​Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Comments on the August 30, 2024 Utilities Division Memorandum and Amendments, Docket No. E-99999A-22-0046
 
Chairman and Commissioners,
 
On August 30, 2024, Commission Staff filed a Memorandum with their recommendations as to the Integrated Resource Plans (IRP) of Arizona Public Service (APS), Tucson Electric Power (TEP), UNS Electric (UNSE), and Arizona Electric Power Cooperative (AEPCO).[1] AriSEIA participates on the Resource Planning Advisory Council (RPAC) for APS and TEP and has for many years.
 
        I.            AriSEIA IRP Engagement
 
AriSEIA first filed in this docket on April 28, 2023 expressing concerns about the delay with APS and TEP providing the modeling licenses that were required from the 2020 IRP Order (Decision No. 78499).[2] It had been 15 months and stakeholders still did not have nondisclosure agreements (NDAs) executed, licenses, or utility data. At that time, we asked for an IRP filing extension, as it takes months to review these models. AriSEIA reiterated these concerns verbally at the June 21, 2023 Open Meeting.
 
AriSEIA also hired a consultant and obtained a modeling license for this IRP. AriSEIA filed two different sets of comments in this docket on January 31, 2024. The comments we filed with our consultant, Rocky Mountain Institute (RMI), are 263 pages long.[3] These comments included comprehensive slides as to their review of the modeling done by APS (60 slides) and TEP (63 slides). We presented this work one on one with each utility and to each RPAC (four total presentations). Plus, RMI provided a presentation to each RPAC on IRP best practices (another two presentations, for six total presentations). We also provided an abbreviated version of the slides to Commission Staff, which we presented at the IRP workshop on July 31, 2024. AriSEIA also attended all of the modeling trainings and briefed APS on what we intended to do with the model before we ever obtained a license. AriSEIA also filed individual comments on the IRP on January 31, 2024, which were 142 pages in length.[4] Those comments focused on our recommendations for the next IRP (the 2026 IRP). Those recommendations are worth repeating here, as many of them are not included in Staff’s recommendation. Namely we recommend retaining the following requirements from the 2020 IRP Order:

• A comprehensive analysis of power system resiliency to extreme weather[5]
• Discussion of the load serving entities’ (LSE) gas price assumptions[6]
• A variety of potential portfolios[7]
• An analysis of resource adequacy[8]
• A requirement to provide stakeholders with modeling licenses[9]
• A requirement to eliminate must run designations,[10] as well as restrictions on the economic cycling of plants[11]
• A requirement that the utilities accurately account for the costs of hydrogen[12]
• A requirement that the utilities continue to include relevant tax credits in their modeling[13]
• A requirement that the utilities evaluate the emissions reductions of their portfolios[14]
• A requirement for the utilities to select a preferred portfolio[15]
• A requirement that both TEP and APS use capacity expansion modeling[16]

We also recommended the inclusion of the following new requirements:

• That the next IRP be filed in 2026.
• That TEP and APS be required to continue using a Resource Planning Advisory Council (RPAC) process to hold at least monthly meetings and commence at least one (1) year in advance of the next IRP filing deadline.
• That TEP be required to file a complete plan and actually use capacity expansion modeling similar to APS’ modeling and plan in this docket.
• That TEP and APS be required to continue using ASRFPs for procurement of new resources.
• That the RPAC be utilized to improve the ASRFPs prior to release and be apprised of the results thereafter.
• That modeling licenses, nondisclosure agreements, any necessary training, and preliminary data be provided to stakeholders at least six (6) months prior to the IRP filing deadlines.
• That the final data be provided to stakeholders at least three (3) months prior to the IRP deadline.
• That the preferred portfolio be provided to the RPAC at least two (2) months prior to the IRP filing deadline.
• That the utilities be required to run at least ten (10) different portfolios that evaluate a variety of different scenarios developed in concert with their RPACs.

The majority of these recommendations were not included in Staff’s recommendation. AriSEIA also filed a letter to this docket on August 27, 2024 in response to APS and TEP comments that stakeholders that obtained modeling licenses had not appropriately used those licenses.[17] That letter noted that fifteen different organizations filed stakeholder comments on the IRP on January 31, 2024. To our knowledge, the only stakeholder groups to obtain licenses were AriSEIA, Western Resource Advocates (WRA), and Sierra Club. All of those organizations hired consultants to evaluate the models. All of those groups filed comments on January 31, 2024, and presented at the Commission’s IRP workshop on July 31, 2024. All of the slides the stakeholders presented at that workshop were also filed in the docket.[18]

