Extended Natural Gas Moratorium

The essentials

  • The Arizona Corporation Commission recently amended its 2018 decision to institute a moratorium on the procurement of natural gas power plants.
  • The moratorium has now been extended to last until August 2019.
  • The extension increases the likelihood that regulated utilities will need to invest in energy sources other than natural gas, including renewables.

See the full policy brief

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.

California’s 50 Percent Renewable Portfolio Standard: Opportunities for Arizona

Published March 2016

download full brief

The Essentials

  • For our analysis of California’s 2011 Renewable Portfolio Standard (RPS), please see California’s Renewable Portfolio Standard: How will Arizona and the Southwest be affected?
  • Under SB 350, named the “Clean Energy and Pollution Reduction Act of 2015,” California recently increased its RPS to 50 percent renewables by 2030 (up from 33 percent by 2020).
  • California’s goal is more than double what will be needed to comply with the Clean Power Plan (21 percent by 2030).
  • The RPS includes interim targets of 40 percent renewables by the end of 2024, 45 percent by the end of 2027, and 50 percent by the end of the 2030.
  • SB 350 also requires demand-side energy efficiency savings for retail consumers of electricity and natural gas to double by 2030. The benchmark for this goal has yet to be determined.

Read full brief at this link: https://energypolicy.asu.edu/wp-content/uploads/2016/03/California-RPS-standards-brief.pdf

Clean Power Plan Summary for Arizona

Published November 2015

download full brief

The essentials

  • The Environmental Protection Agency (EPA) announced the finalized Clean Power Plan rule on August 3, 2015. The Clean Power Plan limits carbon dioxide emissions from existing power plants on a state-by-state basis under Clean Air Act 111(d).
  • The final rule for states includes both a mass-based approach and a rate-based approach for states to ensure emission reductions.
  • States have an interim goal for 2022-2029 and a final goal to meet by 2030.
  • Arizona’s final rate-based goal is a 34% reduction from its 2005 carbon dioxide emissions level.
  • The EPA is also issuing a proposed Federal Plan as both a model design for state plans and as the plan that will be used in cases where states do not submit their own plan. The proposed rule was published on October 23rd, 2015, and the public has until January 21, 2016 to provide substantive comments.

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

download full brief

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



Clean Energy Initiative

The Clean Energy Initiative is a three university project led by Arizona State University in partnership with Northern Arizona University and the University of Arizona. We aim to contribute to the state-level discussions surrounding the Environmental Protection Agency’s Clean Power Plan proposed regulations. Gary Dirks, Director of the Julie Ann Wrigley Global Institute of Sustainability and of LightWorks, provides an overview of our Initiative here.

Our Initiative will include a variety of activities such as:

  • this online forum
  • small workshops
  • a culminating Summit scheduled to coincide with the publications of the finalized regulations

The online forum is hosted on the LightWorks website, but it is also accessible on this page.

Current posts:

Please join the discussion by tweeting us @ASUEnergyPolicy using the #CleanEnergyInitiative or posting on our Facebook page.



{New!} Where we discuss current events in the electric industry world.


March 15, 2016

UNS Electric’s 2016 Rate Case, Docket Number E-04204A-15-0142

If you follow events in the Arizona utility world (and who doesn’t?), you have likely been aware of the UNS Electric rate case hearings being held at the Arizona Corporation Commission (ACC). Although UNS Electric is a small utility, serving customers in Mohave and Santa Cruz counties, the rate case has attracted significant attention due to its precedent-setting potential. UNS Electric has proposed several rate structure changes, in addition to revenue increases. These changes include increased basic service charges to residential and small commercial customers; an optional tri-part rate structure for residential customers and small commercial customers; and a mandatory tri-part rate structure for residential and small commercial customers with “partial requirements,” (generally customers with distributed solar installations). For commercial customers, UNS Electric is also proposing interruptible rates and discounted electricity rates to new businesses meeting certain qualifications. UNS Electric’s rate case is the first in a string of upcoming rate cases at the ACC; APS, TEP, and other utilities throughout the state have rate cases that will be heard later in the year.

UNS Electric’s client base is 88 percent residential customers, 11 percent commercial customers, and 1 percent industrial and mining customers. Retail sales have dropped 50 percent since 2012, due to the combined shutdown and curtailment of operations of their industry and mining customers. The utility also claims a 4 percent residential usage drop since 2012, due in large part to the effects of energy efficiency measures and distributed generation penetration.

Additionally, UNS Electric recently purchased a 137 MW portion of the 550 MW Gila River Power Station Power Block 3 for $55 million. Gila River Power Station is a Natural Gas Combined Cycle (NGCC) generating station in Gila Bend, and this acquisition is UNS Electric’s only baseload generating station in its portfolio. UNS Electric is requesting the ACC to allow UNS Electric to include the cost of acquiring the interest in Gila River Power Station in its rate base.

Some of the most contentious parts of UNS Electric’s proposal are the changes to rates and net-metering tariffs for residential and small commercial customers with distributed solar generation (DG). The new rate design for DG customers would require:

  1. Basic Service Charge (Metering, service line, customer service, billing functions and minimum distribution system costs recovery.)
  2. Demand Charge (To send appropriate cost-of-service signal and allow for recovery of fixed transmission and generation costs over a specific period of time.)
  3. Energy Charge (Recover fuel and purchased power expenses attributable to the amount of energy used by customer.)

The claim is that the rate design changes will result in a more equitable cost recovery in an environment with both declining electricity sales and increased system requirements.

Residential and small commercial customers who participate in net metering would be compensated for excess energy wheeled onto the grid at a new Renewable Credit Rate,- the rate at which the most recent utility scale renewable energy purchased power agreement connected to the distribution system of TEP. Currently, they are compensated at retail costs for all of their DG production.

We’ll be following the proceedings throughout the spring and will keep you informed on the progress.

-Joaquin Arredondo and Maren Mahoney

Brief sheet on the Arizona Department of Revenue’s reinterpretation of tax law on third-party owned solar installations

published June 2014

download full brief

the essentials


  • In 2013 the Arizona Department of Revenue reinterpreted A.R.S §42-11054(C)(2) and A.R.S. §§ 42-14155(B)(C) to require third-party financed solar installations to be assessed a property tax. Homeowners, governments, businesses, and other entities that own their rooftop systems would continue to be exempt from property tax assessments.
  • Taxing leased systems would add roughly $150/year to system costs. The added cost is expected to be passed onto the solar equipment lessees.
  • During the most recent legislative session, some legislators proposed a bill codifying the DOR’s reinterpretation while others worked to exempt all solar panels from property taxation, regardless of how they are financed. However, neither position was codified.
  • Preliminary tax assessments will begin June 2015.

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.