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Ariz. governor signs bill to limit penalties for enforcing renewables standard

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Essential Energy Insights - February 2021

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Ariz. governor signs bill to limit penalties for enforcing renewables standard

Arizona Gov. Doug Ducey signed a bill to limit penalties for utilities that do not comply with regulations in an effort to head off a voter initiative to increase the state's renewable energy standard to 50% by 2030.

The last-minute legislation was inserted on top of another bill and pushed through the legislature on March 22. Ducey signed House Bill 2005 on March 23 so that utilities will only have to pay civil penalties for violating constitutional provisions or regulations specifying the type of electric generation resources they are to acquire or use. The range of a penalty would be $100 to $5,000 for each offense. Each violation is a separate offense, but violations continuing from day to day would be one offense under state law.

The Sierra Club Grand Canyon Chapter opposed the bill, saying it is unconstitutional and that the measure eliminates other actions and sanctions regulators could otherwise impose on utilities. The penalties called for in the bill would be too low to enforce stricter renewable energy measures, the Sierra Club said, contending that the Arizona Corporation Commission would no longer be able to hold utilities accountable in rate cases and other proceedings for failure to meet the renewable standard.

Rep. Vince Leach, sponsor of the measure, said in a press release the legislation will protect Arizona ratepayers from the renewable energy initiative that he said seeks to put unrealistic mandates on utilities. Leach asserted that California billionaire Tom Steyer is funding the voter initiative. Leach and other legislators supporting the bill portrayed the initiative as a big money effort to intrude in local affairs, but supporters said investor-owned utilities were taking steps to prevent voters from taking steps toward a clean energy future.

"The consequences of complying with these unrealistic mandates would be catastrophic to Arizona — electric bills would skyrocket, tens of millions of dollars in tax revenue would be lost, thousands of jobs would go away," Leach said.

Arizona's renewable energy standard requires utilities to derive 15% of their electricity from renewables by 2025, and 30% of that amount must come from distributed energy.

On Feb. 20 a group called the Clean Energy for a Healthy Arizona Committee, with Steyer's backing, filed an application with the Arizona secretary of state's office for a petition to require electric utilities to provide 50% of their annual retail sales from renewables and that distributed renewable energy sources, like rooftop solar, would have to comprise at least 10% of utilities' annual retail sales of electricity.

The constitutional amendment question will require 225,953 signatures of registered voters by July 5 to be put on the ballot, according to the secretary of state's office. The signature drive will require an organized, well-funded effort.

The Sierra Club accused lobbyists of the state's largest electric utility, Pinnacle West Capital Corp. subsidiary Arizona Public Service Co., of persuading lawmakers to sneak the provisions into an unrelated bill by striking everything from that bill and inserting new language to block more clean energy for Arizona.

"It is clear that this measure is intended to undermine the Clean Energy for a Healthy Arizona ballot initiative that requires utilities such as APS and Tucson Electric Power Co. to obtain 50% of their electricity from renewable sources by 2030," the Sierra Club said in a message urging the public to send the governor pleas to veto the legislation. Tucson Electric is a subsidiary of Fortis Inc.

However, APS lobbyist Rod Ross told the Senate Government Committee on March 14 the utility is not seeking to pay for violating the law but to collaborate with lawmakers and regulators to come to the best course of action to protect the state's economy and ratepayers.

Ross said APS worked with Leach on the amended bill. "We proudly support this amendment. We feel it is important to protect the people of this state from an out-of-state initiative funded by a California billionaire that is attempting to raise our state's and our residents' electricity prices," Ross said.

He said APS was extremely concerned the initiative would also reduce reliability by making the state more dependent on intermittent resources and that it would devastate rural Arizona by forcing closure of power plants and killing thousands of jobs.