Alright. We're gonna get started everybody. Let's go on the record. Good morning. This is the time scheduled for an oral proceeding in the matter of the proposed modifications to the electric energy efficiency standards rules, docket number r e zero zero zero zero zero a twenty four zero zero two five. I am administrative law judge Chris Nichols, and I have been assigned to preside over this matter. Chris Nichols. We have language interpreter with us today who will be translating my introductory and closing
remarks as well as the comments of any Spanish speaking members of the public. The notice of rulemaking docket opening and notice of proposed rule making for this matter were published in the Arizona Administrative Register on 10/24/2025. In addition to today's proceeding, a second oral proceeding will be held this Thursday, December 4, beginning at 01:00PM here at the commission's offices in Phoenix. This oral proceeding is being held pursuant to Arizona revised statutes section 41 dash ten
twenty three to allow adequate discussion of the substance and form of the rule proposal and to allow persons to ask questions and present oral argument, data, and views on the proposal. I will begin by asking staff to present information on the proposal, and I may ask questions of staff to clarify the record. I will then take public comment. If you are physically present and desire to speak, please complete a speaker slip and bring it up to me. If you are on the phone, please tell the person who answers both your name and that you desire to speak. Staff, may I please have your appearance for the record?
Good morning, your honor. Nicole Layton from the legal division on behalf of staff. Also present with me are Barbara Keane and Ranelle Palladino. Miss Keane will be the one making staff's presentation today. Good morning, all. And, miss Layton, miss Keane has prepared a statement of information regarding the rule making? Yes, your honor. And, if miss Keane would please, come up and and present that statement at this time. I guess you can, just do it from the table there. That's fine. Good morning. I am Barbara Keane of commission staff. With this rule making, staff is recommending repeal of article 24 of title 14 chapter two of the Arizona
administrative Code as directed by the commission. Article 24 is the electric energy efficiency standards rules, which I will refer to as the electric EE rules. The commission adopted the electric EE rules in decision number seven one eight one nine in August 2010. The electric EE rules apply to class a public service corporations that provide electric service to retail customers in Arizona, unless the utility is an electric distribution cooperative that has fewer than 25% of its
customers in Arizona. The rules designate these utilities as affected utilities. The rules were designed to cause utilities to achieve energy savings through cost effective energy efficiency programs in order to ensure reliable electric service at reasonable rates and costs. Energy efficiency means the production or delivery of an equivalent level and quality of end use electric service using less energy or the conservation of energy by end use customers. Energy efficiency is a type of demand side management,
also called DSM. The rules also identify as DSM DSM any measure designed to result in reduced peak demand or shifting of electricity consumption to off peak periods. The commission adopted the electric EE rules in an effort to ensure reliable electric service at reasonable rates and costs and to minimize the overall adverse environmental impacts resulting from electric utility service to the extent feasible. Among other things, the electric EE rules require effective utilities to,
by 2020, achieve cumulative annual energy savings equivalent to at least 22% of the affected utilities prior year retail energy sales through cost effective programs. The goal for electric distribution cooperatives is 75% of the goal for investor owned utilities. They are required to file an implementation plan for commission approval on June 1 of each odd year or annually at the election of the utility,
including a description of each DSM program to be implemented or continued and estimates of the annual KWH and KW savings projected to be DSM DSM programs and measures. And also file a mid year status report by September 1 of each year, including a tabular summary showing semi annual expenditures compared to annual budget and participation rates. The electric utilities subject to the electric EE rules who have met or exceeded the
standard of 22% in 2020 are Arizona Public Service Company, Trico Electric Cooperative, Tucson Electric Power Company, and UNS Electric. The following electric utilities have received received commission waivers for various requirements. And those are Graham County Electric Cooperative, Mohave Electric Cooperative, Barenzi Water and Electric Co Company, Nave Apache Electric Cooperative, and Sulphur Springs Valley Electric Cooperative.
The electric EE rules went into effect in 2010, but many of the utilities had EE programs in place before that date. For example, APS has provided information in its annual progress report on on program to date DSM societal benefits from January 2005, through December 2024. Utility program costs over these years totaled, $941,563,758
But the amount of net benefits, which includes incremental measure costs, utility costs, and carrying costs as a component of the cost totaled more than $1,432,000,000 So the benefits greatly outweigh the costs. Staff believes that the repeal of the rules will not eliminate energy efficiency programs. Utilities will continue to have the ability to file for approval of modifications to existing
programs or new programs. Repeal of the rules would not eliminate any commission approved surcharges unless a superseding commission decision in either a rate case proceeding or separate EE filing is issued. Finally, staff does not plan to provide oral responses to comments received at today's proceeding. As required by decision number 81496, staff intends to address the written and oral comments received concerning this rulemaking in its
memo to be filed in the docket on January 5. That concludes my presentation. Thank you, miss Keane. I do have a few questions for you, if you don't mind. Mhmm. The first of which is, why is it in the public interest to repeal these rules in staff's opinion? Feel free to take one. It wasn't direct, a commission directive. Okay and and actually the the standard itself has expired because it was 2020. So there is not, a a requirement like that anymore. Thank you. During your summary, I think you you mentioned that the the benefits outweigh the costs.
