State wants to oversee renewable energy policy

ARIZONA - A turf fight is brewing between state lawmakers and the Arizona Corporation Commission over who has the right to tell utilities how they have to generate electricity.

Rep. Lucy Mason, R-Prescott, has crafted a measure that says the Legislature has the "exclusive power, authority and jurisdiction" to decide state energy policy. And just in case there is any question, her proposal spells out that this includes the ability to set mandates and targets for the use and production of renewable energy.

Mason, who chairs the House Water and Energy Committee, is not trying to overturn the Corporation Commission's existing orders, which require all utilities to produce at least 15 percent of their power from renewable sources by 2025. In fact, her proposal specifically ratifies that commission decision.

But the legislation, if adopted, would tweak it a bit.

The commission regulations require utilities to meet that goal with energies such as solar, wind, geothermal and biomass.

Mason's proposal would let them consider energy generated from hydroelectric dams and even nuclear energy. Kris Mayes, who chairs the commission, said that essentially would eviscerate the requirement for most utilities.

Mason also would allow utilities to count any energy savings through conservation or efficiency toward that 15 percent goal.

On a broader basis, what Mason wants to do would derail plans by some commissioners to boost that renewable energy standard beyond the 15 percent goal. That's because future changes would require legislative approval.

Mason told Capitol Media Services that she's not wedded to the specific language currently in the bill. In fact, she already is considering various changes.

But she said the law needs to be changed to "clear up any kind of fuzzy, gray areas between the Corporation Commission and the legislative authority."

Mayes, however, said there's nothing gray about it at all. She said the commission is established by the state Constitution and has its own authority, independent of control by lawmakers.

She is hanging her hat on language that gives the commission the power to set "just and reasonable rates" charged by utilities.

"And a part of that is determining what the proper fuel mix for a utility is," Mayes said.

Ultimately, she said, it comes down to the commission's role of protecting ratepayers.

"You can't do that when the utilities are addicted to natural gas and coal-fired electricity," she said.

Mayes cited the debate in Washington to either impose a carbon tax or some sort of "cap and trade" system, either of which will make the production of carbon-based fuels more expensive. She said consumers will suffer unless utilities are forced to diversify their energy sources.

Mason, a long-time supporter of alternate energy sources, said she is not against mandates to require that utilities use something other than fossil fuels. But she said lawmakers are the ones to set policy in Arizona, not commissioners.

Mayes said lawmakers do have a role. For example, she said they could make it easier for solar companies to locate generators on state land. The Legislature also decides what kinds of industries get tax credits.

Mayes and Mason did agree on one key point: The commission's authority is limited to investor-owned utilities. That gives the panel no power over Salt River Project, which started out as an irrigation district but has turned into a whole separate level of government - and, more to the point, one of the state's largest electric companies.

Mason's measure would allow the Legislature to impose the same renewable energy standards on SRP as the commission is requiring of Arizona Public Service, Tucson Electric Power and other private companies.

Mayes has one other legal argument: Solar and other renewable sources mean less pollution. And Mayes pointed to a constitutional provision that allows the commission to adopt rules to preserve the health and safety of both utility employees and their customers.

The legislation comes in the middle of a lawsuit filed against the commission that, like Mason, is challenging the commission's authority to tell utilities how they can generate electricity.

Technically, the Goldwater Institute is representing three utility customers. They are objecting to the fact that the commission's mandate that utilities purchase more renewable energy allows the companies to pass on at least some of the cost to the consumers in higher bills.

Mason said she doesn't want anything she proposes to help that challenge.

But the outcome of that lawsuit, now set for a May hearing before Maricopa County Superior Court Judge Joseph Hellman, may decide the fate of the legislation: If the court rules that the commission has sole constitutional authority to decide questions of renewable energy, anything the Legislature enacts may be meaningless.

"It's going to be an interesting argument at the court level," Mason said.