Ahead and get started then. Let's go on the record. Good evening. I'm administrative law judge Julia Motter, and I have been assigned to preside over this matter. We have a Spanish language interpreter with us today who will be translating my introductory and closing remarks and the comments of any Spanish speaking members of the public. This is an oral proceeding being held for the proposed rulemaking in docket number RE00000ADash24Dash0026
in the matter of the proposed modifications to the renewable energy standard and tariff rules, title 14, chapter two, article 18. The proposal is to repeal the rules entirely. The notice of rulemaking docket opening and notice of proposed rulemaking for this matter were published in the Arizona Administrative Register on 10/03/2025. In addition to this oral proceeding, an oral proceeding will be held on Thursday, November 13, beginning at 10AM, in person at the commission's offices in Phoenix or telephonically?
This oral proceeding is being held as provided under Arizona revised statute section 41 dash ten twenty three to allow adequate discussion of the substance in 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 may ask questions of staff to clarify the record. If you are on the phone, please tell the person who answers both your name and that you desire to speak. And, staff, may I now have your appearance for the record?
Yes. Eli Golub, staff attorney. And has staff prepared a statement of inform Oh, go ahead. Go ahead. You can do it. And Yes. Staff sorry, your honor. This is Tangerie Allen with staff, and, yes, we have prepared a statement. Okay. You can go ahead and present it now. Okay. Thank you. Good evening. Khandari Allen with commission staff. With this rulemaking, staff is recommending repeal of article 18, title 14, chapter two of the Arizona Administrative code as directed by the commission. Article 18 is the renewable energy standard and tariff rule,
which I will refer to as the rest rule. The commission adopted the rest rules in decision number six nine one two seven and revised portions of the rules in decision number seven four eight eight two. The rest rules require retail electric utilities or affected utilities to obtain a portion of the utility's annual retail energy sales from eligible renewable energy resources, including distributed renewable energy resources. The rest rules do not apply to distribution companies with more than half of its customers located outside of Arizona.
The rest rules were implemented to encourage energy diversity and incentivize the adoption of renewable energy by electric utilities and their customers. In addition, the rest rules were intended to ensure the overall cost and rates charged for electric service over the long term were just and reasonable, that electric utility service to Arizona ratepayers was adequate and reliable, and to the extent possible, minimize the overall adverse environmental impacts resulting from electric utility service. Among other things, the rest rules require affected utilities to,
on an annual basis, obtain a certain percent of retail electric sales from eligible renewable energy resources with a percent of the annual requirement coming from distributed renewable energy resources, file an annual implementation plan for commission approval detailing how the utility intends to comply with the rest rule during the following calendar year, and file an annual compliance report describing utility's compliance with the requirements of the rest rule for the previous calendar year. The rest rules also detail the treatment of renewable energy credits or REX in meeting
compliance with the rule. For For an electric distribution cooperative that is subject to the rule, the cooperative is required to submit for commission approval an appropriate plan for obtaining retail energy sales from renewable resources in lieu of meeting the annual requirement. The retail electric utility subject to the rest rules are APS, TEP, UNSC, Ajo Improvement Company, Ferency Water and Electric, Duncan Valley Electric Cooperative, Graham County Electric Cooperative, Mojave Electric Cooperative, Nara Apache Electric Cooperative, Sulphur Springs Valley Electric Cooperative,
and Trico Electric Cooperative. Based on the annual rest compliance reports filed with the commission, the three largest regulated utilities subject to the rules, APF, TEP, and UNSC, have either met or exceeded the annual renewable energy requirement detailed in the rules for the most recent three years reported, 2022, 2023, and 2024. The annual renewable energy requirement was 12%, 13%, and 14%, respectively. The commission has issued decisions granting waivers of various portions of the rest rules for
affected utilities. For example, in recent years, the commission has ordered that many affected utilities eliminate or significantly reduce the level of the rest surcharge collected by utilities customers and the incentives paid to customers participating in commission approved rest program. For APS, TEP, and UNSC, since the inception of the rule, almost $2,600,000,000 have been spent implementing commission approved rest programs in compliance with the rule. In addition, APS, CT, and UNSC have spent over $779,000,000
in incentives paid to customers who have participated in commission approved programs. The commission recognized that incentives paid to participating customers were paid with funds collected by all customers through commission commission approved surcharges regardless of participation and voted to eliminate these incentive payments. However, utilities continue to be obligated to pay production based incentives and prior contractual agreements, such as purchase power agreements that may have ten to twenty years before reaching full payment for eligible renewable technologies.