The Sierra Club filed 36 pages of single spaced comments on the APS plan[19] and 26 single spaced comments on the TEP plan[20] on January 31, 2024 and hired Synapse Energy Economics, Inc. to review the models. WRA filed 24 pages of single spaced comments on the TEP plan[21] and 49 pages of single spaced comments on the APS plan.[22] WRA hired Energy Strategies as their consultant on the model analysis, as well as to conduct their own modeling. Sierra Club and WRA also presented their work to the RPAC. Other than Staff, AriSEIA is not aware of any other stakeholder obtaining a modeling license. Collectively, the stakeholders that obtained modeling licenses filed 540 pages of analysis and gave at least 11 presentations on our work between the RPAC, the utilities, and the Commission. And that is despite the fact that we received the licenses and data from the utilities very late in the process. Until TEP filed comments on May 31, 2024, it had never before been asserted that the stakeholders had used the licenses insufficiently.[23] APS did not assert there was any deficiency with the stakeholder use of the licenses until August 26, 2024, nearly seven months after the stakeholders filed their comments.[24]
 
     II.            Staff Recommendation
 
AriSEIA did no less work than Staff did with the modeling license. In Staff’s recommendation, they wrote:
 
"Staff did find value in being able to navigate the software and step through the inputs in the project files…. Staff believes this software is important for Staff’s analysis in the IRP process. Staff recommends that APS, TEP, and UNSE continue to provide Staff` with a license to the Aurora Modeling Software."[25]
 
Staff then acknowledges the numerous issues stakeholders had in obtaining licenses from the utilities, stating:
 
"Stakeholders in the RPAC stated that they experienced difficulties with fully utilizing the licensing that was provided because of timelines and insufficient data sharing. As a result, stakeholders modeling effects were not as impactful as they could have been. APS only provided the project files for its reference case and TEP and UNSE only provided the project files for its base case."[26]
 
Despite Staff stating that even though they did not do their own modeling and acknowledging the many issues stakeholders encountered with the utilities in being able to access the models, Staff removes the requirement to provide modeling licenses to stakeholders. The 2020 IRP order stated:
 
"IT IS FURTHER ORDERED that Arizona Public Service Company, Tucson Electric Power Company, and UNS Electric, Inc. shall in future Integrated Resource Plans negotiate a project-based licensing fee that permits up to 12 Resource Planning Advisory Council members and Staff the ability to perform their own modeling runs in the same software package as these load serving entities, and to provide all necessary data and support to fully utilize the models. The load serving entities shall absorb the cost of the licensing fees."[27]

Despite recommending removal of this requirement, Staff then states that “Staff believes that transparency in the IRP process is important to develop comprehensive IRPs.”[28] However, removing the requirement to provide access to the modeling inhibits transparency. Staff’s only stated reason for removing the modeling requirement for stakeholders is cost.[29] However, a reimbursement model would not lower costs. In fact, because it would create additional administrative burdens, it would likely cost more. There is nothing in the Staff Recommendation that articulates the process by which Staff or the utilities will manage a reimbursement program. Some initial questions include:
 
·         Who will manage and monitor this program?
·         By what date must the utilities reimburse the costs of the modeling licenses?
·         What is the deliverable that stakeholders must provide to the utilities and by when?
·         What is the remedy process should there be a dispute?
 
Additionally, it is unclear if the utilities will be able to negotiate a reduced rate license if the stakeholders are to procure the licenses on their own to be potentially reimbursed someday if the utilities, in their sole discretion, deem it warranted. For example, WRA objectively met the never before stated requirement to model their own portfolios (something Staff admits they did not do). Therefore, if only WRA is entitled to reimbursement and that license is astronomically more expensive than the negotiated bulk licenses procured by the utility, the reimbursement could be higher than it is with the current system.
 
Further, a reimbursement program would make it impossible for small nonprofits, such as AriSEIA, to participate at all. AriSEIA has never missed an RPAC meeting. AriSEIA has objectively actively engaged in this docket. It has never been asserted that we do not participate or contribute and yet, under the Staff Recommendation, we are the stakeholder that would be excluded from this process going forward. AriSEIA reached out to Staff three times before this filing in an attempt to understand what problem they are trying to solve with their recommendations, but we were not provided the opportunity to discuss this issue.
 
AriSEIA objects to Staff recommendations 7 and 8 (also known as G and H). Those recommendations will not increase transparency. There is also no evidence that those recommendations will save ratepayers’ money.
 
AriSEIA also objects to Staff recommendation 13 (also known as M). The proper way for the Commission to modify a prior order is through A.R.S. § 40-252. Also, the Staff Recommendation is missing several of the items listed on page 2 above from the 2020 IRP Order that are still very valuable, such as:

• A comprehensive analysis of power system resiliency to extreme weather like heat and wildfires,
• Discussion of the LSE’s gas price assumptions,
• An analysis of resource adequacy,
• A requirement to eliminate must run designations as well as restrictions on the economic cycling of plants,
• A requirement that the utilities accurately account for the costs of hydrogen,
• A requirement that the utilities continue to include relevant tax credits in their modeling, and
• A requirement that both TEP and APS use capacity expansion modeling.

AriSEIA also recommends the utilities model ten, not seven, portfolios in the 2026 IRP. Staff recommended only seven in its recommendation 14 (also known as N).
 
