In 2017, APS reached a settlement on rate design that will have different impacts on different user groups. Although rates will affect individuals differently, and additional changes may occur before final approval, some of the expected results of this settlement are described at this summary brief.
On December 18, 2015, Congress passed The Consolidated Appropriations Act which extended Investment and Production Tax Credits for select renewable energies, effective through 2020.
An Investment Tax Credit (ITC) allows a taxpayer to take a certain percentage of an investment or purchase from his taxes. Similarly, a Production Tax Credit (PTC) is a tax reduction by a given amount per unit of a good produced.
The Act extends the current 30 percent ITC for qualifying solar energy facilities to 2019. It then creates a phase out program where the ITC is reduced to increasingly lower values until 2022. This ITC also applies to qualifying hydroelectric, biofuel, and methane recapturing programs.
The Act also extends the current PTC for wind and other qualifying facilities for another year. Thereafter, the PTC is incrementally reduced before being completely phased out in 2020.
The Act also includes an unrelated provision which lifts a 40 year ban on the exportation of crude oil from the U.S. While this seems to be at odds with the favorable renewable energy provisions of the Act, the wind industry has viewed this as an acceptable tradeoff and a net win for the environment.
The Act is expected to create $73 billion in new renewable energy investment, 8 million more households powered by renewable energy, and 37 gigawatts of new wind and solar capacity.
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.
See our previous brief sheets for background on What a Renewable Energy Credit (REC) is and the background on why the Arizona Corporation Commission is addressing how utilities obtain the Renewable Energy Credits needed to comply with the Arizona Renewable Energy Tariff and Standard (REST).
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 purchasing Renewable Energy Credits (RECs) from their customers who have installed DG systems, typically with 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.
In June 2012, utilities 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.
The REST rules had not been updated since they were approved in 2006.
The Utilities Division Staff (“Staff”) of the ACC proposed seven options to modify the REST rules. Ultimately, the ACC adopted a modified version of APS’s Track and Record option.
The adopted modifications require a utility to include in its compliance reports the actual kWhs of energy produced within its service territory from DG. A utility must differentiate between kWhs for which it owns the REC, and kWhs produced in the service territory for which it does not own the REC. Those kWhs for which a utility does not own the REC will not count towards compliance, but will be “acknowledged” by the ACC for informational purposes only. The REC remains with the producer of DG energy, unless purchased by a utility.
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.
Energy measuring and reporting, also known as energy benchmarking, provides building owners, tenants and property managers with information about energy consumption in their building
Arizona Senate Bill 1241 passed through the Arizona legislature in April 2015, preventing local governments from mandating energy usage reporting for commercial buildings.
Supporters of the bill, including the Commercial Real Estate Development Association, rallied around the perceived risk that energy benchmarking poses for small businesses, citing concerns that regulations raise costs and create a regulatory nuisance for businesses.
Opposition groups to S.B. 1241, including the Sierra Club and ASHRAE, cited the benefits of energy benchmarking to consumers and the environment.
In April 2015, Arizona Governor Doug Ducey signed S.B. 1241 into law.