Dive Brief:

• The Arizona Corporation Commission rejected the adoption of a set of clean energy rules on Wednesday in a 3-2 vote.
• The rules package included a timeline for 100% carbon-free electricity, new demand-side resources standards and integrated resource planning reforms. The package would have expanded energy efficiency programs for Arizona Public Service (APS) and Tucson Electric Power (TEP), offering rebates to customers for replacing inefficient appliances and upgrading lighting.
• Commissioner Jim O'Connor, R, voted against the rules package despite his work last May with Commissioner Anna Tovar, D, to revive the package through a separate rulemaking. Advanced Energy Economy (AEE) called O'Connor's vote "surprising."

Dive Insight:

Several commissioners expressed support during Wednesday's open meeting for moving forward on efficiency components and integrated resource planning through separate rulemakings.

"Abandoning this rules package takes Arizona's economic and advanced energy growth drastically off course," Shelby Stults, AEE's Arizona policy lead, said in a press release. "The ACC's decision creates uncertainty for businesses looking to set up shop in the state and will likely drive up the cost of electricity."

ACC Chair Lea Marquez Peterson, R, voted with fellow Republicans O'Connor and Commissioner Justin Olson to dismiss the rules, citing cost concerns. O'Connor said state-level rules were not necessary as "the utilities are serious and sincere with their commitments to clean energy," given their voluntary commitments for decarbonization.

Tovar and Commissioner Sandra Kennedy, D, noted in their support of the package that the rules would cut customer bills and spur investments in clean energy.

Marquez Peterson previously expressed interest in the full energy rules package with the stipulation that the carbon emissions standard would be a goal instead of a requirement. Arizona advocates stipulated there is a possibility to revive the rules with the Chairwoman's support, "with further modification," according to Ellen Zuckerman, co-director of the utility program at the Southwest Energy Efficiency Project (SWEEP).

Investor-owned utilities in the state, including APS and TEP, had signaled support for the rules package in the past year.

"Arizona's largest utilities have all said they want the regulatory certainty of a firm emissions reduction standard, and the business community has voiced support for that, as well," Adam Stafford, senior staff attorney with Western Resource Advocates, said in a statement.

The state's energy efficiency standard, which advocates say has saved customers more than $1.4 billion over the last decade, would have been extended another 10 years through the rules package.

"By failing to extend Arizona's Efficiency Standard, the Commission has abdicated its responsibility to protect Arizona ratepayers, including our most vulnerable community members," Caryn Potter, utility program manager for SWEEP, said in a statement.

"The commission must regroup and develop a new path forward that allows Arizona to address the current climate crisis. The power sector provides some of the most cost-effective opportunities to reduce climate pollution," Stafford said.