Commission Votes to Decline Proposed Energy Rules Package
Commissioners voted 3-2 at their January Contingency Open Meeting to not move forward with a package of energy rules that, if adopted, would have required electric utilities to achieve 100% zero-carbon emissions energy by 2070. Commissioner Justin Olson cited concerns regarding the cost of the proposed rules on consumers, while Commissioner Jim O’Connor noted that Arizona’s electric utilities have already adopted voluntary clean energy goals on their own. Chairwoman Lea Márquez Peterson said she could not support the 2070 date because she supports 100% clean energy by 2050. She also said she could not support the proposal because she believes the rule should be a goal, not a mandate. Commissioners Sandra D. Kennedy and Anna Tovar voted in favor of the package, stating that the energy rules package had been the result of nearly four years of work by Commissioners, Commission Staff, and a wide array of stakeholders which included regulated utilities, clean energy advocacy groups, and public health advocates.
Commission Moves to Open Rulemaking Docket Related to All-Source RFPs & IRPs
Commissioners voted 3-2 to move forward with the opening of a new rulemaking docket to examine and promulgate rules dealing with all-source requests for proposals (RFP) and integrated resource plans (IRP). The opening of this docket will allow Commissioners, utilities, and stakeholders to provide input on the competitive bidding process that utilities will use for the selection of new energy resources and help to improve the long-range planning process that utilities will utilize for the evaluation of future energy mixes. According to Chairwoman Lea Márquez Peterson, the proposed competitive bidding process and long-term planning components of the proposed energy rules were the most important aspects of the previous rulemaking proceeding and deserved to move forward in their own right. Commissioners Justin Olson and Jim O’Connor supported Chairwoman Márquez Peterson’s proposal to ensure that these critical components of the Commission’s regulatory oversight move forward without further delay.
Commissioners Approve Partial Consolidation in EPCOR Water Arizona, Inc. Rate Case
Commissioners unanimously approved a rate case application from EPCOR Water Arizona, Inc. (EPCOR). Approval comes after discussion, consideration, and adoption of myriad amendments over the course of two open meetings.
EPCOR had advocated for a full consolidation of its Arizona water districts, placing all customers under one rate design. After hearing from numerous ratepayers, Commissioners decided to adopt an amendment from Commissioner Jim O’Connor that implemented proposed Scenario 1, a partial consolidation, leaving Paradise Valley, Sun City, and Sun City West as standalone districts.
An amendment from Commissioner Sandra D. Kennedy requires EPCOR to file, within six months, an analysis of why participation in its low-income program is so low, and recommendations to boost participation moving forward. Additionally, it requires EPCOR work with relevant stakeholders with experience in low-income assistance and water conservation to provide input and shall report on their recommendations.
Commissioner Justin Olson had two amendments adopted. The first reduced the Return on Equity from 9.25% to 8.93%, this reduces the increase to the revenue requirement by approximately $350,000. His second amendment adopted Commission Staff’s and the Residential Utility Consumer Office’s (RUCO) recommendation to remove 50% of EPCOR’s short-term incentive plan, which reduces the revenue requirement by approximately $700,000.
In addition to his amendment adopting partial consolidation, Commissioner Jim O’Connor had a second amendment adopted during the meeting. This amendment allows EPCOR to recalculate low-income surcharges on March 31, 2022.
EPCOR’s water customers will see the following average monthly bill impacts after 3-year rate phase-in: