Arizona’s proposed move to 100% carbon-free energy will have a “low to moderate” impact on customer bills, with estimated increases varying from as little as about $1.50 to nearly $60 per month for the average Tucson Electric Power home bill by 2050.
And as regulators focus on costs, ratepayers can weigh in on draft clean-energy rules requiring a shift to 100% carbon-free energy by 2070, at meetings hosted by the Arizona Corporation Commission beginning next week.
Corporation Commission Chairwoman Lea Márquez Peterson, a Tucson Republican, said she plans to invite her fellow commissioners to join her in hosting a series of virtual and in-person town halls and public comment sessions on the proposed energy rules this fall.
“Now that we have the cost information we’ve requested, we can discuss the pros and cons of the proposed clean energy objectives openly and transparently and let customers guide our decision on whether to adopt the proposed rules,” Márquez Peterson said.
In late May, the commission on a 3-2 vote approved draft rules requiring state-regulated utilities including Tucson Electric Power Co. and Arizona Public Service Co. to generate all of their power from renewable sources like solar and wind by 2070.
The utilities face interim mandates starting with 50% by the end of 2032, progressing to 65% by 2040 and reaching 80% by 2050. An earlier version of the rules had called for 100% carbon-free power by 2050.
TEP, its sister rural utility UniSource Energy Services and APS have said they support the draft clean-energy rules, citing their own goals – which are in some cases more ambitious than the proposed state rules.
A study by Colorado-based Ascend Analytics found that if utilities achieve 100% zero-emission energy by 2050 – the final benchmark in a previous version of the draft clean-energy rules – TEP residential customers would see their bills rise by $15.61 per month on average, based on TEP’s projections.
But the Ascend report says that based on own its modeling, for that scenario, TEP bills could go up an average of $58.23 monthly compared with a “least cost” estimate based on continued use of natural-gas power plants.
The cost estimates account for an annual inflation rate of 2.5%, meaning $60 in 2050 dollars equals about $30 in today’s dollars, Ascend said.
If the utilities reach 80% clean energy by 2050 – a milestone included in the current draft rules – TEP home customers would see an average monthly bill increase of $1.56, according to the company, or $40.33 per month based on Ascend’s model, the study shows.
TEP spokesman Joe Barrios said the utility worked with Ascend to develop the report and that the utility’s projections are based on other industry studies.
“As noted in Ascend’s report, a power system study that spans decades is speculative in nature due to the uncertainty of new technology costs and commodity price assumptions over time,” Barrios said.
Ascend notes that it is less optimistic than TEP about the ability of renewable-energy resources to meet reliability requirements, and about expected declines in technology costs.
And TEP assumes prices for wholesale power and natural gas will more than double by 2035, while Ascend predicts those prices will decline over the next few years before flattening.
“TEP believes decarbonizing the power sector can be achieved cost-effectively over the next two decades, with 80% of energy sourced from clean energy resources, as indicated in the Ascend study,” Barrios said, citing the company’s own clean-energy goals of 70% renewable energy and an 80% cut in carbon emissions by 2035.
The Corporation Commission will hold its initial telephonic public meeting on the proposed clean-energy rules at 10 a.m. on Monday, Aug. 16, and Thursday, Aug. 19.
To participate, dial 1-888-450-5996; to speak, use passcode 457395#, and to listen only use passcode 4208475#. A live webcast will be available at azcc.gov/live.
Written comments may be filed until Aug. 20 at azcc.gov in docket number RU-00000A-18-0284.
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