Arizona’s Renewable Energy

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Kris Mayes, a former Arizona Corporation Commissioner and current Faculty Director for the Program on Law and Sustainability at ASU’s Sandra Day O’Connor College of Law, talks about Arizona’s renewable energy standard and plans to launch a Utility of the Future Center at ASU.

Ted Simons: Good evening. Welcome to "Arizona Horizon." I'm Ted Simons. Six years ago the Arizona corporation commission adopted a renewable energy standard that requires public utilities to generate 15% of their energy from renewable resources. Kris Mayes was one of the commissioners who voted for that standard. Today she works at ASU when she's faculty director of the program on sustainability. I spoke with Kris Mayes. Thanks for joining us.
Kris Mayes: Thanks. Good to be with you.
Ted Simons: as far as the renewable energy standard is concerned give us a definition.
Kris Mayes: the renewable energy standard is a law or policy passed by the Arizona corporation commission in 2006. What it does is it tells the utilities of the state of Arizona that they must produce or procure at least 15% of their total retail sales, their total energy, from solar, the sun, wind, biomass, bio gas, landfill gas or geothermal. It basically says you have to do more to get more of your energy from renewables.
Ted Simons: 15% by 2025. Is that likely to change either a greater standard or a lessening?
Kris Mayes: Well, that's the $64,000 question. I think right now all else being equal it probably isn't likely to be changed by the Arizona corporation commission. The new commission that was just elected basically has said they are okay with the 15% by 2025 and they don't want to go much higher. Obviously there were folks in that campaign who wanted to see, and other folks who would like to see the standard be increased. The fact of the matter is while our standard has a very high requirement within it for solar rooftops and because of that we're going to be doing more solar rooftops on a per capita basis than any other state in the country, the overall standard at 15% is still much smaller than our surrounding states. So there's a lot of people who would like to see us take that and go a little bit further. I would add to that it's interesting that utilities have recently said that they are doing so well toward meeting that standard they are going to meet it in two years, which is ten years early. They will be done.
Ted Simons: Why wouldn't you consider, then, tightening the standard a little bit if it's that easy to get to now, why not bump the schedule a little bit?
Kris Mayes: Personally I'm in favor of that. It's something that I think we do need to look at. I think there's a lot of Arizonans who believe it's time that we look at that, and I think there's a lot of Arizonans who would say, if the utilities are going to be done in two years we don't want them to stop. We want them to continue to do renewable energy. There's nothing in Arizona more popular than solar energy. I think that's going to be a subject of conversation over the next couple of years. You may see potentially something like a ballot initiative that would say, all right, we really do believe that in some way Arizona should continue to do solar energy.
Ted Simons: The impact you mentioned the Republican team, three Republicans ran as a team, won as a team. Keeping the standard is not likely to be all that aggressive as far as moving it forward. What other impact do you see?
Kris Mayes: That's interesting. I think the new commissioners basically indicated they are okay with where the standard is, and I think they also said we're going to faithfully execute and implement the existing standards. So I think you will see that. I think there are a couple that are very interested in water issues, so you may see more of a focus on fixing our private water companies, many of which are broken now. I think you'll see a focus on more traditional ratemaking issues. Maybe some of them more meat and potatoes type stuff that the corporation commission does, which is basically set rates and prices for utilities. I think that you'll continue to see a focus on renewables because those issues are always going to come up. You're going to continue to see focus on water. I think also maybe on energy efficiency. Arizona has from one of the highest energy efficiency standards in the country at 22%.
Ted Simons: what about the congressional delegation in terms of things happening back in Washington as opposed to starting to happen here? Talk about that dynamic. We could very possibly see a democratic majority as far as congressional delegation is concerned impact there.
Kris Mayes: No, I think it's a great point. I think you have the potential for having a majority democratic delegation, two of which at least, maybe more, are strong supporters of solar in the form of -- and renewable energy in the form of Ron Barber and Kyrsten Sinema, but Matt Salmons, just reelected in the east valley, is one of the strongest proponents of solar energy we have ever had. Congressman Salmons was one of the co-founders of the solar caucus in Congress and was one of the co-sponsors of the investment tax credit which has yielded so much solar energy and renewables across the country.
Ted Simons: Talk about policy concerns regarding renewables that the Congressional delegation will face now.
Kris Mayes: right now this delegation is going to face a really critical issue which is whether or not to extends what's called the production tax credit. The PTC is a tax credit that's obscure, nobody knows about it, incredibly important to supporting renewables, especially wind. This wind incentive has to be extended this year or it goes away and this country will lose literally tens of thousands of jobs in the wind sector and probably Arizona will lose the opportunity to do additional wind projects, particularly in northern Arizona. So that's the first issue. I think the congressional delegation in general is going to be asked to sort of carry the torch on solar. We'll see whether we can get the solar caucus kick started. We'll see whether somebody steps up the way Gabrielle Giffords did during her time in Congress and really supports solar energy and becomes a strong, vocal champion of solar in Arizona.