The Commission removed the requirement for Staff to obtain a consultant to provide an independent review of the IRPs.[30] This is reason enough for continued stakeholder access to the models. Removing the third party requirement and limiting stakeholder participation in the IRP docket is a step in the wrong direction and takes us back to the backbox utility IRPs that we not acknowledged by the Commission in prior years.[31] This is the first time the utilities have ever provided modeling access and no evidence has been provided that those licenses were misused. No evidence has been provided that removing that requirement will save ratepayers money. Therefore, AriSEIA has provided two Proposed Amendments below.
 
  III.            Battery Storage
 
Baseload resources are resources that run consistently all or most of the time. Nuclear is an example. You are not going to ramp up and down a nuclear plant based on changes in demand. Dispatchable resources are resources that can be increased or decreased on demand as the needs of the grid change. Some resources are both, such as geothermal and hydropower. They can be run consistently or they can be ramped up and down based on needs. Some resources like gas peakers (combustion turbines (CTs)) and batteries are dispatchable, but are not baseload. Batteries can be dispatched as needed.[32]
 
There are many kinds of storage, batteries are one type. There are many different kinds of battery technologies and they have different capabilities. There are lithium ion batteries, redox flow batteries, lead batteries, vanadium redox flow batteries, nickel-cadmium batteries, sodium sulfur batteries, iron-chromium flow batteries, and zinc-bromine flow batteries.[33] The durations of these technologies range from two hours to ten hours.[34] Indeed, Salt River Project (SRP) has a ten hour flow battery expected to be operational by Q1 of 2026.[35]
 
Batteries are dispatchable. Therefore, they should not be excluded from the Commissioner Thompson and Commissioner Myers Joint Proposed Amendment No. 1. Further, singling out specific technologies undermines the utilities’ usage of all source requests for proposals (ASRFPs). The entire point of moving to ASRFPs is so that all resources have a level playing field on which to compete on cost and utility needs. The Commission singling out specific technologies that cannot be used for capacity or resource planning will jeopardize affordability. Further, it undercuts innovation. Why would the Commission want to choose winners and losers in a game with constantly improving technology? Additionally, specifically eliminating certain technologies makes the utilities more vulnerable to supply chain constraints. A war, natural disaster, new political administration, global pandemic, port strike, etc. can all impact which technologies are available and affordable at any given time. Why would the Commission want to constrain those options?
 
As the amendment is drafted, the only resources that appear to count as “dependable and dispatchable capacity, not including battery storage” but also “approved” after December 31, 2024 and before 2031 would be gas peakers (CTs). Specifying how much of what kind of resource a utility must buy and when, in order to make an additional decision about which plants to retire, is very prescriptive and may be more of a managerial decision than a regulatory one.
 
Finally, because APS first announced it was closing Four Corners in 2020. It is not clear why the new capacity resources that APS must procure to replace Four Corners need be procured only after December 31, 2024. All capacity resources APS procures to replace Four Corners should count for resource adequacy purposes.
 
That being said, AriSEIA understands the purpose of the Amendment and has suggested a friendly amendment below to maintain the spirit of the Amendment while being technology agnostic.
 
  IV.            Commissioner and Staff Amendments
 
AriSEIA has reviewed the documents filed by Staff, Commissioner Myers, and Commissioner Thompson.
 
AriSEIA supports Staff Proposed Amendment No. 1. The utilities have been clear that the coal retirement dates are economic decisions.

AriSEIA opposes Staff Proposed Amendment No. 3. This amendment makes the data that the utilities are to provide to stakeholders with the modeling licenses more ambiguous. “Portfolios” are more specific. If Staff wishes to add “information” it should be additive to and not in lieu of the “portfolios.”

AriSEIA opposes Staff Proposed Amendment No. 2. This language is removed by AriSEIA Proposed Amendment No. 1. Further, this language is redundant. For the stakeholder to have modeling results, they would have to use the software.

AriSEIA supports Commissioner Myers Proposed Amendment No. 3. Ensuring the accuracy of load forecasts is essential for maintaining reliability and ensuring affordability.

AriSEIA supports Commissioner Myers Proposed Amendment No. 6. Regional markets participation is a relevant factor that can impact resource selections and costs and should be included in long term planning.

AriSEIA has offered a friendly amendment to Commissioner Thompson and Commissioner Myers Joint Proposed Amendment No. 1. AriSEIA supports efforts to ensure resource adequacy, but does not think the Commission should exclude any technologies that provide “dependable and dispatchable capacity.” Please see AriSEIA Proposed Amendment No. 3.
 
Respectfully,
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] Arizona Corporate Commission, Staff’s Integrated Resource Plans (IRP) Recommendation, August 30, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000037784.pdf [hereinafter Staff Recommendation].

[2] AriSEIA, Letter to Commission on IRP, April 28, 2023, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000026311.pdf?i=1727931647086.

[3] AriSEIA, Vote Solar, and Advanced Energy United, Joint Comments to Commission on IRP, January 31, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000033451.pdf?i=1727931647086.

