Justin Olson
Commissioner

Opinion from Commissioner Olson - Energy Rules

For Immediate Release | 10-28-20

Media Contact | Michael Clark

Direct |  602-542-3622

E-Mail | WMClark@azcc.gov

As the Commission considered proposed changes to its renewable energy rules at the October 14th open meeting, I brought forward my Revised Amendment No. 1 that would have prohibited these rules from increasing costs to ratepayers. I was disappointed that the Commission rejected my amendment. This sent a clear signal that the Commission intends for compliance with the proposed mandates to drive up costs to ratepayers. This was a mistake that I ask the Commission to reverse.

 

If the Commission is unwilling to reconsider its vote on my amendment then the Commission, at a minimum, should adopt a transparent limit to the amount that rates can be driven up as a result of compliance with these rules. Without such a limit, these rules provide our utilities a blank check to spend ratepayers’ money. We must not let this happen!

 

To limit the harmful impact of these rules on ratepayers’ bills, I will offer a new amendment at the October 29th open meeting to prohibit the utilities from charging customers more than $1,000,000 a year for recovering the costs of complying with these rules.

 

As have I stated previously, even this amount is inappropriate as the Commission’s mandate should be for the utilities to invest in the renewable energy projects that are the most cost-effective way of meeting their customers’ energy needs. With such a rule, our utilities would increase their renewable energy portfolios without driving up rates.

 

This is a commonsense, win-win approach to this issue. But since the Commission is unwilling to adopt such a policy, the ratepayers deserve to know how much the Commission’s mandates are going to cost them, and, more importantly, they deserve a limit to the negative impact on their household budgets.

 

If the Commission’s majority does not agree with the amount of this proposed limit, I invite that majority to amend my amendment to adopt the limit it deems appropriate. Any limit will be an improvement over providing the utilities unlimited access to spend ratepayers’ money in complying with the Commission’s rules.

 

As my follow Commissioners consider my amendments, I expect them to keep in mind that the voters just last election cycle overwhelmingly rejected an energy mandate very similar to the rules they are considering adopting. Voters rejected Proposition 127 out of concern that the mandate would drive up their rates. My Revised Amendment No. 1 respects the will of the voters, which is why I ask the Commission to reverse its decision on my amendment.

 

The Commission should also acknowledge that its renewable energy mandates adopted in 2006 have had an extremely detrimental impact on the affordability of Arizona utility rates. Since 2007, for example, APS ratepayers have paid an astonishing $1.25 billion dollars to comply with the Commission’s energy rules. These mandates drove up rates because they required utilities to invest in specific technologies at a time when these technologies were not cost effective. The utilities complied and entered long term energy contracts at extraordinary premiums that ratepayers are still obligated to pay and will be for years into the future.

 

We should not repeat the mistakes of previous Commissions. It’s for this reason that I propose that if the Commission will not prohibit a rate increase from resulting from its energy rules then the Commission needs to at least limit the ratepayers’ exposure.

 

Let’s don’t create another billion-dollar burden on top of the what the 2006 Commission already placed on the backs of ratepayers.

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