ACC (Pending)

A brief sheet on UNS Electric’s application for rate design change

Published June 2016

(Download full brief here)

The essentials:

  • UNS Electric, Inc., is a small utility serving approximately 93,000 ratepayers in Santa Cruz and Mohave Counties in Arizona.
  • The utility faces challenges in paying for fixed assets with a declining demand and a business model built on increasing energy consumption.
  • As a remedy, UNS is applying for a rate change focused on increasing the cost of electricity for small volume electricity users, especially those that may benefit from net-metering policies for distributed (primarily solar) generation.
  • Although the utility is small, the rate case is being closely watched, as it may be precedent setting for other utilities.

A Brief on the Draft Amendment to Change Arizona’s Energy Efficiency Resource Standard to a Goal

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The essentials

  • The Arizona Energy Efficiency Resource Standard (EERS) requires regulated electric utilities with an annual revenue of more than $5 million to achieve a cumulative energy savings of 22 percent by 2020, based on historical customer demand. The incremental savings began in 2011 at 1.25% of the previous year’s retail sales. Regulated gas utilities have a similar requirement of 6 percent cumulative energy savings by 2020, also based on historical consumer demand.
  • On November 4th, 2014, the Arizona Corporation Commission (ACC) staff filed a draft amendment to the state EERS that would have the effect of rescinding the mandatory Standard. Instead, gas and electric utilities would be allowed to determine their own custom energy efficiency goals each year, on the basis of cost-effectiveness, during their bi-annual integrated resource planning (IRP) process. The IRP is non-binding.
  • The public has until Tuesday, November 18th, 2014 to submit comments to the ACC regarding the proposal. (Comment submission information can be found at the end of this document).
  • Currently, the Societal Cost Test is used to verify all energy efficiency programs under the EERS. The amended goal would allow the Commission to use three other tests to determine cost effectiveness:

o   The Participant Cost Test

o   The Ratepayer Impact Cost Test

o   The Utility Cost Test



The ACC seeks an alternative to RECs: APS’s Track and Record brief Part II

Published April 2014

(download full brief)

The essentials

  • Arizona’s Renewable Energy Standard & Tariff (REST) requires that 4.5% of electricity comes from distributed generation (DG) systems such as rooftop solar.
  • Regulated utilities demonstrate compliance with the REST by collecting Renewable Energy Credits (RECs) from their customers who have installed DG systems, in exchange for upfront cash incentives meant to help customers finance the installation of the DG system.
  • With the rising demand for DG installations since the start of the REST, the Arizona Corporation Commission agreed to significantly reduce upfront incentives. As a result, the regulated electric utilities lost their guaranteed source of RECs that are needed to demonstrate compliance.
  • During June 2012, Arizona Public Service (APS), Tucson Electric, & Power (TEP), and UNS Electric (UNS) proposed a Track and Record option that would allow utilities to demonstrate compliance by tracking and counting towards compliance any new DG connection added within each service territory, independent of REC ownership.
  • On February 24, 2014, the ACC issued an order indicating that good cause exists for authorizing a one-year waiver to the regulated utilities’ (APS, TEP, and UNS) 4.5% DG requirement. The purpose of this waiver is to allow the ACC time to develop a new method to track utility compliance with REST.

APS’s Track and Record Proposal for Renewable Energy Credit Compliance

(download full brief)

The essentials

  • In its 2013 REST implementation plan submitted to the Arizona Corporation Commission, Arizona Public Service (APS) proposed eliminating all incentives for distributed generation (DG) renewable energy systems.
  • Under the REST, regulated utilities such as APS are required to obtain a certain amount of Renewable Energy Credits (RECs). One REC is created for every kilowatt hour generated, and is the property of the owner of the distributed generation system.
  • APS currently purchases its RECs by offering cash incentives to DG owners. Without incentives, APS will be unable to obtain the required amount of RECs.
  • APS proposes severing the relationship between generation of energy and ownership of RECs. Instead, APS proposes demonstrating compliance with the REST by tracking and recording all distributed energy production that is interconnected within its service territory.
  • Critics argue this would violate the REST and constitute a government taking of private property.


(download full brief)

The essentials

  • Energy efficiency may bring benefits such as less cost to consumers, fewer future rate increases, and less environment impact for energy consumption.
  • However utilities have a disincentive to invest in energy efficiency measures that reduce sales and therefore profitability.
  • A critical step for successful energy efficiency policy is a mechanism that severs the link between utility revenue and total energy sales.
  • The Arizona Corporation Commission has pursued such “decoupling” measures in several recent rate cases.