[4] AriSEIA, Comments to Commission on IRP, January 31, 2024, Docket No. E-99999A-22-0046, at 4-5, available here https://docket.images.azcc.gov/E000033415.pdf?i=1727931647086.

[5] Arizona Corporate Commission, Staff Assessment of 2020 IRP, March 2, 2022, Decision No. 78499, at 11:1-2,  available here https://docket.images.azcc.gov/0000206081.pdf?i=1700515655944 [hereinafter 2020 IRP Order].

[6] Id. at 11:8-13.

[7] Id. at 13:10-16.

[8] Id. at 14:5-8.

[9] Id. at 14:9-14.

[10] Id. at 14:15-17.

[11] Id. at 14:22-25.

[12] Id. at 15:1-3.

[13] Id. at 15:4-6.

[14] Id. at 15:7-9.

[15] Id. at 15:14-16.

[16] Id. at 17:15-17.

[17] AriSEIA, Letter to Commissioners, August 27, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000037591.pdf?i=1727931647086.

[18] Utilities Division Staff, IRP Memorandum, July 29, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000036917.pdf?i=1727931647086.

[19] Sierra Club, Comments on the APS 2023 IRP, January 31, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000033488.pdf?i=1727931647086.

[20] Sierra Club, Comments on the TEP 2023 IRP, January 31, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000033487.pdf?i=1727931647086.

[21] WRA, Notice of Filing Comments on the 2023 IRP of TEP, January 31, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000033471.pdf?i=1727931647086.

[22] WRA, Amended Notice of Filing Comments on the 2023 IRP of APS, January 31, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000033473.pdf?i=1727931647086.

[23] TEP, Response to Stakeholder Comments, May 31, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000035982.pdf?i=1727931647086.

[24] APS, Response to Commissioner Questions, August 23, 2024, Docket No. E-99999A-22-0046, available here https://docket.images.azcc.gov/E000037555.pdf?i=1727931647086 (APS asserts they purchased a total of six licenses for stakeholders. It is unclear if this number includes Staff. It is unclear who the additional licenses were for and contradicts information APS has provided as to the total amount spent on the licenses. It also falsely asserts that “APS is not aware of whether any other stakeholders utilized the remaining licenses,” despite us presenting at least 11 total times.)

[25] Staff Recommendation at 86.

[26] Id. at 86-87.

[27] 2020 IRP Order at 14:9-14.

[28] Staff Recommendation at 87.

[29] Id.

[30] Arizona Corporate Commission, Order, June 20, 2024, Decision No. 79385, Docket No. E-00000V-15-0094, available here https://docket.images.azcc.gov/0000211300.pdf?i=1727936736722.

[31] Arizona Corporate Commission, Order, March 29, 2018, Decision No. 76632 at 53:4-6, Docket No. E-00000V-15-0094, available here https://docket.images.azcc.gov/0000186964.pdf?i=1727936284687.

[32] American Clean Power, Clean Energy Storage Facts, available here https://cleanpower.org/facts/clean-energy-storage/.

[33] American Clean Power, Battery Storage, available here https://cleanpower.org/facts/clean-energy-storage/battery-storage/.

[34] Id.

[35] Salt River Project and CMBlu Energy Announce Launch of Innovative Long-Duration Energy Storage Project, Aug. 31, 2023, available here https://media.srpnet.com/salt-river-project-and-cmblu-energy-announce-launch-of-innovative-long-duration-energy-storage-project/. 

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.

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Sulphur Springs Docket No. E-01575A-24-0160 and E-01575A-23-0299
 
Chairman and Commissioners,
 
We request that you pull agenda item No. 7 from the consent agenda on the September 5th open meeting and place it on the regular agenda to allow public comment and also so that Commissioners and Staff can ask the utility questions.
 
AriSEIA sent Sulphur Springs (SSVEC) questions about this filing earlier this week and scheduled a call with them to discuss those same questions on August 30th. However, SSVEC was not able to answer any of the questions and abruptly ended the call after only approximately 17 minutes.
 
SSVEC filed a different avoided cost calculation on November 6th, 2023.[1] That avoided cost calculation was $.0629, which is greater than their export rate of $.041310. For some unknown reason, this filing never moved forward and was withdrawn one day later. AriSEIA filed a letter in that docket explaining that an export rate below the avoided cost rate was a violation of the Public Utility Regulatory Policies Act (PURPA).[2] Vote Solar and Solar United Neighbors have sued Salt River Project (SRP) in federal court over the same issue.[3]
 
Six days later, SSVEC filed a new avoided cost calculation in a new docket.[4] That avoided cost calculation is $.0307, less than half that of the avoided cost calculation from the prior filing. They filed an amended tariff on August 1st and a Staff proposed order was docketed within a few weeks and it was scheduled for the September 5th open meeting (approximately 6 weeks after being initially filed).
 