I just wanted to clarify, the the benefits of the EE rules outweigh the costs or the benefits of repealing the EE rules outweigh the costs? No. It's, the benefits of the programs. Thank you. So staff is not concerned that repealing the rules would cause utility companies to, get rid of their, their energy efficiency programs? Energy efficiency programs, were in place before the rules went in into place. I would say it ramped up a bit,
but there's so many benefits from having those programs that that they should continue, and and I believe utilities want to continue. The, participating customers and potential participate participating customers want want programs like these. So we don't think that energy efficiency will stop when the rules are repealed. Thank you. I appreciate the clarification. Alright. That's all the questions I have, miss Keane. So at this time we'll move on to public comment. So I will now begin to take public comment.
I may ask questions to clarify speaker's position for the record. In addition, I will allow staff the opportunity to respond to statements and to ask questions to clarify speaker's position for the record. I'll also have staff respond to any substantive questions posed by the speakers regarding the proposal. For each of you who has provided your name to speak, I will call on you by name and will spell out your last name. When I call on you, if you are here in person, please step forward to the podium. If you are on the phone, please unmute yourself by pressing 6.
Then please confirm or correct the spelling of your name and provide the city or town where you live. If you're speaking on behalf of an organization, please identify the organization and your position with it. Please remember that each speaker is requested to limit their comments to three minutes. If you are reading from prepared remarks, please pay extra attention to speaking slowly and pause occasionally. We also would ask you to file your prepared comments with the commission. If you are using the services of our translator today, please pause frequently so that the translation can be made. Alright. The first speaker slip that I received is from mister Alizada.
Please come forward and provide your comments. And if you can make sure the green light on the, microphone there is on. Okay. Good morning, your honor. My name is Sapand Elazada, and I am the government relations specialist with the Arizona Technology Council, 2800 North Central Avenue, Suite 1530. I am here today to submit comments to express our association's opposition to the repeal of the electric energy efficiency standards rules. A repeal of the energy efficiency standards threatens to undo a bipartisan pro business program
that has become the most cost effective way to meet Arizona's growing energy demands. A recent study published by the World Bank Group found that for every dollar invested in energy efficiency, businesses have captured $4 in returns through lower utility bills and avoided infrastructure costs. Over the last fifteen years, energy efficiency programs developed by our state's utilities have reduced demand and improved grid stability. Every megawatt saved through smarter energy use is a megawatt that doesn't have to be
generated, transmitted, or paid for by consumers and businesses. In their adoption of energy efficiency programs to meet rule requirements and offering consumers purchase these tech upgrades rebates, utilities have also created countless jobs in the HVAC industry. Many of these jobs retrofitting heating and cooling systems are held by military veterans who can support their families by working in this industry. Arizona's Universal Technical Institute, one of the nation's leading trade school education providers,
even published a blog post in September 2025 entitled why veterans should consider HVAC training, explaining that many of the skills possessed by our nation's bravest, such as communication, problem solving, and physical strength, translate to long term career success in the HVAC field. A repeal of the energy efficiency standards rules is not a death knell death knell per se for an industry that has blossomed over the last fifteen years. That said, a repeal by the Arizona Corporation Commission would discourage the highest amounts of investment into
this field. So let's not move forward down this path. Let's enhance and extend the rules into the next decade. Let's find reasonable energy savings requirements for our utilities and give them flexibility to meet them to ensure energy innovation. Like everything in life, there's always a middle ground. It's up to all of us, however, to discover where that middle ground is. Thank you for giving me this opportunity. Thank you, sir. And, if you didn't mention it already, would you mind providing the, the city that you live in? So, our organization is based in Phoenix,
Arizona. Arizona Technology Council. Thank you. Thank you. And miss Layton, my recollection is the staff does not plan to, respond during this proceeding to, to comments that we received from the public, that staff will go ahead and respond in in writing. Is that correct? That is correct, your honor. Alright. Moving on to our next speaker, miss Strother. Good morning. Good morning. Good morning, your honor. My name is Joanna Struther, and I, represent the American Lung Association. I am their senior director of advocacy. On behalf of the American Lung Association, we appreciate the opportunity to comment on the repeal of the renewable energy standard and
tariff. We strongly urge the Arizona Corporation Commission to vote no on the repeal of the rest rule. Repealing this rule will derail years of clean air progress. The rest rule has been instrumental in improving air quality and encouraged Arizona utilities to consider pollution free energy source sources such as wind and solar for decades. With 84% of Arizona residents living with unhealthy air, Arizona utilities need to do more, not less, to set us on track for healthier air.
