Arizona Corporation Commissioner Andy Tobin has joined ACC Chairman Doug Little's earlier call to change the state's renewable energy standard. But while Little wants to double the standard, Tobin called for moving away from what he termed an obsolete commitment to arbitrary renewable energy goals.
"The time is ripe to revisit and revise Arizona's Renewable Energy Standard and Tariff," or REST, Tobin said in a Dec. 9 letter to fellow commissioners and interested parties. Tobin called instead for providing incentives to limit peak demand.
Calling for a review of the renewable standard on Aug. 22, Little issued a press release proposing to double the requirement for the amount of electric power investor-owned utilities must get from renewables from 15% by 2025 to 30% by 2030. At the same time, Little said the rules need to be simplified so that renewable energy choices would be based on least-cost, not carve-outs that benefit favored industries (ACC Docket No.E-00000Q-16-0289).
In a Sept. 14 letter, Little asked stakeholders to file comments on whether a 30% renewable energy requirement by 2030 is achievable and whether a carve-out for distributed generation in the present rules is appropriate in light of current market conditions. Little also asked stakeholders to examine the consequences for ratepayers of a 30% goal.
Tobin's response was that the standard in its current form is a bad idea. Instead, Tobin wants a clean peak standard that would allow all renewable and carbon-free energy technologies to compete as least-cost resources in meeting system peak demand needs. Such a regulation would help reduce the need for generation capacity required to meet peak energy demand in evening hours during four or five months of the year with the highest demand, he said.
"These hours and months add extraordinary cost to ratepayers," Tobin wrote.
In June, Tobin proposed that utilities be required to establish energy efficiency and demand response programs to reduce peak energy demand and to establish a residential energy storage incentive program. After Tobin and Little appeared to resolve an initial dispute over the breadth and timing of the proposal, the commission ordered Arizona Public Service Co., a subsidiary of Pinnacle West Capital Corp., to include a $4 million residential battery storage program in its demand-side management plans.
Renewable commitment 'obsolete'
Tobin said a clean peak standard would move utilities away from simply focusing on acquiring expensive renewable energy resources without regard to actual system needs.
"The Clean Peak Standard offers great promise in moving the commission away from an obsolete commitment to arbitrary renewable energy goals," Tobin wrote. "When we think about correcting our REST rules moving forward, the commission must not make the same mistake of separating system peak from renewable or carbon-free energy."
In a report prepared for the Arizona Residential Utility Customer's Office, Berkeley, Calif.-based Strategen proposed that along with a traditional megawatt-hour-based renewable portfolio standard, a second complementary building block would introduce a capacity-based standard that would focus on peak demand needs. This requirement would encourage the use of clean energy resources to provide capacity during peak demand hours.
"A cornerstone of this new approach is the introduction of the Clean Peak Standard which will help to encourage clean energy resources that generate energy during peak hours, when it is needed most," the study concluded. "Additional components and implementation details can be added over time to create a more sophisticated RPS that is more aligned with the true needs of the grid."