Additionally, both tariffs include a meter fee unique to solar customers of $2.70, despite the fact that all residential customers, solar or not, have identical meters. This is the identical issue to the DG meter fee in the last TEP rate case. AriSEIA presented extensive evidence on why that fee was unjustified and it was ended as a result.[5]
 
AriSEIA would like the following questions answered by SSVEC before this item receives a vote:
 

1. Why is the avoided cost calculation so dramatically different between November 2023 and July 2024? Is the methodology the same? Can stakeholders be provided with the workpapers? Has Staff received the workpapers?
2. Why was the November filing withdrawn? How are those customers going to be made whole? It is very concerning that when the utility finds the avoided cost is too low the item does not move, but when the utility finds the avoided cost is too high, the item moves immediately. The process should be applied consistently.
3. Why are solar customers paying more for an identical meter than non-solar customers?

 
Respectfully,
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] SSVEC Tariff Filing, November 6, 2023, available here https://docket.images.azcc.gov/E000032051.pdf?i=1724737112344.

[2] AriSEIA Letter, July 9, 2024, available here https://docket.images.azcc.gov/E000036580.pdf?i=1725068843076.

[3] Complaint for Declaratory and Injunctive Relief, U.S. District Court for the District of Arizona, Case 2:24-cv-02021-DJH, August 12, 2024.

[4] SSVEC Amendment to Application, August 1, 2024, available here https://docket.images.azcc.gov/E000037043.pdf?i=1724736609230.

[5] TEP rate case, AriSEIA direct testimony, P. 365, January 27, 2023, available here https://docket.images.azcc.gov/E000023835.pdf. 

Arizona, with its abundant sunshine, seems like a natural leader in solar energy. Yet, according to Autumn Johnson, an advocate for solar energy, the state is facing a significant decline in residential solar installations. Data from Ohm Analytics shows a 31% year-over-year drop in solar permits as of May 2024, marking the lowest level since 2021.

Economic and Policy Challenges
Several factors contribute to this decline. High interest rates, currently above 8%, make financing solar systems more expensive, deterring potential customers despite the federal tax benefits available under the Inflation Reduction Act.

Beyond economic barriers, state policies are also to blame. Arizona has reduced the export rates for excess solar energy, meaning homeowners are paid less for the energy they send back to the grid. Additionally, recent increases in fixed fees for solar customers, such as the grid access charge introduced by the Arizona Corporation Commission, have made solar less financially attractive.

A Missed Opportunity
While other states continue to support solar growth through net metering, Arizona's policies are pushing it in the opposite direction. Johnson points out the irony that Arizona, with over 300 sunny days a year, ranks only fifth in solar capacity nationally—a position that should be much higher given the state’s natural advantages.
​
Looking ahead, Johnson is concerned about the state’s direction. With increasing political skepticism toward both residential and utility-scale solar projects, Arizona risks missing out on a significant economic opportunity. In a state where solar should be thriving, policy and economic barriers are holding it back, leaving the future of solar in Arizona uncertain.

Arizona Power Plant and Line Siting Committee
Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Bella Project, L-21314A-24-0144-00233
 
Dear Chairman and Committee Members,
 
The Arizona Solar Energy Industries Association (AriSEIA) was not originally planning to engage in this docket. However, in observing the start of the hearing, we noticed the attorney for the Applicant lie to the tribunal in the opening statement. Mr. Moyes said that gas plants are “clean.” Rule 42 of the Arizona Rules of Professional Conduct prohibits an attorney from knowingly making a false statement of fact or law to a tribunal. ER 3.3. Gas is not clean by any definition. The Department of Energy (DOE) lists clean energy types as: solar, wind, hydro, geothermal, bioenergy, nuclear, and hydrogen.[1] According to the Massachusetts Institute of Technology (MIT), “clean energy” means energy resources that produce no greenhouse gases, which includes hydro, geothermal, solar, wind, nuclear, and sometimes bioenergy.[2] According to the Environmental Protection Agency (EPA), clean energy is renewable energy, energy efficiency, and efficient combined heat and power.[3]
 
According to the Energy Information Administration (EIA), natural gas has less greenhouse gas emissions than coal or oil. However, even then, “[t]he U.S. Environmental Protection Agency estimates that in 2021, methane emissions from natural gas and petroleum systems and from abandoned oil and natural gas wells were the source of about 33% of total U.S. methane emissions and about 4% of total U.S. greenhouse gas emissions.”[4] We are not aware of any credible resource that defines gas a “clean.”
 
The Applicant lying to the tribunal at all, let alone within a few minutes of the hearing commencing, should be cause for concern and we encourage you to strenuously review the veracity of the information presented by the Applicant and, certainly, by their attorney.
 
Further, within the first panel of witnesses, the panel seems to be attempting to speak under oath for the Arizona utilities. The Applicant is not a utility and has no ability to speak for the utilities or their coal retirement plans. The Arizona Corporation Commission just held an integrated resource plan (IRP) workshop last week in which the utilities confirmed their coal retirement dates. It is entirely speculative and inappropriate for the Applicant to be testifying under oath about any changes to those retirement dates or any other utility business plans.
 
