Scottsdale debates weighing in on ACC's proposed energy efficiency, renewable standards

By Melissa Rosequist
Twitter: @mrosequist_

Scottsdale city officials will decide how publicly they want to support energy efficiency standards, as a letter endorsed by Mayor Jim Lane is being considered to be sent to the Arizona Corporation Commission in support of a new energy rule.

Two versions of a letter have been drafted for the ACC — only one mentioning and supporting energy efficiency standards — to be considered and voted upon by the Scottsdale City Council on Tuesday, Sept. 15.

The Arizona Corporation Commission, a five-member elected board responsible for regulating public utilities, is in the midst of considering a new energy rule, although a meeting for consideration and adoption of the new rule has not been yet scheduled, according to a Scottsdale city staff report.

The new rule, drafted by commission staff, proposes:

• 50% of the state’s electricity come from renewable sources such as solar and wind by 2030;
• 100% of power generated in the state be carbon-emission free by 2050; and
• 35% of Arizona electricity demand is met with energy efficiency measures by 2030 and thereafter.

“[C]ommunications with the office of the chairman of the ACC indicate his intent is to have such a meeting before the end of September,” stated the city staff report penned by Public Works Director Dan Worth.

This summer, ACC Chairman Bob Burns and Commissioner Sandra Kennedy put forward an amendment changing the staff plan, known as the BK Amendment.

“While many elements remain the same as in the staff proposal, including clean energy standard and the renewable energy standard, there are significant differences,” Mr. Worth said.

Those differences include replacing energy efficiency reporting with a mandated energy efficiency standard, requiring a utility to use cost-effective energy efficiency programs to achieve cumulative annual energy savings of 35% of the prior year’s retail sales by 2030.

The utilities are working under a current energy-efficiency plan that requires them to shave 22% of their previous year’s use. That plan was passed in 2010.

New Energy Rule

Mr. Worth states one of the proposed rules’ “more significant” issues is the inclusion of an energy efficiency standard.

“The July 29 staff-proposed rule does not include an energy efficiency standard, while the BK Amendment mandates that utilities achieve substantial reductions through energy efficiency,” Mr. Worth said.

Scottsdale receives utility services from both Salt River Project and Arizona Public Service Co., however the new rule will only affect APS operations as the ACC does not regulate SRP.

Scottsdale Water currently receives a payment of over $100,000 annually for its participation in the APS peak-shaving program, which calls on businesses and governments to reduce energy use during peak periods with financial rewards for doing so. Similarly, APS offers rebates for the installation of energy-efficient equipment, the staff report states, noting the city’s facilities department received rebates between $30,000 and $50,000 per year in past years for energy-efficient equipment replacements.

“In communications with staff APS indicates that they will still likely offer rebates and other demand management programs even if there is no energy-efficiency standard in the new energy rule, although their current programs may be modified. In the worst case, if APS reduces support for the peak-shaving program Scottsdale Water could lose some or all of the roughly $100,000 annual payment it receives,” Mr. Worth said.

Scottsdale also projects APS rebate programs will have an increased value for the city in future years, perhaps rising to as much as $200,000 annually or more as the city pursues energy-efficiency projects.

Part of the 2019 voter-approved bond project is the construction of solar energy projects, Mr. Worth points out.

“There is a potential fiscal impact to the city of the decision whether or not to include an energy-efficiency standard in the new energy rule,” Mr. Worth said.

“The city currently spends about $17.1 million per year for electrical service from APS and about $2.6 million per year for electrical service from SRP.”

As it stands now, there are several different rules regarding energy the ACC has approved in the past and which are included in the Arizona Administrative Code. This includes Renewal Energy Standard and Tariff — REST — rules that require affected utilities to provide 15% of their energy from renewable sources by 2025.

In August 2018, the ACC began a process to review these rules and to evaluate the modernization of Arizona’s energy regulation.

For the past two years, the ACC has held a series of workshops and gathering input on the proposed modernization.

In July 2019, ACC staff published a proposed new energy rule that was discussed at a July 30 ACC meeting.

Mr. Worth states in the Council report, the goals represented in the proposed new energy rule are consistent with goals expressed in the Scottsdale general plan and Council’s strategic goals.

“The community has consistently expressed support for energy-efficiency initiatives through various forums including support for the energy efficiency goals in the Scottsdale General Plan,” Mr. Worth said.

From the Mayor’s Office

In the first, supporting letter to be signed by Mayor Jim Lane, which was revised by city staff, it states the city feels it is “critical” to prevent the energy-efficiency standard from sunsetting at the end of 2020.

“Maximizing use of existing energy resources before investing in new sources is sound policy,” said Mr. Lane in the letter.

He goes on to point out the energy-efficiency programs offered by the electrical utilities, which Scottsdale residents take advantage of.

“The city supports continued rebates and incentives to encourage users to effectively manage energy usage and to partner with business to choose the most environmentally responsible equipment,” Mr. Lane said. “Energy efficiency measures produce greater results when assisted by utility set-asides and targets. We hope that reducing energy consumption will mitigate the need for new utility-scale power plants while reducing the urban heat island effect and keeping our energy rates as low as possible.”

In the second, shorter letter, Mr. Lane states the city supports the inclusion of clean and renewable energy standards in the proposed new energy rule under consideration.

Mr. Lane says the REST initiative enacted in 2006 was instrumental in encouraging development of renewable technologies and has contributed to cost reductions in these technologies, particularly solar.

“Continuing and strengthening the clean and renewable energy standards originally implemented with the REST as you adopt a new energy rule is vital to the state’s clean energy future,” Mr. Lane said in the second letter option.

The special meeting to consider endorsing the energy rule will be 4 p.m. Tuesday, Sept. 15. The meeting will be held electronically, and the public can view a live stream on Cox cable Channel 11 or ScottsdaleAZ.gov.