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Natural Gas Volatility Key to AZ Renewable Standard

Arizona regulators made it clear Tuesday that they expect the new renewable energy standard and accompanying rules they enacted to be a buffer against overreliance on natural gas-fired electricity in their state. Through stepped-up distributed generation and other means, a majority of the five members on the Arizona Corporation Commission (ACC) see their state being inundated with rooftop solar panels on homes and businesses.

"It is my hope that some day when Arizonans fly into Sky Harbor International Airport, they will see as many solar panels on rooftops as swimming pools in backyards," said ACC Commissioner Kristin Mayes, one of four regulators voting for the new renewable rules. "Passing the RES (renewable energy standard) will help wean our state off its addiction for expensive fossil fuels and put us on a pathway to energy independence."

She said there is a "battle" ongoing between forces pushing for more renewables and entrenched industry sources resisting the change.

The ACC's lone dissenting member, Commissioner Mike Gleason, said the regulators are not sure about the purpose of the new rules, and in his opinion "the RES will not assure reliable service at reasonable rates. Renewables that are at reasonable rates are a small supply. The ones in abundance are expensive, and all predictions are that they will continue to be expensive." He raised doubts that the ACC has the authority to impose the new rules.

Commissioner William Mundell said without Tuesday's action the renewable energy industry in Arizona would "grind to a halt, and we'll continue to send billions of dollars out of state for natural gas instead of investing that money in Arizona. You can't look at this issue in a vacuum; you must be aware that Arizona Public Service Co. (APS) has been before this commission requesting rate increases between $30 [and] $40 per month for natural gas alone."

Besides mitigating against higher gas prices, the majority of Arizona regulators envision the renewable push being good for the state's economy, creating new jobs and less dependence on fossil fuels from "foreign governments." They do not accept Gleason's argument that the state will be more vulnerable from a reliability standpoint by using more renewable energy and distributed generation sources.

Unlike renewable programs in 21 other states, Arizona does not allow any "grandfathered" existing projects or "credit" for them. The Arizona program is "focused on adding new generation and taking advantage of emerging opportunities," said the ACC's Phoenix-based spokesperson.

Voicing indecision on how he would vote on the issue after a majority had already revealed itself, ACC Chairman Jeff Hatch-Miller acknowledged that no one is totally happy with all of the RES program, but he said the commission and future commissioners will have "ample opportunity" to fine tune the program with annual assessments that will be conducted every April. "These assessments will help reveal the true costs of the renewables," Hatch-Miller said.

Hatch-Miller credited former ACC Commissioner Marc Spitzer (now a FERC commissioner) with being one of the key people active in bringing a standard to fruition in Arizona. He also credited his elected commission colleagues, several of whom worked on aspects of renewable energy development as members of the Arizona state legislature.

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