The Applicant also mischaracterized California Independent System Operator (CAISO) outages. It was unclear from the testimony, but presumably the panel was speaking to 2020 outages in California. Gas plant outages played a significant role in those outages. CAISO has issued a Root Cause Analysis.[5]
 
We are gravely concerned with the credibility of this Applicant and would encourage you to strenuously review this application. We recommend you ask who is buying this power and also ask questions about a) Arizona gas pipeline constraints and b) whether or not these turbines can be run on 100% hydrogen by when and at what cost. It may be more appropriate to deny this application and focus on applications from known entities in Arizona that can at least avoid lying on the record.
 
Respectfully,
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] U.S. DOE, Clean Energy, available here https://www.energy.gov/clean-energy.

[2] MIT, Climate Portal, available here https://climate.mit.edu/ask-mit/what-clean-energy-any-kind-energy-completely-clean.

[3] U.S. EPA, Lean About Energy and its Impact on the Environment, available here https://www.epa.gov/energy/learn-about-energy-and-its-impact-environment#:~:text=reduce%20my%20impact?-,What%20is%20clean%20energy?,pollution%20emitted%20as%20a%20result..

[4] U.S. EIA, Natural Gas Explained, available here https://www.eia.gov/energyexplained/natural-gas/natural-gas-and-the-environment.php. 

[5] CAISO, Root Cause Analysis, available here https://www.caiso.com/Documents/Final-Root-Cause-Analysis-Mid-August-2020-Extreme-Heat-Wave.pdf. 

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: APS 2024 RCP, Docket No. E-01345A-24-0095; TEP 2024 RCP, Docket No. E-01933A-24-0094  
 
Dear Chairman and Commissioners,
 
Both Arizona Public Service (APS) and Tucson Electric Power (TEP) have filed in the above noted dockets to request the maximum annual reduction in the Resource Comparison Proxy (RCP).While it is AriSEIA’s position that the underlying Value of Solar decision from Docket No. E-00000J-14-0023 should not be modified in the new export rate Docket No. AHD-00000J-23-0273, we would like to highlight concerning developments in the residential solar sector in Arizona.
 
Recently, Arizona has seen several major residential solar companies leave the Arizona market. Very large residential solar installers based in Arizona have closed entirely. And just in the last week, several AriSEIA members have declared bankruptcy, including companies local to Arizona. Overall, residential solar installations in Arizona are down 31% year over year. Installations in the state are at their lowest level since 2020, a year in which the Commission decreased the RCP by less than the maximum.
  
The decline in residential solar installations, bankruptcies, and company closures are not due solely to the RCP. But a decrease in the RCP will continue to exasperate this alarming situation. Solar represents a significant amount of jobs and economic development in Arizona. Such a significant downturn in this sector in the sunniest state in the country should be cause for concern.
 
Further, distributed generation, including rooftop solar and battery storage, is a critical tool in the toolbox for peak demand reduction and grid reliability. With solar alone, it is possible for rooftop solar customers to completely eliminate or dramatically reduce their peak usage. With a battery, it is possible for them to provide that capacity back to the grid. With well designed policies, these resources can benefit all ratepayers.
 
Respectfully,
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]
 

Same APS discrimination against solar customers 

Arizona Public Service likes to tout itself as somehow new and different. It is not the APS we remember involved in scandals at the Arizona Corporation Commission (ACC) or opposing renewable energy like with Proposition 127. They have new leadership and clean energy goals now. But if you are paying attention, APS consistently makes decisions that undermine renewable energy and hurt solar customers.

Last year, APS opposed the adoption of community solar in Arizona. Community solar is an option for customers that want rooftop solar, but cannot install rooftop solar either because they are renters, or live in multifamily housing, or have an older roof. It allows them to participate in the clean energy transition while also increasing a distribution grid resource and saving them money on their electric bills. The ACC ended up adopting a policy to kill any advancement of community solar in Arizona.

APS continues to ask for annual decreases in the export rate solar customers are paid for the extra solar power their rooftop panels produce and they sell back to the grid. APS buys it at a fraction of what it sells it to your neighbors for. APS has consistently fought against you having any options to sell that extra power elsewhere, including supporting HB2101 in 2022, which eliminated competition in the electric sector in Arizona.

APS simultaneously has advocated for increased fixed fees on solar customers. APS has nearly 200,000 customers with rooftop solar and it has advocated for all of them, every single one, to pay 15% more for the same power than their neighbors without rooftop solar. That new fee is the subject of ongoing litigation at the ACC and APS has most recently advocated for 74,000 of those customers to be completely excluded from the hearing entirely. These customers got solar years ago and are on rate plans called “Legacy Solar.” 