Ted Simons: That first credit you were talking about, is that a lame duck issue?
Kris Mayes: I think they should. If they don't we're in a world of hurt. The PTC is probably in a world of hurt. It's possibly they could pass the production tax credit in the early part of next year, maybe as part of a fiscal cliff type resolution. I don't know. But it's got to get going. They have to do something or we'll lose jobs.
Ted Simons: How much did the Solyndra controversy hurt the industry in general?
Kris Mayes: I don't think you can understate -- overstate how bad that was. You know, it's unfortunate that it happened. Failures always happen in a nascent and young industry. But the fact of the matter is that a lot of Americans see that as something of an emblem now and and obviously people on the far right took it up and tried to sort of tarnish and tag all of renewable energy with Solyndra. I think it was awful. I don't think we can sweep it under the rug or ignore it. You just have to face it. Go on and talk about all the successes we have had in this area.
Ted Simons: let's talk about something that you're working on at ASU that hopefully will be a success. The utility of the future center. What is that all about?
Kris Mayes: Well, the utility of the future center is something we're just launching. The idea behind it is that we know that because of these policies that you and I have just been talking about that we have passed in Arizona and elsewhere nationally people are doing more solar on their rooftops. Thousands of people in Arizona, tens of thousands, are solarizing their homes. What that means is essentially you are becoming increasingly independent of the utilities. No longer do you derive as much of your energy from the utilities. Over time it means they will have less and less business. When we reach the point where you can put solar on your rooftop for the same price that you can buy energy from APS, it means a lot of people are going to leave these utilities. That isn't necessarily -- it's good in the long term in the sense that people will be able to produce their own power. It could be bad in the short term in the sense we can't have utilities that are completely unhealthy. We can't have this total disruption. We need to find a way for the utilities to bridge into a more decentralized future and become a part of the solar revolution.
Ted Simons: basically the center will look at business model, developing new rate designs, these sorts of things to help with a changing --
Kris Mayes: Exactly. With a changing energy landscape. The idea is utilities are going to need to have new business models developed. We have to develop new rate designs to assist both consumers and utilities in bridging into the future. We have to have education of regulators about what's going to need to happen to bridge into this future. We're also going to have to help consumers deal with all these huge changes that could happen in our energy sector.
Ted Simons: I noticed it was a three pronged approach. Utilities, regulators and consumers. Helping with the regulators, do the regulators necessarily want that help?
Kris Mayes: Well, we'll see. We'll offer it and see if they take it up. But I think they do. The problem with this is that both regulation and the utilities tends to be pretty STAID. It's a traditional, resistant to change industry. Sort of regulatory environment. So it's going to take some time for people to get used to these new rate designs, these new business models. It's going it take time for consumeers to get used to them and a lot of education on all those front.
Ted Simons: The scenario you outlined, as far as consumers are concerned, you're going to have to be able to monitor, to able to control your energy needs, output, the whole nine yards. A lot of folks, they can barely handle paying the bill every month. There's a lot of education to be done.
Kris Mayes: there is. There are so many changes and it's happening so rapidly, we think it could happen so rapidly, getting people up to speed, making sure people are comfortable with this is important. Not everybody is going to make this transition at the same pace. That's what's so interesting about this new area and the utility of the future. The consumer of the future. You may decide to solarize your house, I may decide to solarize my townhouse, but you know, your neighbor doesn't necessarily want to do that, your grandmother may not do that. Yet your grandmother still needs power delivered to her house, so we have to make sure that everybody, no matter where they are on the spectrum of their energy usage and their desire to go solar or go more energy efficient, is provided for.
Ted Simons: that brings me to the last question, talking about how it's almost as if the goal posts are moving not only for consumers, for regulators, for utilities, the entire industry. Is that good or just making it that much more difficult? Seems every year there's been technology, prices go up, go down, the Chinese dump on the market, pull back. That's got to be difficult to get a handle on.
Kris Mayes: I think it is, but in the long run I think it's good because we're all striving for one objective and we're starting to see it on the horizon. That objective in my mind is that each of us has an equal opportunity to provide energy to ourselves and to become more independent not only of other countries but of our utilities, of monopolies. We're reaching that point. We're -- it's insight. But the next couple years and beyond that, maybe the next ten years, are going to be critical. As you said you're going to see all kinds of new technologies developed over time and that are tried, some will fail, not everything will succeed, but certainly getting to that point is where we want to be.
Ted Simons: Kris, thanks for joining us.
Kris Mayes: great to be here.

Kris Mayes:Faculty Director, Program on Law and Sustainability at ASU Sandra Day O'Connor College of Law;

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