Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Rulemaking (RE-00000A-24-0026) In the Matter of the Proposed Modifications to the Renewable Energy Standard and Tariff (REST) Rules
 
Chairman and Commissioners,
 
When the Commission voted to eliminate the REST rules, AriSEIA made public comments in opposition. We understand that the REST was, very probably, acting as a floor to renewables development at this point. The utilities all plan to exceed 15% renewables next year. However, the repeal of the REST sends the wrong message to the rest of the country and the rest of the State. The repeal of the REST tells the renewables industry that Arizona is not a stable and reliable place to do business and that they should take their jobs and investment elsewhere. The value of the State’s solar market alone is $20.4 billion, with $2.5 billion invested just last year.[1] There are currently 9,726 solar jobs in Arizona.[2] Those companies could develop in Nevada or Utah or New Mexico instead.
 
Further, the REST rules repeal is specifically being referenced in county Board of Supervisors meetings in support of renewables moratoriums or caps. This could directly impact the affordability and reliability of our grid. Arizona only has 15 counties. Two of them currently have de facto moratoriums or proposed extreme caps on solar development. Yavapai County is currently proposing a cap of less than 1% of the county’s land and the repeal of the REST is being cited in support. These kinds of ordinances spread. If the utilities cannot procure or develop renewables in Arizona, they are either going to have to invest in more expensive power or buy more power from out of state or rely on market purchases.
 
We know that renewables have a lower levelized cost of electricity (LCOE) than combustion cycle (CT) gas, nuclear, or coal.[3] We also know that the Arizona utilities plan to develop significant amounts of clean energy resources.[4] But they will have trouble doing that if they cannot build anything. We have seen NIMBYISM plague every type of generation in the state from solar to transmission to gas plants. We do not need to exacerbate what is already a concerning problem and that is exactly what the REST rules repeal does. It provides additional inaccurate talking points to those that are not tasked with keeping the lights on and the prices affordable.
 
Further, while AriSEIA has great respect for Elliott Pollack, indeed, they are also the economists we work with on our own economic studies, the Memorandum attached to Staff’s August 21, 2024 filing includes no economic analyses or quantitative data. Additionally, the “affected classes of persons” does not include industry or employees that could very well be impacted by a curtailment in the State’s renewables sector.
 
Additional Information Regarding the Economics of Solar
 
As additional attachments, AriSEIA includes several supplemental reports on the economic value of renewables to the State. And while we have heard several comments about the cost of renewables to ratepayers, including in the Commission’s own press release,[5] we have not seen that data filed to the docket. We are unable to verify the veracity of that data or review its methodology. Any such data must compare the costs and the benefits to arrive at a net value. An independent study by Strategen concluded that the REST has delivered significant benefits to utilities and the customers of APS and TEP including $1.5 billion for the public and $469 million for customers.[6]  
 
According to Rounds Consulting Group, Arizona is uniquely positioned to leverage solar as a major economic driver in the State.[7] Some of the largest global companies like Meta, Google, Intel, PayPal, and Apple rely on solar in the State.[8]  In the wake of fortune 500 companies prioritizing clean energy, LG Energy Solutions is an example of companies choosing Arizona as a major base because of solar potential.[9]  Large company presence contributes thousands of jobs to the Arizona economy.
 
Solar benefits the local and state community by generating jobs and revenue. Based on an Elliott Pollack Economic Impact and Tax Revenue Analysis for solar development in Maricopa County, solar generates significant tax and economic impacts.[10] Considering current tax structures, a solar project around 1,200 acres producing 200 MW of power with 200 MW of battery storage would return an estimated $26.2 million in tax revenues over the life of the project.[11] A project this size would produce an estimated $349.7 million in economic activity with 379 jobs for Maricopa County during construction over 40 years of solar operations and 20 years of battery storage operations.[12] Similarly, an Economic impact and Tax Revenue Analysis for solar development in Yuma county yielded higher returns.[13] Assuming the same project size and lifespan as the Maricopa study, Yuma County solar development revenue is estimated at $25.8 million in taxes for the life of the project and $213.4 million in economic benefits including 299 jobs.[14]
 
Well over half of the states have mandatory renewable energy standards.[15] Very few states have repealed renewable energy standards without updating the standards thereafter. Arizona repealing the REST is not the norm or the trend of most U.S. states and nonexistent for states with high solar potential like Arizona.[16] We respectfully request the Commission update the REST to reflect the continued renewable energy economic potential and establish goals competitive with neighboring states.
 