If APS is successful, not only will these customers be subject to APS’ discriminatory fees on solar, but they will be deprived of their due process rights, as well. APS has also argued (and won!) that the evidence used to substantiate this discriminatory fee on solar customers not be evaluated in the hearing. So, the evidence used to substantiate the fee is not part of the hearing in which the ACC decides if the fee is even legal.

Earlier this year, the ACC ordered APS to start a pilot program that aggregates the household batteries that customers pay for with their own money to offset energy APS needs when demand from customers is especially high. APS was ordered to undergo a stakeholder process and work collaboratively with the community to develop a fair program. Instead, APS has come up with a program that will almost certainly fail, because it inadequately pays for the resource it takes from customers. 

APS will continue to penalize solar customers unless the utility is held accountable. APS does not like solar customers because solar customers pay for their solar panels themselves. APS does not own them and does not earn a profit margin off of them. APS’ nearly 200,000 solar customers need to pay attention and need to tell the ACC that APS must stop its needless attacks on solar customers. 

Unfortunately, the ACC just sided with APS and determined that some solar customers may, indeed, be excluded from the rate case rehearing and that the underlying evidence APS provided to justify the discriminatory fees on solar customers will not be evaluated. This raises serious concerns about the validity of the rehearing. The public needs to reach out to the ACC in support of solar. You can file a comment with the ACC and be sure to reference Docket No. E-01345A-22-0144.
​
Autumn Johnson is executive director of the Arizona Solar Energy Industries Association.

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: APS Virtual Power Plant (BYOD) Pilot Program, Docket No. E-01345A-22-0144
 
Chairman, Commissioners, and Staff,
 
Arizona Public Service (APS) is predicting unprecedented load growth over the next decade. To meet this rising need, the utility must aggressively add capacity which will put dramatic upward pressure on rates. One way to mitigate that upward rate pressure is to avoid direct utility investments where possible and to leverage customer owned assets to provide services that would otherwise require utility investment and risk ratepayer funds. To this end, the Commission ordered Arizona Public Service (APS) to implement the money-saving Bring Your Own Device (BYOD) program (also known as a virtual power plant (VPP)) which uses customer owned batteries to meet peak demand. The evidence in the rate case found that such a program could give APS access to batteries at a cost well below the cost of utility owned options.

AriSEIA/SEIA have raised several concerns about APS’s approach and its valuation methodology during the ongoing BYOD stakeholder process. APS has expressed consistent opposition to this program that could displace some utility investment opportunities from the start so it is unsurprising to AriSEIA/SEIA that APS’s methods and assumptions are designed to skew the outcome of this process in its favor. While we have some questions about the program implementation costs, the primary issue is with the value of avoided capacity and energy. The Company’s approach for valuing these categories does not reflect actual conditions on the ground and, as a result, produces avoided cost values that are substantially lower than justified.  Further, under the Company’s value, nearly all potential value from participating perfectly will be eaten up by the opportunity cost of forgoing peak time of use (TOU) reductions. Stated more plainly, APS’s proposal undervalues the important services BYOD can provide to such an extent that ratepayers will be unlikely to participate at all and would be better off simply reacting to the TOU rate. Rather than provide the appropriate price signal to customers to manage their battery for the broader good of the grid and all ratepayers, APS’s proposal will result in retrenchment to optimizing individual bill savings.

Capacity Value Issues

APS had indicated that it will use the Public Utility Regulatory Policies Act (PURPA) avoided capacity cost for the BYOD. Based on its Federal Energy Regulatory Commission (FERC) filing, this appears to be roughly $80/kW-year.  There are two key issues with using the PURPA avoided capacity value as a proxy for avoided capacity costs. 

First, the Company’s latest PURPA filing assumes that customer-sited microgrids are the capacity resource of choice. This is a non-conventional and inappropriate choice. APS was recently prevented by the Commission from pursuing additional customer-sited microgrid projects due to the impingement of its utility monopoly into a competitive market. This alone disqualifies this technology as the future capacity resource of choice, and any PURPA capacity costs based on this technology. Further, the Company has projected more than 4,000 MW of new capacity need over the following decade, and its integrated resource plan (IRP) shows that it will be procuring copious amounts of centralized generation and battery storage. Using a more conventional avoided resource such as a battery or gas combustion turbine (CT) or Company unit is more appropriate. AriSEIA/SEIA’s filing in this case used the annual revenue requirement of a utility-scale battery as a proxy, finding its avoided capacity value was north of $200/kW-year.

Second, PURPA is not driving investment in Arizona. The Company indicated that it has not signed any new PURPA contracts for years and the IRP filing does not rely on this financing mechanism for future procurements. Rather, it is procuring resources through competitive all-source contracts and through market-based purchases. Tying the value of this program to a moribund policy that is not producing new capacity is simply the wrong framework and should not be approved.

Energy Value Issues

The Company is using a simulated dispatch model to project avoided energy costs. This approach is necessarily tied to the input assumptions used and will necessarily not reflect actual real-world conditions, particularly during the scores of high-load/high-cost hours that the BYOD program will target. APS indicates that the average avoided energy cost is between $33/MWh and $52/MWh, a value that is simply inconsistent with historic market purchases during high-cost hours.

