State Capitol News
11:08 am
Wed February 24, 2010

House panel votes to overturn mandate on utilites

Phoenix, AZ – The Arizona Corporation Commission requires that 15 percent of
power come from solar, wind, geothermal or other similar sources
by 2025. While those cost more, the regulators have let utilities
pass that on to ratepayers. That move has annoyed some lawmakers
who say they should set energy policy. The measure by Rep. Debbie
Lesko preserves the 15 percent requirement but says companies can
meet that with nuclear or hydro. And it says companies can escape
the mandate entirely if it would mean they can't provide
affordable energy. The vote came just a month after Suntech Power
Holdings said it was building a solar manufacturing plant in
Goodyear. Lobbyist Polly Shaw said one reason her firm came to
the state was because of the mandate -- a mandate that she said
convinced investors that if they make the panels in Arizona they
will be able to sell them here. She said HB 2701 guts the
mandate.

(If this bill passes today, I have the unhappy moment of telling
you that you will have removed a very significant motivator for
us to come to Arizona. 2701's advance will force us to reconsider
and possibly pull our decision to put a factory in Goodyear.)

There is the more basic question of cost. Mike Gleason, who was
on the commission when the plan was approved -- and who cast the
lone vote against it at that time -- said he remains convinced
that the alternate energy sources are not economical. He said
when he was a commissioner, the cost of producing electricity by
Arizona Public Service from its coal, nuclear and natural gas
plants was in the neighborhood of 2 1/4 cents per kilowatt hour.

(This solar thermal plant that they're looking at is 14 cents.
Wind energy is about 25 cents. Solar is about 35 cents.)

More to the point, the difference is made up, at least in part,
by that surcharge the commission allows the utilities to impose
on its customers. APS lobbyist Marty Shultz said his company
collects an extra $81 million a year in those surcharges. The
average monthly fee for homeowners is about $3.46. Marv Worthen,
executive director of the Sun City Taxpayers Association, said
that may not sound like much. But he told lawmakers there are
folks in his community who are living on small fixed incomes that
were set when they retired years ago.

(I'm sorry. But $3, $4, 10 percent here on a utility advancement,
it really counts up. Because they're at a point where they have
to give something up in order to find that extra $3.)

The issue for some lawmakers came down to the question of that
subsidy being passed along to ratepayers. Rep. Steve Montenegro
said that's not the way the system should work.

(Ultimately, I am a believer in the free market. Ultimately I am
a believer that the market should prevail. I also believe in
solar. But I believe on its own it should be able to stand
without having to bump it up.)

But Rep. Chad Campbell said it's not as simple as that. He argued
that every new form of energy has needed subsidies initially and
that nothing supported itself from the beginning without special
government tax breaks or incentives. Campbell said those
subsidies are not limited to power. He said all sorts of
developments that have transformed the country have depended on
government funds, mentioning the first transcontinental railroad.

(That was a massively subsidized project. And I would again
challenge anybody in this room to tell me that the
transcontinental railroad was not a good idea for this country
and for the economic development and stability of this country.)

The measure now goes to the full House. For Arizona Public Radio
this is Howard Fischer.