Respectfully,
Autumn Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] Solar Energy Industries Association (SEIA), Arizona State Solar Census, Q2 2024, available here https://seia.org/wp-content/uploads/2024/08/Arizona-1.pdf. See Attachment K.

[2] Id.

[3] Lazard, LCOE, June 2024, available here https://www.lazard.com/media/xemfey0k/lazards-lcoeplus-june-2024-_vf.pdf. See Attachment L.

[4] See the integrated resource plans of APS and TEP in Docket No. E-99999A-22-0046, filed November 1, 2023 and Salt River Project (SRP), available here https://www.srpnet.com/assets/srpnet/pdf/grid-water-management/grid-management/isp/SRP-2023-Integrated-System-Plan-Report.pdf. See Attachment M.

[5] Arizona Corporation Commission, News Release, Feb. 8, 2024, available here https://www.azcc.gov/news/8.

[6] Strategen, Arizona REST 2020 Progress Report, Mar. 3, 2020, available here https://www.ceres.org/resources/reports/arizona-renewable-energy-standard-and-tariff-2020-progress-report. See Attachment D.

[7] Rounds Consulting Group, The Economic Benefits of Renewable Energy in Arizona, Aug. 2024, available here https://static1.squarespace.com/static/5734cf71b6aa60fb98e91bf2/t/66b4f9a81dd3d03b9e379fb2/1723136442672/080824+The+Economic+Benefits+of+Renewable+Energy+in+AZ+-+FINAL_v2+Reduced+Size.pdf. See Attachment A.

[8] Id. at 11.

[9] Id. at 13.

[10] Arizona Economy, Maricopa County Solar (Example Project) Economic Impact and Tax Revenue Analysis, July 2024, available here https://www.ariseia.org/uploads/1/3/8/5/138583971/maricopa_county_solar_project_e_f_071124.pdf [hereinafter Maricopa County Economic Analysis]. See Attachment B.

[11] The report bases estimates on 1,200 acres of solar producing 200 MW of power and an additional 200 MW of battery storage as this size is in the range of recent power purchase agreements by Arizona Public Service and Salt River Project. Additionally, the taxable original cost of solar equipment is depreciated over 30 years using a 10% floor, while battery storage is depreciated over 15 years with a 10% floor. According to A.R.S. § 42-14155, the full cash value for renewable energy equipment is 20% of the depreciated cost, subject to Arizona personal property taxes for 40 years (solar) and 20 years (battery).

[12] Maricopa County Economic Analysis, at 1-2.

[13] Arizona Economy, Yuma County Solar (Example Project) Economic Impact and Tax Revenue Analysis, July 2024, available here https://www.ariseia.org/uploads/1/3/8/5/138583971/yuma_county_solar_project_e_f_071124.pdf. See Attachment C.

[14] Id. at 1-2. See Attachments E-J for Economic Impact studies on other Arizona counties.

[15] NCSL, State Renewable Portfolio Standards and Goals, Aug. 13, 2021, available here https://www.ncsl.org/energy/state-renewable-portfolio-standards-and-goals.

[16] S&P Global, Arizona Regulators Vote to Repeal State Renewable Energy Target, Efficiency Rules, Feb. 8, 2024, available here https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/electric-power/020824-arizona-regulators-vote-to-repeal-state-renewable-energy-target-efficiency-rules.

AriSEIA filed direct testimony today in APS' rate case rehearing against the new fees imposed on solar customers this year. Those fees were imposed with absolutely no evidence presented in the original case, based on a cost of service study that was rife with errors and anomalies. Not only is the fee unfounded, arbitrary/capricous, and discriminatory, but our analysis reflects that actually solar customers are subsidizing non-solar customers. The hearing is scheduled for the week of October 28th.

APS sent a misleading customer notice about the solar charge rehearing in August. That notice implied that only some solar customers are impacted by the rehearing, when potentially all solar customers are impacted. AriSEIA has asked APS to reissue the notice.