The future of renewable energy standards in Arizona hangs in the balance as state regulators prepare to vote on a proposal that could significantly alter the landscape for electric utilities. The Arizona Corporation Commission is considering the repeal of established rules requiring utilities to source a portion of their electricity from renewable resources, a decision that could reshape the state’s energy market dynamics.
Originating nearly two decades ago, the Renewable Energy Standard and Tariff (REST) mandates that a minimum of 15% of electricity sold by utility companies come from renewable energy, with residential rooftop solar panels contributing 30% of that total. However, the Commission began steps last year to dismantle these requirements, driven by the argument that market forces should dictate renewable energy adoption, not regulatory mandates.
Former Commissioner Jim O’Connor, who chaired the Republican-dominated commission at the time, was a vocal proponent of letting the market decide. He cautioned, “When the hefty, federally-subsidized tax incentives expire, this may leave our ratepayers holding the proverbial bag if there are mandates requiring actions that are not supported by the marketplace,” highlighting the rollback of various federal solar incentives under President Donald Trump’s One Big Beautiful Bill Act. Read more about this here.
Kevin Thompson, the current Commission Chair, echoed similar sentiments, emphasizing the need for market control over solar grid interactions. Yet, this perspective has faced criticism from those who argue that Arizona’s utilities, functioning largely as monopolies, are insulated from typical market pressures. “So for them to talk about a market is pretty laughable, because there’s not really a market that operates to influence the behavior of these utilities,” commented Sandy Bahr, director of the Sierra Club’s Grand Canyon Chapter.
Proponents of the repeal argue that the REST rules have already achieved their objectives, as the state surpassed the 15% renewable energy mark, with 20% of its electricity generated from renewable sources in 2024, according to data from the U.S. Energy Information Administration. Arizona Public Service and Tucson Electric Power, two major utilities, reported sourcing 19% and 22% of their energy from renewables, respectively.
Despite these statistics, renewable energy advocates caution that the figures may not reflect future growth demands. “These figures fall short of the 15% threshold when considering growth expectations and cast doubt on assertions that the standard is no longer necessary,” warned a joint letter to the Commission from Vote Solar, Solar United Neighbors, and the Arizona Solar Energy Industries Association.
Democratic Attorney General Kris Mayes, who played a role in establishing the REST rules in 2006, opposes their repeal, arguing it could lead to increased power bills and noting the rules’ role in reducing renewable energy costs in Arizona. “The cost of wind and solar resources have declined concurrently with the REST Rules,” Mayes stated. “Utility-scale solar costs have fallen by 84% since 2009, and utility-scale wind costs are down 55% over the same period. Both utility-scale wind and solar are cheaper to construct than new natural gas, coal, or nuclear plants.”
Mayes also contends that the Commission’s current process to repeal the rules may not comply with state law, suggesting the need for a comprehensive ratemaking process, which ensures decisions are “just and reasonable” and supported by substantial evidence.
The Arizona Corporation Commission is set to cast its vote on the potential repeal during its open meeting on August 14, a decision that could have lasting implications on the state’s energy policies and market operations.
Original Story at www.kjzz.org