Tobin Appears To Overstep With Energy Modernization Plan

Late last month, ignoring the duties outlined by Arizona’s Constitution, Corporation Commissioner Andy Tobin announced that he would be proposing a “series of reforms” as part of his Energy Modernization Plan. The plan includes policies “offered as a way to help better position our state to embrace the many changes occurring in the energy space.”

Tobin’s plan has raised numerous questions; not the least of which is whether or not Commissioner Tobin’s history as a policymaker is interfering with his duties on the Commission. The Commission is supposed to be a quasi-judicial body.

In her 2014 Executive Order adopting the state’s Master Energy Plan [View emPower Arizona: Executive Energy Assessment and Pathways here], Governor Jan Brewer discussed the role of her office in the development of policy and the role of the Commission:

The ACC is the sole regulatory body created by the Arizona Constitution to “prescribe… just and reasonable rates and charges to be made and collected, by public service corporations within the State for service rendered therein, and make reasonable rules, regulations and orders, by which such corporations shall be governed in the transaction of business within the State…”

The governor, state legislature and local governments also play a role in regulating the state’s energy industry by developing policies, setting rates, and enacting legislation and ordinances. This governance can be set through the state legislature, municipalities, or districts and may take the form of state statutes, district regulations, and local ordinances.

To be clear, the commissioners have full jurisdiction over public service corporations, whereas the governor, legislators, and cities have jurisdiction over the producers of energy (non-public service companies that provide energy). Special districts like Salt River Project and city-owned power generation facilities, with exceptions, are the responsibility of the governor, legislators, and municipalities.

Tobin’s plan appears to be a cut and paste hodgepodge of industry talking points including the claim that nuclear energy is “clean energy.”

Since he lost his congressional bid, Tobin has bounced around government agencies at the behest of Governor Doug Ducey before finally landing at the Corporation Commission. Since his arrival there, he and fellow commissioner, Tom Forese, have tried to redefine the roles of commissioners and expand their individual powers. At the same time, they have actively tried to weaken the powers of oversight granted to the commissioners by the constitution.

In 2013, Governor Brewer formed a Master Energy Plan Task Force due to the fact that “Arizona’s last energy plan was written in 1990. According to the executive summary of the plan, “an updated assessment was much needed to lead the state towards a strong and sustainable energy future.” The executive summery reads in part:

The 40 members of the Governor’s task force served on four subcommittees: Transportation, Fuels, and Infrastructure Planning; Business, Regulation, and Workforce; Environment, Natural Resources, and Land Use; and Technology Development.

They met monthly to provide and consider information about the current status, key challenges and 10-year outlook for each subcommittee’s specialty area. After the information was compiled and approved, the Governor’s Office of Energy Policy convened statewide public meetings to encourage contributions from all stakeholders and further solicited experts to ensure the report was comprehensive and inclusive.

The public meetings highlighted the importance of an energy blueprint for Arizona’s economy, job creation, and environment each of which rely heavily on Arizona’s human and energy resources.

As a result, executive level goals were identified to: increase solar development; educate Arizona’s next generation of energy professionals on two levels: first, through energy education in high schools, and second through apprenticeship and job-training programs; reduce energy consumption; and establish an energy advisory board to address energy issues on an ongoing basis.

Yet, Tobin is proposing a new plan that will surely take commission staff away from their duties. Then the proposed “series of reforms will be offered for consideration by the Commission at the upcoming Open Meeting on February 6-7, 2018.

While Tobin cites numerous sources as a basis of his proposal, nowhere does he mention Brewer’s extensive work.

From Utility Dive:

Tobin’s proposal would also direct utility regulators to devise a new efficiency program within 120 days to meet the goals of the clean energy standard. Details would be left up to the rulemaking proceeding, but energy efficiency gains would count toward the utility’s renewable energy goals.

Additionally, the plan would direct utilities to propose EV charging programs for new and existing homes, commercial and industrial customers and on major freeways. It would also direct the procurement of 60 MW of biomass energy to aid in Arizona’s efforts to thin forest underbrush, which worsens wildfires.

Finally, the Modernization Plan would direct regulators to begin reforming the utility IRP process in Arizona, pushing utilities to add more scenarios and targeted analysis for clean energy into their generation plans.

“The lack of clear energy policy in the State has resulted in each utility using their own strategies as the guiding principles in developing their IRP,” Tobin wrote. “As such, the rules and regulations governing the IRP process shall be amended for the purpose of supporting and promoting the policies adopted herein.”

For his part, Commissioner Burns stated in a letter in response to Tobin’s plan that he believes it is “extremely important if any plan like this is going to succeed, is that it should be a statewide plan.” As a result, he is requesting that Salt River Project (“SRP”) voluntarily also comment on Commissioner Tobin’s proposal and that SRP voluntary provide a cost analysis.” In fact, Burns argued that “all parties should also comment on how this plan could be a statewide plan, e.g., coordinate with the Governor’s office and the State Legislature, special legislation, etc.”

