Ryan Randazzo

The Republic | azcentral.com

Corporation Commission Chairman Doug Little suggests using more renewable energy

He proposes doubling the state requirement to 30 percent by 2030

He says using more renewables could extend the life of some coal facilities

Arizona's top utility regulator thinks it is time the state consider doubling its requirements for solar and wind energy and simplifying the rules for utilities to comply.

Utilities such as Arizona Public Service Co. would be required to get 30 percent of their power from renewable sources by 2030 under the proposal Corporation Commission Chairman Doug Little announced Monday.

Little said that declining prices for solar and wind energy, as well as increased focus on carbon emissions from fossil-fuel plants, warrant more renewables. The current standard was set in 2006.

“This is a logical next step,” Little said Monday. “You can’t say we should put a standard like this in place and just never go back and look at it again. You need to have these logical checkpoints as technology evolves. The idea here is to ensure we continue to do the right thing for Arizona ratepayers.”

Keeping coal plants open longer

The current Renewable Energy Standard and Tariff was passed in 2006 and requires utilities to increase their use of renewable energy each year until 2025, when they are required to get 15 percent of their power from those sources. The requirement this year is for regulated utilities to get 6 percent of their power from renewable sources, increasing 1 percent annual from now until 2025.

Little is concerned utilities could become too reliant on natural-gas-fired power plants. He said increasing the use of renewables could help utilities keep their existing coal-fired power plants open through the end of their useful lives, rather than close them early

The Environmental Protection Agency proposed a plan in 2014 that would reduce carbon emissions from fossil-fuel plants, particularly coal, which emits about twice as much carbon as natural gas. The Supreme Court put the plan on hold with a stay earlier this year.

“Depending how the election turns out, we could see a return of the Clean Power Plan,” Little said. “By deploying more renewable energy, you are actually able to offset some of the emissions that you have in places like Four Corners and Springerville. It could extend the life of those (coal) plants. If you retire those plants early, you end up sticking ratepayers with the ... costs.”

Little is proposing to extend the requirement's timeline, increase the use of renewables and eliminate some of the trickier details, such as a requirement that 30 percent of the renewable energy come from “distributed" sources such as rooftop solar, rather than large, utility-owned power plants.

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Little’s proposal on the carve-out is sure to generate controversy among rooftop-solar installers. Because backyard wind turbines and other technologies are relatively uncommon, most of the distributed-generation requirement has been met by rooftop-solar electric systems.

Little said utilities should be able to purchase the lowest-cost renewable-energy available to comply with the rules.

Today, utilities use a system called net metering to pay customers retail credit for excess power their solar panels send to the grid, and retail rates for a kilowatt-hour of electricity are about 12 cents each, depending on the time of day and season. Utilities contend they can buy renewable energy from large solar and wind farms for about half or even a third of that price.

A decision by November

By November, the five commissioners are expected to have a decision in a separate docket examining the value of rooftop solar that could lead to changes in net metering.

The carve-out for distributed generation was considered ambitious in 2006, when rooftop solar was a fledgling industry and utilities such as APS had to provide thousands of dollars per customer to offset the installation costs and get enough customers to participate to meet the requirements.

But the price of rooftop solar has declined significantly in the past decade, and the pace of residential installations has increased, particularly after California-based SolarCity Corp. introduced no-money-down leases in Arizona in 2008, followed by similar deals from Sunrun Inc. and other competitors.

“At this point I don’t see any benefit to maintaining those carve-outs,” Little said. “SolarCity’s market cap is like $2.3 billion. They are not a little company anymore. The solar-rooftop industry is not a small industry anymore.”

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Little opened a new docket at the Corporation Commission to examine the rule change. It is likely to take a year before he and the four other elected commissioners make a decision.

“The increase in the renewable-energy standard is a very good idea and, frankly, should have been done a long time ago,” said Kris Mayes, a former Corporation Commission chairwoman who voted for the renewable standard in 2006 and is now working for political groups funded by SolarCity.

“I’m not sure this is the time to eliminate the carve-out,” she said. “It ensures we don’t just have utility-owned generation.”

She said the proposal makes the value-of-solar docket already underway even more important.

“If the commissioners get the value-of-solar correct, solar will win under this proposal,” she said. “If all the benefits are accounted for, distributed solar will be recorded as the least-cost technology. But we have utilities trying to deny the benefits of solar.”