According to the American Lung Association's State of the Air Report, Phoenix constantly ranks among the most polluted cities in The US for ozone. We actually rank fourth. In short term PM 2.5, the Phoenix Metro Area ranks 20. And on annual particle pollution, we rank twentieth. This is across the country. These pollutants can cause respiratory distress such as asthma attacks, difficulty breathing, respiratory infections, and cardiovascular issues including heart attacks and stroke. Vulnerable Arizona populations,
including children, seniors, low income individuals, and people of color face greater risk to negative health outcomes. We urge the commission to adopt a new new standards for utilities to invest in clean energy that will reduce air pollution, strengthen the economy, and offer reliable electricity. The Arizona Corporation Commission needs to listen to the public. A recent poll found that 77% of Arizona voters are supportive of clean energy. In fact, voters want to see more solar and more
wind. Yet the ACC continues to approve gas expansion projects instead of directing utilities to expand renewable energy. Our commissioners must act in good faith and consider policies that will promote clean energy solutions and support healthier communities and save Arizonans money and spur economic development. We can secure a clean, strong future without putting Arizonans health at risk. Thank you very much for considering our comments. And the American Lung Association is based right here in Phoenix.
Thank you, mister Weather. Mhmm. Alright. That is all of the speaker slips that I have received so far. Oh, we have one more. Thank you. Alright. I have a speaker slip for miss Diane Brown. Great. Good morning, judge and staff. My name is Diane Brown. I'm the executive director of the Arizona PIRG Education Fund. The Arizona PIRG Education Fund has been involved in energy efficiency issues leading up to and since the passage of Arizona's very successful energy efficiency standard. The Arizona PERG Education Fund urges the commission to extend and expand,
not eliminate Arizona's energy efficiency standard. Let me start by correcting something miss Keane stated. The standard has not expired. While energy savings are not required to increase each year, the standard still remains in tact, and that has been verified by staff on at least a few occasions and is also part of the rule. The standard is a rule that keeps giving to rate payers year after year after year. In fact, I can't think of a commission rule that provides more financial benefits to all Arizona
ratepayers that are regulated by the commission than Arizona's energy efficiency standard. This is true whether a ratepayer is low income, lives in a rural community, and or takes advantage of a related utility offering. You asked about, the repeal being in in the public interest. In our view, the repeal is not in the public interest. One of the reasons that the standard has been wildly successful is that it is not subject to the whims of a particular commission or a utility CEO who may
wanna either dramatically increase or decrease utilities can continue to do energy efficiency programs and that customers want it, there is no doubt that the energy efficiency standard want it, there is no doubt that the energy efficiency standard has helped to provide that consistency, stability, and has resulted in significant cost savings, cost benefits for rate payers. Under the energy efficiency standard, the utilities know what the commission expects. Relevant employers can better predict their employee and business needs, and rate payers can turn to program offerings to save money on their monthly bills
while also reducing offerings to save money on their monthly bills while also reducing strain on the grid. The EIS prepared by the commission's consultant really makes the case. $1,700,000,000 in net economic benefits is what the standard has meant for rate payers since its inception and what it means for capacity and reliability of the grid. The EIS raises questions in line with questions that we post in the docket alongside the Nature Conservancy Arizona,
and these questions were refiled by miss Johnson on November 14. While we seek questions to all of or while we answers to all of the questions we pose, let me just highlight a few real briefly here that we think are fundamental, that the commission, responds to well before the vote takes place. One, if the commission was to eliminate the standard, how would commissioners ensure the utilities consistently provide energy cost saving and peak reduction programs that benefit all rate payers? Two, is a commission navigates unprecedented demand for electricity in the coming years?
