Corporation Commission

Feb. 3, 2009

Transcript:

Ted Simons:
In January, Kris Mayes was selected by her colleagues as chairman of the Arizona Corporation Commission. Here what's she had to say shortly after taking over as chairman.

Kris Mayes:
As everybody knows, I'm a major proponent, like some of my colleagues, of increasing the amount of renewable energy we do in the state of Arizona, the amount of energy efficiency and water conservation. But those are my objectives as a colleague. It's not my role as the chairman to try to force those issues. It's my hope that together we can reach consensus on those issues. I do believe that Arizona can, over the next couple of years, become the solar energy capitol of America. And we have to do a couple things to make that happen, including encouraging more renewable energy transmission. But I believe -- and it's been my experience over the last couple of years -- that the best way to make big policy changes is to gain consensus of the commissioners. And 5-0 votes are better than 3-2 votes. I'll be looking to try to achieve that kind of consensus on big issues like renewable energy and energy efficiency and water conservation.

Ted Simons:
Joining me now is chairman of the Arizona corporation commission, Kris Mayes. Good to have you on the program, thanks for joining us.

Kris Mayes:
It's great to be here, Ted. Thank you.

Ted Simons:
Busy, huh?

Kris Mayes:
Oh, boy! It's been a great start, yeah. It's been a fast start. Things are very busy at the commission.

Ted Simons:
Let's start with the concept of the renewable energy standard and increasing that from what it is now, to what, 25% by 2025?

Kris Mayes:
Well, right now it's 15% by 2025, and I have called for increasing it to 25%, which would put Arizona sort of back at the front of the pack among all of those states. There are about 30 states right now that have a renewable energy standard. Right now we have the most aggressive requirement for solar rooftops. But, as a total overall requirement, the 15% is not necessarily very aggressive among the 30 states that already have a renewable energy standard. I think we ought to look at taking to it 25%.

Ted Simons:
There has been some fussing and fighting over even the 15%. Is 2025 doable?

Kris Mayes:
I think it is. And you're right, there has been some fighting over that. We're being sued by the Goldwater Institute as we speak for doing what we did. Some people think that we didn't do enough, some think that we did too much. Maybe that says we did exactly what with we ought to have done. But I think it's time to start looking at that. It's pretty clear to everybody that our utilities are capable of doing more renewable energy. Some of them now are so much on the bandwagon that they're actually willing to do more than we have required, so I think we ought to shoot a little bit higher.

Ted Simons:
For those who say we should hold off on shooting for anything until the cost of this stuff goes down, you respond.

Kris Mayes:
First of all, the cost of it compared to fossil fuels, already is beginning to look competitive, at least with regard to wind. Solar, we believe within the next four years, will be cost competitive. And when the federal government passes a cap and trade program, which will put additional expenses on coal-fired electricity, it's going to make renewable energy look very cost competitive. And t would make us look very foolish if we didn't do this now.

Ted Simons:
So in other words, if you wait until it becomes competitive, you are already behind the game.

Kris Mayes:
We would be way behind the curve. One of the things we're trying to do with the renewable energy standard at the Commission is drive the price of renewable energy down. When you drive up demand, you create a demand for technology. Some of that technology is being developed right here at Arizona State University, in our School of Sustainability, in our engineering school here. So, what we're trying to do is drive down the price of renewable energy so it's cost competitive, and so that we can really mainstream the technology into our utility system.

Ted Simons:
What are the latest thoughts regarding transmission issues with alternative energy?

Kris Mayes:
Critical piece of it. And probably a lot of folks don't realize how important transmission is to making sure that Arizona becomes the solar energy capitol of the world. Because you can have all the standards in the world; you can have 15%, 25%, but if you can't get the energy to the cities and the people who need it and who would use it, what's the point? A lot of the energy, we know we've got about 10,000 meg watts in the desert between Yuma and Phoenix available for solar energy. There's 10,000 meg watts of solar energy there but we need the powerlines to get that into Phoenix and then even potentially into Los Angeles. When you do that, you will start to see 100-megawatt, 200-megawatt projects built out in the desert. Then I believe you will start to see manufacturers of that solar equipment locate in the state of Arizona. That's what we want to see. We want to bring ourselves out of this situation we find ourselves in where we're totally dependent and tied to the housing industry. Why not diversify our economy with something that we have?