APS provided the quantity and price of its wholesale market purchases from 2018-2022 in the rate case.[1] An analysis of this data shows that the Company routinely paid in excess of $200/MWh for market purchases, with occasional purchases in excess of $1,000/MWh.  AriSEIA/SEIA’s analysis showed that the average weekday market purchase cost between 2019 and 2022 was over $100/MWh between 5 PM and 9 PM, the exact hours the BYOD program would target.[2] 

But if one looks at the actual highest-cost purchases, the avoided energy potential is much higher. AriSEIA/SEIA determined the 500 highest cost hourly purchases throughout the year and then analyzed the purchases that fell in the core summer months of June to September from 2018 through 2022.[3]  The results show that year after year, the avoided energy cost values during the highest cost hours are at times an order of magnitude larger than what APS proposes.

Even in 2019, which was an outlier in terms of the low quantity of high-cost market energy purchases, the average purchase during the high-cost hours was nearly $400/MWh. In 2021 and 2022 (and likely 2023), the price and quantity of high-cost purchases surged, with the average high-cost hour moving north of $800/MWh. 
Against this irrefutable historic purchase data, which has cost the Company’s customers tens of millions of dollars per year, the Company’s offer of as little as $33/MWh in avoided energy is simply unacceptable. AriSEIA instead recommends a minimum value of $500/MWh for avoided energy purchases for the BYOD program, a value which is roughly 1/3 of the highest cost purchase in recent years.

APS’s Proposal Is Eroded by TOU Opportunity Costs

By lowballing the avoided cost value on both the energy and capacity side, APS is setting the BYOD program to undercompensate customers for the real services they provide which will cause the program to fail. The residential value available to customers is only $40/kW-year based on the average reduction over the course of a program year.  The Company is authorized to call up to 60 events of up to 4 hours each between the hours of 4 PM and 10 PM.  Given that only half of these hours fall within the current peak TOU period (and fewer than half if events are called on weekends), customers participating in the BYOD event will have to consider the opportunity cost of peak TOU reductions. In other words, customers electing to participate in BYOD and give APS the ability to access the energy and capacity when they need it, may be inclined to simply participate in the TOU rate design thereby depriving APS and all its customers of the savings possible with BYOD.  

APS’s current peak and off-peak rates are roughly $0.34/kWh and $0.12/kWh, with a rate spread of $0.22/kWh.  Each kWh that a customer discharges their battery during an off-peak hour event call thus has an opportunity cost of $0.22. From this, it is possible to calculate the total opportunity cost that a BYOD customer faces by participating in the program.

In a best-case scenario, every event would be as short as possible (perhaps 2 hours) and fall during the peak TOU period.  In this case, discharges from the battery would not incur an opportunity cost and the customer could capture the full $40/kW-year benefit the Company proposes. In a worst-case scenario, every event would be 4 hours long and fall on weekends. This means that 100% of the event hours would incur the opportunity cost. A middle of the road scenario might assume event calls from 6 PM to 9 PM weekdays, with 2/3 of the hours occurring off-peak.
Suppose one analyzes an 11.5 kWh battery. The results of the three different scenarios are tabulated below. Even in the middle scenario, so much of the value of the program is eaten up by the opportunity cost that it is hardly worth the effort for a customer to sign up for the program. And in a worst-case scenario, it actually costs the BYOD customer money to participate in the program.

APS’s Stakeholder Process Violates Order No. 79293

Order 79293 (the “Rate Case Decision”) orders APS to “meet with AriSEIA/SEIA and any other interested parties to discuss collaboratively and attempt to reach agreement on the language of the BYOD Pilot POA.”[4] APS has held several stakeholder meetings in which it has told the stakeholders what it plans to do. AriSEIA requested an additional meeting to walk through the concerns identified above. APS sent out the proposed valuation that same afternoon. At the following stakeholder meeting, several stakeholders pointed out that the APS methodology was flawed and the valuation was too low and would make the program unsuccessful. APS requested stakeholders provide feedback in writing. Stakeholders asked for the Company’s workpapers. Stakeholders received two spreadsheets with two business days to review before the date in which APS asked for written feedback.

To date, it does not appear that APS plans to consider any stakeholder feedback in the plan of administration (POA) it intends to file within a month. APS is going through the motions of a stakeholder process, but there is nothing to indicate they intend to discuss collaboratively or attempt to reach agreement with stakeholders.

Respectfully,
 
Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] AriSEIA 4.03_ExcelAPS22RC03362_Hourly Market Purchases 2018-2022

[2] Lucas Direct at 59.

[3] This is twice as many as are allowed in the BYOD program, which authorizes 60 event days with events up to 4 hours.

[4] APS Rate Case Decision, Order No. 79293, 452:17-18, available here https://docket.images.azcc.gov/0000210704.pdf?i=1722230808744.