In a January 31, 2018 memorandum, Commissioner Forese expressed concerns regarding costs of Tobin’s scheme. Burns wrote in support of Forese’s “request for a thorough analysis by Commission Staff (“Staf f ‘) and the Residential Utility Consumer Office of the prospective costs,” and requested “that every electric utility in Arizona that would be affected by Commissioner Tobin’s proposal provide their comments and their thorough cost analyses.”

Burns asked that the utilities affected by Tobin’s proposal to address the following items in particular:

1. Potential impact/consequences to ratepayers,
2. Possibility and magnitude of stranded investment,
3. Positive and/or negative impacts to reliability and resiliency,
4. Amount of additional investment that may be required,
5. Possibility and magnitude of possible negative pricing, and
6. Any other issues believed to be consequential.

Burns concluded, “In order to conserve Staff resources because the utilities have much more detailed information and data than does Staff, I believe Staff’ s comments and cost analysis should not be provided until at least thirty days after comments and analyses from the industry have been received.”

Tobin is proposing a “bold” plan. Some would say it would be impossible unless you are willing to accept the impossibly unbelievable notion that nuclear energy is clean energy:

Notably, I am proposing a goal that Arizona’s economy run (sic) on 80 percent clean energy by 2050. While this is ambitious, testimony from stakeholders and scientific studies from around the country show that it is achievable and will benefit all of Arizona. Our utilities are already transitioning away from coal and are expanding their use of renewables, energy efficiency, and storage. If there is a focus on maximizing existing generation assets, this goal can be achieved with proper planning and market signals. Other states have set targets that focus on renewable resources as the ultimate goal. A more productive approach is working towards sustainability, affordability, and reliability, with renewable energy being a tool to help us get there.

Another major target of this proposal is to expand energy storage in the state to 3000 MW by 2030. This is the largest such target in the United States today and would allow our state to not only maximize the renewable resources we have already deployed, but help develop the next wave of innovation in our country’s energy evolution. “Utilities in Arizona are already partnering with leading companies to deploy proven new technologies in energy storage,” said John Zahurancik, chief operating officer of Fluence, a Siemens and AES company that has worked with Arizona utilities on multiple storage projects in the state. “This policy provides strong support to take Arizona further in that direction, ensuring the state will realize the economic benefits of clean, low-cost power and get the most from its power infrastructure.” I have added a Clean Peak Target for our utilities to establish that ensures we can manage our peak hour energy demand and meet more of those needs with clean energy. Today, the top 10 percent of our demand accounts for 40 percent of our overall electricity costs. These policies will help us save money, protect the grid, and limit our environmental impact.

After working closely with Commissioner Boyd Dunn and his staff, I am also setting a forest biomass energy requirement for our regulated utilities to help us expand our use of renewables, improve our watersheds, and protect our state’s forest land. Wildfires, made worse by unhealthy forests, threaten lives, property, watersheds, wildlife, businesses, and grid reliability. From 2002 2017, the State has seen 29 lives lost, and total expense of over $162 million due to Arizona wildfires. According to state Forester Jeff Whitney, “Prevention is our most important opportunity. If we can treat the fuels before the fire starts — in other words, if we can minimize the vegetation that feeds a fire — we’ll be more successful at extinguishing that fire.” Partnering with utilities in this effort not only helps them protect their infrastructure in high risk areas, but offers a unique solution to a problem that has plagued the state for decades To limit the chance of catastrophic forest fires in the long term, our state must clear about one million acres over the next twenty years, or 50,000 acres each year. This plan represents the first true, statewide commitment to help resolve this annual crisis in a meaningful way.

Finally, I am asking utilities to incorporate greater use of electric vehicle infrastructure into their planning to propose ways to make our homes, businesses, communities, and highways ready for the coming expansion of electric vehicles. Following Governor Doug Ducey’s lead, Arizona has already taken steps to lead the transition to electric vehicles. The Governor recently partnered with seven other western states on efforts to create a corridor of charging stations. Beyond being the future of personal transportation, electric vehicles offer critical air quality benefits for a sprawling metropolis like Phoenix. ADEQ documents show that the Phoenix metro area being in ozone nonattainment for EPA clean air standards can cost the state as much as $296 million annually.

Our State needs a forward looking, comprehensive energy plan that can direct long-term decision making at the Commission and Utility level and I believe this policy proposal will accomplish this goal.

Burns served on Brewer‘s State Energy Advisory Board. The Board was comprised of public and private sector energy experts The Board was tasked with “carrying out the governor’s policy energy goals and helping to ensure the long-term affordability, reliability and security of Arizona’s energy industry.”

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