renewable energy mandate on utilities by the Arizona Corporation Commission.
HB2701 strips utility regulators of their authority to impose such requirements. In its place, it puts in a different mandate, this one crafted by Rep. Debbie Lesko, R-Glendale.
But the mandate is full of loopholes that, in essence, would undo the commission order requiring utilities to generate at least 15 percent of their power by 2025 from solar, wind, geothermal and other renewable sources.
Most notably, the legislation would let companies meet that mandate with nuclear or hydro power. That automatically would exempt Arizona Public Service, the largest electric provider, which already gets that much from its share of the Palo Verde Nuclear Generating Station.
And it would prohibit any utility from being forced to purchase “alternative” energy — meaning something other than coal, oil or natural gas — if it would interfere with its ability to provide services at “just and reasonable costs” to ratepayers.
The move came over the objection of commission lobbyist Amy Love, who said that, if nothing else, the move might be illegal.
Lesko said that, at the very least, it should be up to lawmakers and not commission members to set energy policy for the state.
But she said the issue has financial implications for Arizonans. The problem is that the permitted forms of renewable energy under the commission order all cost more than what companies now have to pay for their power from nuclear, coal and natural gas.
Former commissioner Mike Gleason, the lone dissenting vote on imposing the mandate, said base costs for power for APS are in the neighborhood of 2.2 cents per kilowatt hour. He said solar thermal, where the sun is used to heat water, runs about 14 cents, with wind at 25 cents and direct generation from photovoltaics at 35 cents.
The commission has allowed utilities to pass on at least part of the cost to ratepayers.
Lesko said APS is collecting an extra $153 million a year from its customers; utility lobbyist Marty Shultz later put the figure at $81 million.
Those costs, Lesko said, come out of pockets of some people who really can’t afford it.
The 5-2 vote by the House Government Committee came even after Polly Shaw, lobbyist for Suntech Power Holdings, said her firm is likely to reconsider its decision announced just last month to build a solar panel manufacturing plant in Goodyear.
She told lawmakers that the decision to locate in Arizona was based in large part on the renewable energy requirements in the commission’s directive. Shaw said HB2701 effectively makes them meaningless.
“Voluntary goals don’t build solar projects,” Shaw said, saying investors want “concrete market certainty” that the products will sell. That mandate includes not only a requirement that some of the renewable energy come from solar, but that part of that come from “distributed generation,” which essentially means individual homes and businesses installing photovoltaic solar panels on their roofs.
“Broadening the definition of renewable to include nuclear and hydro power will gut the renewable standard,” Shaw testified.
“It will obliterate demand for solar,” she continued. “And it will eliminate the reason we selected Arizona.”
But Marv Worthen, executive director of the Sun City Taxpayers Association, said lawmakers also need to look at the effect on taxpayers. He said people who retired years ago are living on minimal Social Security or retirement payments.
“I’m sorry, but $3 or $4 or 10 percent here on a utility advancement, it really counts up,” Worthen said. “They’re at a point where they have to give something up.”
Rep. Warde Nichols, R-Gilbert, one of two legislators to vote against the measure, said he believes the commission did act illegally. But Nichols said the decision to enact a renewable energy standard was first made more than a decade ago and that companies did make decisions to move here based on what they believed was settled law.
Rep. Steve Montenegro, R-Litchfield Park, said he believes that while solar may be worthwhile it should be able to “stand on its own” without subsidies.
That brought a sharp response from Rep. Chad Campbell, D-Phoenix, who said the government has long subsidized projects and goals it considers worthwhile. He said that includes the first transcontinental railroad.
“I would again challenge anybody in this room to tell me that the transcontinental railroad was not a good idea for this country and for the economic development and stability of this country,’’ Campbell said.