Dive Brief:
- Arizona Public Service Co.'s long-term plan calls for boosting its reliance on gas-fired power, looking to capitalize on cheap fuel that is about one-third the price it was a decade ago, the Arizona Republic reports.
- The Arizona Republic reports the utility's plan would boost gas reliance from about 26% today to 36% by 2031, which has sparked concerns from regulators over potential risks for customers.
- The utility is working to replace two older turbines at the Ocotillo Power Plant in Tempe, adding five more fuel efficient units and boosting capacity almost 300 MW.
Dive Insight:
APS this week presented its long-term resource plan to the Arizona Corporation Commission, and The Arizona Republic reports the utility faced questions about its plan to boost gas reliance, with regulators wary of possible price increases in the future.
"To significantly increase the deployment of natural-gas-based generation, what we are doing is assigning significant risk if gas prices rise to levels we've seen in the past," said Commission Chairman Doug Little. "If we bet our future on the price of natural gas, the customer pays the price."
The Southwest Energy Efficiency Project wants to see APS include more demand management options in its plans, especially targeting a reduciton in summertime peak use. "The commission needs to balance the utility's interests with the customer interests," said Jeff Schlegal, the group's representative in the state.
Last week, regulators approved APS' proposals for demandside management programs, which incorporates energy efficiency and energy storage. The utility's demandside management program is aimed at compliance with a 22% by 2020 energy efficiency standard.
The Sierra Club is challenging an air quality permit issued to APS that would enable the Ocotillo Power Plant upgrades, The $700 million project replaces two units and leaves in place a pair of 55 MW generators, ultimately boosting capacity from 330 MW to 620 MW.
Construction was scheduled to be completed in 2018 but the environmental group's appeal may slow the process.
APS is currently paying about $2.50/MMBtua, about one-third the cost 10 years ago. But while prices have remained low for some time, many expect the cost to rise as more utilities turn to the fuel.
Earlier this year, the U.S. Energy Information Administration said it expected gas to rise from an average of $2.65/MMBtu this year, to $3.22/MMBtu in 2017.
