In Navajo County, where people have been feeling the economic losses from the decline of coal-fired power plants, few seem to be embracing Proposition 127 — the Clean Energy for a Healthy Arizona ballot initiative. The measure seeks public approval for a constitutional mandate to require Arizona utilities to provide 50 percent of their electricity from renewable resources by 2050.
Currently Arizona’s renewable portfolio standard (RPS) — the amount of renewable energy required by law — is 15 percent renewable energy by 2025. The state presently gets about 12 percent of its energy from renewable sources.
The proposition has become the most expensive in state history, with over $40 million spent either for or against the measure. Most of the money has come from two sources — Arizona Public Service’s parent company, Pinnacle West, has contributed almost $22 million in opposition and San Francisco billionaire Tom Steyer has spent over $17 million trying to pass the measure, according to a recent campaign finance report.
APS, the state’s largest utility company, took local action against the measure early on — lobbying local municipalities to pass resolutions against it.
Neil Traver, Northeast Division Manager for APS, and other company executives began making the company’s case against the proposition back in June. Since then, Navajo County, the towns of Snowflake and Pinetop-Lakeside, the Real AZ Corridor and the Snowflake-Taylor and Show Low chambers of commerce have all passed resolutions against the proposition. In addition, Show Low Mayor Daryl Seymore and councilors Brent Hatch, Mike Allsop, Rennie Crittenden, Connie Kakavas and John Leech Jr. have all expressed opposition, as has Navopache Electric Cooperative and Novo Power.
Brad Worsley, president and CEO of Novo Power, the only industrial-scale biomass electric generating facility in the state, says he is supportive of renewables, but he also has some doubts that the technology is affordable enough to achieve the goals of Prop 127.
“You have to allow (battery) storage capability to catch up … and until that happens, most of our renewable energies can be generated cost-effectively, but not stored cost-effectively, and that creates grid instability,” he said.
Rob Hephner, chairman of the Show Low Chamber of Commerce board of directors, says that the cost is just too high, and it will hurt businesses and families, noting it could even reduce the purchasing power of individuals, which affects business.
Arizonans for Affordable Electricity, a political action committee Pinnacle West has donated millions to, has made cost the central issue in their fight against Prop. 127. They commissioned a study, conducted by Arizona State University’s Seidman Research Institute, that confirmed their claims for enormous cost increases to consumers.
“Our primary objection is that Prop. 127 is going to significantly increase electricity rates for Arizona families; that’s the primary issue,” said Matt Benson, spokesman for Arizonans for Affordable Electricity.
Indeed, APS has made dire predictions of rate increases of as much as 100 percent over current costs, and analysis of the measure by other utilities has also indicated a sharp hike in electrical rates, although not as much.
Cost increases debated
Central to APS’ claim of potential cost hikes from the passage of Prop. 127 is that the company’s Palo Verde Nuclear Generating Station, the nation’s largest nuclear power plant, would close if the measure were to pass. The plant provides energy for about four million people from west Texas to California. The so-called “baseload” plant runs 24/7 all year long, providing a steady supply of energy that is carbon-free, clean energy, according to APS. The plant is the largest single property taxpayer in the state at $55 million annually, and one of the state’s single largest employers.
Since Prop. 127 does not include nuclear power in its definition of renewable energy, APS and Arizonans for Affordable Electricity say it is a threat to Palo Verde. Benson said that Arizona utilities would have to add 8,000 megawatts of renewable power infrastructure to meet the guidelines of Prop 127. With that much capacity, he says that “Palo Verde will be uneconomical to operate.”
Foes of Prop. 127 predict Palo Verde would have to close within 10 years.
That would mean that ratepayers could potentially be saddled with the enormous cost of decommissioning Palo Verde at the same time that they are paying for the construction of a new utility-scale solar generating system and some natural-gas-fired power plants.
Proponents of Prop. 127 say the outlook is much sunnier than the doom and gloom offered by Arizonans for Affordable Electricity. In fact, they say that electricity costs would gradually come down because utilities would not have to pay for fuel anymore.
Clean Energy for Healthy Arizona has their own study, commissioned by the Natural Resources Defense Council (NRDC) who hired and researched and written by ICF — a global corporation that provides strategic planning and consultation to businesses, including energy industries — that indicates Palo Verde is unlikely to close.
“We find that the operation of Arizona’s big nuclear power plant, Palo Verde, is not changed by a 50 percent RPS (renewable portfolio standard), despite APS’s claim to the contrary. The plant continues to run around the clock …” their study said, whether the state implements more renewable energy or not.
Dylan Sullivan, policy director for Clean Energy for a Healthy Arizona and a Senior Scientist at NRDC, said that in the study, all of the state’s existing nuclear and fossil fuel generation systems would remain in place through their current planned lifespan as renewable energy systems are put in place.
The NRDC study further claims that the falling cost of solar power combined with the savings from not purchasing fuel for power plants will save the state $4 billion dollars in energy costs between 2020 and 2040.
“Because it allows Arizona to use its natural resource, the sun, instead of paying Texas, Oklahoma and New Mexico for gas, it’s the better option for the state, and solar is just cheaper now,” said Sullivan. Sullivan said that the cost for utility-scale solar “has declined by 86 percent over the past few years.”
“Ultimately there’s no question that prices are going to come down and that the technology is going to improve. But the fact of the matter is if renewable technology was competitive price-wise, they wouldn’t need to lock it into the Arizona Constitution,” said Benson.
APS officials also said in a recent interview with the Independent that its coal-fired Cholla Generating Station near Holbrook would close sooner than 2025 — its current closure date — if voters pass the measure.
Who is regulating whom?
Benson and others also question why the state’s energy policy should bypass the Arizona Corporation Commission.
“We strongly believe going through the ACC is the appropriate remedy,” he said.
But after allegedly spending millions in dark money, and later disclosing its contributions to regulators in a subsequent election, APS and its parent company in recent years have influenced the election of commissioners to the ACC. Although these contributions are legal, some question the motives of the state agency tasked with regulating utilities.
“I think APS really likes to have control and is used to getting its way. They basically have a situation where they’re the biggest spender in the races for their regulator and able to set the terms of the debate,” Sullivan said.
Even if Prop. 127 passes, the measure’s mandates could be ignored. The Legislature this year passed a law that took effect in August that “spells out that any violation of a constitutional provision on renewable energy would only be a civil violation … (with) a one-time fine that could be as much as $5,000 or as little as $100,” according to a report last month by Capitol Media Services. Clean Energy for Healthy Arizona has vowed to fight the law.
Rates to rise anyway?
Regardless of the outcome of Prop. 127, ratepayers in the White Mountains could still see higher electricity rates, though not as high as the utility claims if the measure should pass. APS customers recently saw a rate hike of as much as $17 dollars a month, far more than the $6 month predicted from their 2017 rate adjustment, according to an August 7 story in the Arizona Republic. A formal complaint has been filed concerning the recent increase.
Some sources estimate “APS will earn from $208 million to $233 million more annually from the new rates, much more than the $95 million increase the company estimated at the time of the rate hike,” the Republic article states.
While controversy over the most recent rate increase continues to swirl, “the company is asking for another $67.5 million rate increase to cover the expenses of environmental equipment added to the Four Corners Power Plant,” an increase APS estimates at about two percent, or $3 month on the average bill, according to the Republic.
The White Mountain’s other primary electrical utility, Navopache Electric Cooperative, currently has a rate increase request before the ACC, that will add 7.24 percent to their monthly member’s bill. Administrators at the cooperative have stated that they plan to pursue another rate increase request within about two years. This is the third rate increase filed by NEC in the last three years.