(The Center Square) – The Arizona Corporation Commission unanimously voted to repeal mandates that allowed affluent ratepayers to be subsidized by low-income ratepayers.
The ACC implemented Electric Energy Efficiency Standards Rules in 2010, requiring retail electric utilities to achieve 22% annual savings in retail energy sales by 2020.
At its meeting last week, the ACC said the market had advanced to where these types of subsidies were no longer necessary. Utility companies such as Arizona Public Service and Tucson Electric Power have gone above the standard, according to the commission.
The ACC noted these mandates were costing ratepayers, including low-income ratepayers, millions of dollars, while a portion of the benefits went to affluent ratepayers.
Nick Myers, the ACC’s chairman, gave the example of how these mandates were benefiting a select few.
He cited home builders installing new energy-efficient appliances and then applying for an energy-efficient credit.
“It was literally just shifting money from the ratepayers to certain classes or industries of people,” he told The Center Square on Wednesday.
Myers said these mandates end up hurting low-income people because they are not going out and using energy efficiency credits.
He also gave the example of a new energy-efficient air conditioner that costs $10,000. He said a credit may cover $1,000 of the air conditioner, but a person would need to come up with the other $9,000.
“Low-income folks typically just don’t have the money to do that,” he explained.
“The people that these programs were targeting are not going to get any benefit from the actual program because they can’t afford it even with the handouts,” he noted.
The ACC sees these mandates for utilities as a “blank check,” Myers explained.
Whenever something is mandated for utility companies, they are allowed to recover payment for it, he said.
The ACC doesn’t “necessarily like that,” he added.
At the ACC meeting, Vice Chair Rachel Walden said, “The repeal of the rules does not mean that energy efficiency or demand side management programs go away. I urge technology stakeholders to continue to propose these types of solutions to offset new generation needs.”
Commissioner Lea Márquez Peterson noted she looked “forward to working with stakeholders on supporting programs that provide energy efficiency options for families and small businesses in the future for those customers that want to participate.”
All other approved energy efficiency programs will continue, the ACC said.
Ann Porter, the communications director for Arizona Public Service, told The Center Square by email on Wednesday that the company “will continue to work with the commission on cost-effective energy efficiency and demand-side management programs to meet customers’ needs.”
Joseph Barrios, Tucson Electric Power’s manager of corporate communications, said, “Although state regulators voted last week to repeal energy efficiency rules for Arizona’s electric utilities, energy efficiency programs remain available to TEP and UniSource electric customers.”
“Customers can continue to sign up for existing programs,” Barrios told The Center Square via email on Wednesday.
According to Myers, the programs the ACC likes to keep in place “are ones that are specifically for low-income folks.”
When utility companies have a new rate case, all their “programs will be evaluated on an individual basis as to whether they are cost-effective or not,” Myers said.
“This removes the blanket rules that utilities could create new programs and then justify their existence,” he added.
If utilities propose a plan that is “impactful” and helps low-income people “in a meaningful way,” then the ACC “would look at it more favorably,” Myers explained.