Ariz. regulators order resource planning reset for utilities

The Arizona Corporation Commission has done something it has never done before. In a March 13 order, the commission voted unanimously not to acknowledge the utility resource plans for Arizona Public Service, Tucson Electric Power, and UNS Electric.

The decision sends the investor-owned utilities back to the drawing board to draft new integrated resource plans in a process that begins this August. The schedule calls for the plans to be filed by April 1, 2020, with the commission ruling on them in the first quarter of 2021.

The commission also voted to approve several amendments. An amendment by Commissioner Bob Burns explained that the commission refused to acknowledge the plans, stating that “the APS load forecasts were not proper because they are ‘too aggressive.’”

One of several amendments by Commissioner Andy Tobin stipulated that the next IRPs should present an option that includes at least 1,000 MW of energy storage, 50% clean energy resources, 25 MW of renewable biomass resources running at no less than a 60% capacity factor, and at least 20% of demand side management resources.

(Tobin recently proposed to revamp the state’s power sector by requiring utilities to get at least 80 percent of their power from zero-carbon resources by 2050 while deploying 3,000 megawatts of energy storage by 2030).

Another amendment by Tobin requested the commission to open a docket to begin workshops “to completely revise and reform the existing Resource Planning and Procurement rules.”

A fourth amendment by Tobin calls for a moratorium on the construction of any new gas-fired generating plants of 150 MW or more until Jan. 1, 2019, and directs the utilities to compare the costs of a possible gas plant against energy storage options.

Tobin in an interview said the commission has already done a lot of work toward revamping the state’s energy sector. “We already have all the pieces to design our own energy plan,” he said.

“By not acknowledging the IRPs we sent the message that we want the utilities to look at other things,” Commissioner Burns said in an interview. “I’ve had a problem with the IRP model since I came on board the commission in 2013.”

 “People are reluctant to get out of their comfort zone,” Burns said. “Let’s open this up and hear from other types of generation.”

“I believe that competition drives prices down,” Burns said. “Even if you have a monopoly model, one piece that doesn’t have to be a monopoly is generation.” Burns said he wants to see more resources such as wind and solar power, more fuel cells, and more combined heat and power resources in the new IRPs.

In the resource plan it filed in April, APS predicted its resource requirement would increase by 60%. And while the plan called for the addition of 3,300 MW of renewable resources, it also identified a need for nearly 5,400 MW of new gas-fired plants.

Tucson Electric Power’s IRP also emphasized renewable resources in its plan, calling for the addition of 800 MW of renewable capacity, as well as 192 MW of gas-fired plants between 2020 and 2022.

UNS Electric’s IRP calls for the addition of roughly equal amounts, about 100 MW each, of renewable resources and gas-fired capacity.

The ACC’s action was welcomed by the Southwest Energy Efficiency Project, which said that by shutting down APS’ plans to build new gas-fired plants ratepayers would save about $300 million.

The ACC’s denial is “a move to ensure ratepayers aren’t on the hook for a plant they may not need,” Travis Kavulla, vice chairman of the Montana Public Service Commission and former president of the National Association of Regulatory Utility Commissioners, said in an email. “I think throughout the West there’s a lot of skepticism about new build in a time of weak demand and a lot of uncertainty on resource costs.”

Kavulla also noted that renewable resources costs are falling, but even if those declines do not fully materialize, “it seems more risky to make a big bet rather than standing pat for a time.”