Ted Simons:
But you know that there are those who say, these are great ideas, once the free market gets there, they're going to be wonderful ideas. But right now the free market isn't there.

Kris Mayes:
The problem with that argument is that we're not talking about the free market, we're talking about utilities. If utilities had their way, they are monopolies, so they don't operate in a free market. They would never do renewable energy, because it's not what they know. My job as a regulator is to say, look, you're going down a foolish path. We need to diversify. We also know there are huge environmental benefits associated with renewable energy. The renewable standard as it stands now we prevent the emission of 93 billion pounds of carbon dioxide into Arizona's atmosphere alone. Imagine what would happen if we increased that standard. The same goes for knocks and socks and water saved.

Ted Simons:
Yeah, and I want to get to water conservation here in a second, but you mentioned that some of the utilities are almost too gung ho on some of this stuff. What kind of response are you getting from utilities?

Kris Mayes:
A very different response than we saw five years ago. They were coming dragging their heels and kicking and screaming into this new era. Now, frankly, I do have to give some credit to companies like Arizona Public Service, which has taken a lead role. They went out and signed the contract with Solano, the Spanish company Abengoa is going to build that near Gila Bend. So those companies have seized this, not necessarily because they are controlled by a bunch of environmentalists, let's face it. What they see is that it's good for their bottom line. What they see coming is cap and trade, which is going to make carbon-fired electricity much more expensive. The fact of the matter is, solar energy in four years is going to be cost competitive. Let's start building it now.

Ted Simons:
When we talk about alternative energy conservation being green, these sorts of things, we don't think much about water. Yet that is a crucial aspect and something I know the commission is very much involved in here. Talk to us about conservation issues regarding water.

Ted Simons:
First of all, we regulate 350 private water companies in the state of Arizona. We have a huge role in water conservation. The commission quietly has become a leader in water conservation. We have gone beyond any branch of Arizona government in requiring our companies to adopt water conservation measures. We have a provision now that tells our water they companies cannot use groundwater for golf courses, and we are making companies that are outside of an act of management area adopt more water conservation measures that are actually required by the Arizona Department of Water Resources. I would like to expand that. We just have to. Regardless of the snowpack we got this year, we're still in a drought and we probably still will be.

Ted Simons:
When it comes to conservation measures what kind of response are you getting from water companies?

Kris Mayes:
They have been a little bit reluctant to adopt those. But when you allow for some degree of cost recovery associated with those conservation measures, they are a little bit more sanguine about it. The fact of the matter is, like with electric companies, when we ask them to adopt energy efficiency programs, the water companies are losing revenues when people don't use the water. So it's a tough -- it's a difficult balance to strike.

Ted Simons:
Speaking of a difficult balance, the state is in a financial crisis right now, we all understand that. How do you get conservation measures, how do you get thinking about the future, those sorts of ideas involved in a situation that's pretty tough right now when even the present day is hard to figure out?

Kris Mayes:
It is hard. Whether it's our renewable energy programs and trying to get people to put solar energy panels on the rooftops or our energy efficiency programs with the utilities that we're trying to expand, or water conservation measures, it becomes more and more difficult when people just don't have that discretionary cash to spend. We have to be more creative about how we adopt these programs. In the case of solar, I think we'll encourage the leasing of solar panels to folks and loan programs. In the case of energy efficiency, you just have to go out and make the case, this is going to save you money over time. And it will. And it will save the state of Arizona a lot of money over time. Energy efficiency is the cheapest form of electricity that we can produce because it's not producing electricity.

Ted Simons:
That's the nega-watts, correct.

Kris Mayes:
Exactly, the negawatt, which is basically negative energy. It comes at price of about a cent per kilowatt hour, very cheap when you compare that to the eight to nine cents it generally costs us to produce electricity. We have to go out and offer people rebates for C.F.L. light bulbs and air-conditioning systems that are efficient, and to help people make their homes more energy efficient.

Ted Simons:
Very good. Kris, thank you so much for joining us. We appreciate it.

Kris Mayes:
Thank you, Ted. Good to be here.

Ted Simons:
That's it for now. Thank you so much for joining us, I'm Ted Simons, you have a great evening.