Dive Brief:

• Staff of the Arizona Corporation Commission (ACC) on Thursday proposed a 100% Clean Energy Standard by 2050, a new integrated resource planning (IRP) process and other rule changes as part of the state's efforts to modernize electricity regulation.
• The proposal includes a "technology neutral" all-source request for proposal (RFP) process where utilities solicit bids from market participants to address resource needs.
• Clean energy advocates recommended an emissions-based standard that would measure carbon dioxide reduced over time. "What staff has proposed is a step forward, but it falls short,"  Adam Stafford, Clean Energy Program staff attorney for Western Resource Advocates, told Utility Dive.

Dive Insight:

Arizona's renewable energy requirements were last set in 2006 at 15% by 2025, and since then utilities in the state have set goals that match, or in some cases exceed, staff's new proposed pace.

In June, Tucson Electric Power (TEP) proposed using solar, wind and energy storage systems to reach 70% renewables by 2035. Arizona Public Service (APS) plans to deliver 100% carbon-free energy by 2050, with a near-term target of 45% renewables by 2030.

Utility IRPs are unlikely to be impacted by the new rules because their proposals appear to meet the standards being considered, said Stafford. Long-term plans were originally slated for approval in December, but that has been pushed back until February due to the COVID-19 pandemic. 

Staff's proposal calls for at least 50% renewables by 2035.

APS said it plans to respond to staff's proposal in the ACC docket. "What we can tell you now is that APS supports the Commission adopting forward-looking energy rules," a spokesperson told Utility Dive. "We look forward to working with the ACC and other stakeholders so that we can balance affordable rates with delivering clean energy to our customers.”

A spokesperson for TEP said the utility is reviewing staff's proposal and could not comment, but noted that its 2020 IRP includes a carbon emissions reduction goal.

Staff's proposal will replace Arizona's current Renewable Energy Standard and Tariff rules, efficiency standard and IRP process. The informal process to develop the proposal has been going for two years now, and if the commission adopts the proposed order, it would launch a formal rulemaking process.

Amendments and changes to the proposed rules are likely to occur at the ACC's July 30 open meeting, said Stafford. Once proposed rules are formally issued, it will launch a 30-day comment period.

"It's a step in the right direction, but it's a technology-based standard and we proposed an emissions standard," said Stafford. "The analytics we did showed you get better results focused on an emission standard. ... Under what we proposed, you would get a clean energy credit for producing power from wind, solar and other renewables. Natural gas would get a partial credit."

Gas will eventually need to be phased out or paired with carbon capture, said Stafford. "But for the next five to 10 years, gas will play an important role in balancing intermittent resources."

The turning point, he said, will come when the cost of long-duration storage is low enough to push all gas-fired generation off the system. But until then, the state can "still achieve meaningful carbon reductions."