Since the inception of the rule, surcharges have been approved to help fund rest programs implemented by affected utilities in order to comply with the rule. APS, TEP, and UNSC have collected over $2,300,000,000 in rest surcharges from all customer taxes. The surcharges collected have been used to administer commission approved rest programs and pay incentives to customers participating in available programs. For APS, the current commission approved surcharge is 7¢ of a cent per KWH with a monthly
cap of $2.84 and a monthly average residential bill impact of $2.84. The current commission approved budget is approximately $86,200,000. For TEP, the current surcharge is 1.89 per KWH with a monthly cap of $10.37 and a monthly average residential bill impact of $8.44. The current commission approved budget is approximately $65,800,000. For UNFD, the current surcharge is 1.23¢ per KWH with a monthly cap of $5.60
and a monthly average residential bill impact of $4.77. The current commission approved budget is approximately $9,300,000. The repeal of the rules would not eliminate any commission approved surcharges unless the superseding commission decisions and either a rate case proceeding or separate rest filing is issued. SAS believes that repeal of the rest rules as directed by the commission will have no impact on existing commission approved programs offered by affected utilities. Electric utilities will continue to have the abilities to file for approval of modifications to
existing rep program or new programs as part of a rate case application or separate application. SAS continue SAS will continue to evaluate any proposed modifications to existing programs or new programs. Because several affected utilities, including APS, TP, and UNSC no longer offer incentives to participating customers, they therefore do not receive RECs in exchange for energy produced by interconnected DG system. The RECs were used by utilities to demonstrate compliance with the rest rules. The commission has granted waivers to various affected utilities from using REX to demonstrate compliance
with the rules. Although REX will no longer be required for compliance purposes, they will continue to have value on the market for electric utilities. For example, if utility is able to sell REX on the market, those revenues could be used as an offset to the rep surcharge or or an offset to rates in general. Based on information provided by ATFTP and UNSC, the evaluation of different resource types is primarily based on reliability, cost effectiveness, and affordability. Therefore, the repeal of the rest rules should not materially impact the utility's adoption of renewable
resources. However, utilities have indicated that any potential reductions in federal tax credits or grants for renewable resources or battery storage could make these resources less economic and make them less competitive compared to other resources. The revised EIS filed as exhibit b to decision number eight one four five one expanded on and provided additional and a more comprehensive analysis on the potential impact and implications associate associated with the repeal of the rest rule. SAS recognizes that info information related to APS's clean energy goal included in the revised
revised EIS has changed since it was filed as APS has updated its commitment to a carbon neutral goal. However, SAS does not believe that the revised EIS filed has any bearing on SAS recommendations to repeal the rules because the repeal of the rules was directed by the commission. A second revised EIS may be filed if necessary. The adoption of renewable energy technologies expanded in part due to incentives paid by participating customers through the rent surcharge and base rate, and the industry has become a stable market participant. The commission has recognized that the standards contained in the rules are no longer needed
to sustain the expansion of the industry as the continued proliferation and adoption of renewable energy resources from all customer classes continues in Arizona. Staff believes that the repeal of the rules will not eliminate electric utilities investment in renewable energy. Electric utilities will continue to be able to and are encouraged to invest in cost effective renewable energy resources that would benefit their systems and their customers. Customers will continue to be able to install renewable energy resources that they should they choose to do so. Additionally, staff believes that the repeal of the rest rules will reduce regulatory burden by eliminating
the requirement for affected utilities to design, develop, and administer rest programs on an annual basis. Utilities will be able to continue to file for commission approval of programs as needed to benefit their customers. This will also help the staff's workload because staff would not be required to evaluate the annual filings, which can take several months for re for final review. Further, any current reporting requirement in the rules can be included in a specific commission order with the repeal of the rule. And finally, that does not plan to provide oral responses to comments received at today's proceeding.
As required by decision number eight one four five one, map intends to address the written and oral comments received concerning this rulemaking in its memo to be filed in the docket on December 15. Thank you. Thank you, staff, for your comments. We appreciate it. So with that, I will now begin to take public comment. I may ask questions to clarify a speaker's position for the record. In addition, I will allow staff the opportunity to respond to statements and to ask questions to clarify a speaker's position for the record.
I also will have staff respond to any substantive questions posed by speakers regarding the proposal. For each of you who has provided 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, 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 are speaking on behalf of an organization, please identify the organization and your position with it. And 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. And if you are using the services of our translator today, please pause frequently so that the translation can be made. Okay. We will first take comments from Amber Daniel, d a n I e l. You can go ahead and unmute yourself and provide your comments. Hi. My name is Amber Daniel. I live in Chandler, Arizona, and I am providing a comment on behalf of Mormon Women for Ethical Government.
