It turns out that upending Utility energy production and mandating “clean” energy by an arbitrary date costs money. A lot of money actually—to the tune of over $6 billion according to a new study commissioned by the Corporation Commission.
This study comes over a year after the Commission first announced its Green New Deal Energy Rules. Many votes have taken place since then, votes that would impact ratepayers, yet no independent cost analysis had been done until now.
The green energy lobby repeatedly told the Commission that the mandates (which were rejected by a margin of two to one on the ballot in 2018), would actually save ratepayers money and have an economic benefit of $2 billion. Seemingly everyone in the Corp Comm echo chamber and the media actually believed these suspicious figures. Everyone except Commissioner Justin Olson. He introduced an amendment last April to ensure that costs incurred by Utilities to comply with the mandates aren’t passed onto ratepayers. The amendment failed. It turned out that the same people claiming that energy mandates save people money didn’t believe their own hype and fought to kill this ratepayer protection.
We already know that previous mandates have led to higher utility bills and boondoggle projects. The Renewable Energy Standard and Tariff adopted by the Commission in 2006 (requiring 15% renewable energy by 2025) resulted in APS signing a 30-year contract for solar energy costing 400% above market rates. All passed onto the ratepayer.
Thankfully prior to leaping before they looked, the Commission agreed to conduct a study with an independent firm to identify the potential cost of additional mandates. The firm they hired—Ascend—compares 3 different portfolios of energy production: “Least Cost” which relies on utilities pursuing the lowest cost option for consumers, an 80% clean energy mandate by 2050, and a 100% clean energy mandate by 2050. In order to hit the 80% or 100% mandate requirements, utilities would need to phase out all fossil fuels, purchase more solar and wind generation, expand lithium-ion battery storage and convert natural gas generation to green hydrogen.
The result? The difference between the modelled Least Cost portfolio and the 100% reduction for APS is over $6 billion. That’s $6 billion that would be footed by ratepayers. This comes out to an estimated $60 per month, an 80% increase per bill for the average ratepayer.
There certainly are cost-effective and reliable renewable energy options for utilities. And when it makes sense to invest in or purchase from them, the utilities are free to do so. But those investments should not come at the cost of higher utility bills, and utilities should be required to justify those investments to the Commission.
If a utility makes a bad investment or signs a bad contract, the liability should be on them, not the ratepayer.
But when the Commission adopts mandates, as it did in 2006 and is now considering again, it shifts risk and liability away from utilities (and the dozens of special interest groups that profit from mandates) to ratepayers.
The role of the Commission is to protect ratepayers by ensuring just and reasonable rates, not engage in energy policymaking. By injecting itself into these market decisions, the Commission ties its hands from its constitutional role and allows utilities to dictate rates and harm ratepayers. Instead of new mandates, let the utilities make investments in renewable energy production when and where it makes sense to do so, and in the process protect ratepayers from bad investments and contracts.
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