How will it provide or excuse me. How will it prioritize strategies to meet that demand? And lastly, how would the commission ensure sufficient DSM planning, reporting, and evaluation on items such as peak energy savings, participation rates, and costs and benefits be provided to the commission, stakeholders, and rate payers? In conclusion, we ask the commission to closely review the findings of the EIS as well as the Arizona PIRG Education Fund, we're a statewide organization. We're Arizona PIRG Education Fund, we're a statewide organization. We're based in Gilbert. Thank you,
miss Brown. I do have a question or two for you before you step down. I believe, one of the things you stated was that the the current rules provide consistency when it comes to these programs. Is it the Arizona PIRG Education Fund's prediction that if these rules are repealed that, these these programs will decrease or be eliminated or reduced somehow? Yes. Thank thank you, judge for that question. I think we can look no further than the anticipated vote tomorrow on APS's DSM plan, where the chairman has, put forth an amendment that would dramatically decrease
the program offerings and the overall funding, cut it in half, if that if that provides jobs in this sector, and ultimately, it reduces the, and ultimately, it reduces the amount of savings that can be had on the grid. And if we're really looking at the future in Arizona and this dramatic growth that is anticipated, we need everything we can do to re to make sure that there's more capacity on the grid and that we can ensure that the reliability that the utilities have so well provided remain. Thank you,
miss Brown. Thank you. Alright. And my last speaker slip for the moment is, mister Reyes. Good morning, sir. Good morning, honor. My name is Ricardo Reyes. I am a Marine Corps veteran. I'm also executive director of Vets Forward. Vets Forward is a, veterans advocacy group, based here in Phoenix, Arizona. I grew up here in Phoenix on the West Side Of Miami, Maryville. I now live in the Moon Valley area. I'm here because Arizona families, including thousands of veterans and seniors, cannot afford any more unnecessary rate hikes. Energy efficiency standards are one of the only tools the commission has that directly lowers
cost for everyday Arizonans. The cheapest energy is the energy we don't have to generate. When utilities invest in efficiency, better appliances, weatherization, smart buildings, it saves taxpayers money. Every dollar spent on efficiency saves 2 to $3 by avoiding new power plants, new transmission lines, and the raising of fuel costs. This is real long term bill relief, not temporary a band Aid. Efficiency also protects the people who are hit the hardest by rate increases, fixed income seniors, and low income families.
And what people don't know is that there's also a lot of veterans who are in these groups. Even active duty, when I was a young marine, I had to rely on SNAP to feed my family. I was also living, you know, below the poverty line as an active duty member of the military. Efficiency programs help keep these people and their homes cool, safe, and affordable. It's not just a pocketbook issue as well. Efficiency standards, strengthens the grid. We live in one of the hottest states in the country. Reducing the demand through efficiency is the fastest way to prevent outages and reduce the
blackout risk during extreme heat. This is not a theory. It's the safest, most reliable grid management strategy we have. Efficiency also supports local jobs, electricity electricians, HVAC, construction workers. These are good Arizona jobs that can't be outsourced. Rolling back standards doesn't save money. It kills jobs while raising bills. This shouldn't be a partisan issue. States across the political spectrum like Texas, Georgia, and Florida all use efficiency because it works. Arizona should not fall behind. Commissioners, your job is to protect the public from unnecessary rate hikes.
Keeping strong energy efficiency standards is the responsible fiscally conservative choice that helps families strengthen the grid and save families during extreme heat. One last thing that I wanted to mention so that I have a little bit of time is that I I have a lot of veterans who, as the executive director of this, group, come to me all the time when they need help, whether it's financially, mentally, or, otherwise. And one of the things that I've gotten the most this last year has been people who are suffering because of heat and because of their utility bills. So on behalf of those people,
I am here to make sure that it is expressed that veterans, lots of veterans are suffering right now, and getting rid of these standards will only cost them even more. Thank you very much. I appreciate you. Thank you, mister Reyes. Alright. That is all of the speaker slips that I have. Is there anyone else here in the hearing room who wants to provide comment? Seeing and hearing none, and it does not appear that anyone has called in to provide comment by telephone. So that that concludes our, our opportunity to provide public comment on this matter.
Miss Layton, would staff like to make a closing statement or respond to, any of the comments that have been provided today? No, your honor. Staff will respond in writing as necessary. Thank you. Thank you, miss Layton. Alright. So the next step in the rule making process will be for staff to file by 01/05/2026. A summary of all written and oral comments concerning the notice of post rulemaking received between 09/26/2025 and 12/04/2025,
along with staff's responses to those comments, as well as a final economic small business and consumer impact statement or a memo explaining why no revision to the economic impact statement dated 08/27/2025 is needed. The hearing division will then review the record and issue a recommended opinion and order for the commission's consideration at an open meeting. The commission will determine whether and in what manner the rule making should go forward. And I need to apologize to our translator because I need to ad lib a
bit here. I just wanted to remind anyone who's, watching on the stream, but is not participating, but who, would like to, that in addition to today's proceeding, there will be a second oral proceeding on Thursday, December 4 at 01:00PM here at the Commission's offices. Are there any additional comments or other issues that need to be addressed during this oral proceeding, staff? No, your honor. Thank you. And we will now adjourn. Thank you everyone for your participation today. This oral proceeding is adjourned.