So the renewable energy standard and tariffs rules passed by the ACC in 2006 made Arizona a leader in creating economic and clean energy clean energy conditions that benefit businesses and residents alike. As ratepayers and concerned citizens, we are disappointed that the ACC's August vote to begin the administrative process to repeal the rest rules. We respectfully encourage the commissioners to reconsider the repeal of the rest standards and work
to improve them instead. Arizonans and stakeholders submitted more than two twenty nine thousand comments during the respective public comments process, the majority of which recognize the financial and environmental benefits the rest rules provide to our state. Since taking effect in 2007, the rest rules have encouraged Arizona utilities to invest in clean, affordable, and renewable energy. Sources like solar and wind installations are less expensive to build than fossil fuel power
plants, faster to move online, and cheaper to run. Renewable energy is not subject to the price fluctuations of fossil fuels, providing more affordability and stability to Arizona's utility bills. The ACC's economic impact statement emphasizes that increased exposure to fossil fuel price fluctuations will create missed opportunities for long term cost savings and reduced price stability resulting in higher cost to rate payers. Repealing the rest rules will not save customers money because utility companies have already con
have contractual obligations under the current rules. In addition, renewable energy incentivized by the rules is creating jobs in rural Arizona and increasing the local tax revenue for schools and public services all without raising taxes. The solar industry has made over $11,000,000,000 in investment in our state. We would like to see these economic benefits continue. The rest rules are still needed. Arizona Public Service is walking away from its own clean energy goals, slowly for slowing future development of clean energy projects.
An independent study highlighted almost $2,000,000,000 in gross benefits for the public and customers of APS and TEP from renewable energy standards since 2006. We thank you for your service on the Arizona corporation commission. Sincerely, Mormon women for ethical government. Thank you, miss Daniel, for your comments and your time this evening. We do appreciate it. Okay. Next, we will take comments from Tamora Muir, m u I r. You can go ahead and unmute yourself and provide your comments.
My name is Tamora Muir, t a m o r a, the first name. I'm representing myself. I simply wanted to speak today to ask you not to repeal the rest rules. There are extremely important reasons for this. First, I see the primary responsibility of the Arizona Corporation Commission as keeping rates low for Arizona electricity users in a monopoly market. This leads directly to my second point. Solar and wind energy are now the least expensive ways to generate power. Why undo the rules that require the most cost effective methods of producing electricity?
They can be modified to produce new and greater goals if the current ones have already been met. I understand there is a perverse incentive for electric companies to invest in the most expensive generation projects they can justify. Their permitted profits are based on what they invest, not on keeping prices low. So company stakeholders are motivated to spend as much as possible and then argue for higher rates to maintain their allowed profit margins. It's your job to present that because it runs directly counter to what is best
for Arizona rate payers. New data centers are coming to Arizona and will demand huge amounts of electricity. Across the country, when data centers arrive, residential rates tend to rise to meet the increased demand. The same will happen here unless we are extremely careful to expand generation capacity while keep keeping those generation costs low. That means solar and wind. Study after study shows that they are the least expensive sources of energy, cheaper than coal, even less expensive than natural gas, and that's before accounting for the costly health impacts of pollution from fossil fuels.
Please keep Arizona rate payers as your first priority. Repealing rest will not save us money, but replacing renewable energy with fossil fuels will cost us dearly. Please don't repeal rest. Thank you. Thank you. Thank you for your time and your comments this evening. We do not have anyone else who has called in to provide public comment at this time. So with that, we will turn to staff to, for any closing statement or closing remarks. Thank you, your honor. Tandrea Alba with staff. We just thank everybody for taking the time this evening to provide comments.
We appreciate it, and we will be, including those comments and our summary, in the memo to be filed. Thank you. Thank you. Alright. The next step in the rulemaking process will be for staff to file by 12/15/2025. A summary of all written and oral comments concerning the notice of proposed rulemaking received between 08/19/2025 and November 14, 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 07/15/2025 is needed. The hearing division will then review the record and issue amended opinion in order for the commission's consideration at an open meeting. The commission will determine whether and in what manner the rulemaking should go forward. Of Right. Are there any additional comments or other issues that need to be during that need to be addressed during this oral proceeding from staff? No, your honor. Okay. And we still have not had any additional speakers join. So with that, we will now adjourn.
Thank you everyone for your participation today, and this oral proceeding is adjourned. Thank you. Night. Kendrea? Yes. Yes, ma'am. This is Jill, the court reporter. Could I ask you to please email me a copy of your statement? Oh, yeah. Absolutely. Do, can you give me your email address?