A History of Harmful Mandates

Arizonans have faced repeated attempts over the last six years by various interest groups to impose costly Green New Deal energy mandates on utility ratepayers. In 2018, liberal billionaire Tom Steyer bankrolled a statewide ballot measure to require utilities to obtain 50% of their energy from renewable sources by 2030. Voters realized the danger of this California-style energy plan and rejected it by a 2 to 1 margin.

Immediately after the Steyer initiative failed at the ballot, the Arizona Corporation Commission began considering their own green energy mandate to completely ban fossil fuel generation in Arizona by 2050. The Commission’s plan was even more radical than the energy initiative, and this time the mandate was being pushed by our regulated utilities, not far left radicals. This caught most observers by surprise—the utilities were among the opponents of the Steyer initiative, and now they were cheerleading energy mandates.

Why the change of heart by our monopoly utility providers? The reason is simple—they knew that if the Commission adopted official policy requiring Green New Deal mandates, they would be guaranteed full cost recovery from their captive ratepayers. After fierce opposition from ratepayers and organizations like the Free Enterprise Club, this proposed mandate was rejected by the Commission in early 2022.

Unfortunately, this victory for ratepayers was short lived. Almost immediately after the Commission voted to reject costly energy mandates, the utilities announced that they would be implementing their clean energy agenda anyway, irrespective of what their captive ratepayers thought about it. This didn’t come as a total surprise, considering these utilities have gone all-in on Environmental, Social, and Governance (ESG) and the accompanying “Net Zero” commitments to ban fossil fuels in their SEC filings to shareholders, which our organization began advocating against at the Commission earlier this year.

We told the Commission that if the utilities are allowed to operate under ESG, every downstream policy decision would be shaped by it—ultimately resulting in massive ESG rate hikes for Arizona ratepayers. Based on the energy resource plans submitted by the utilities last month, it appears our predictions have been proven correct.

ESG Resource Plans

Every three years, the major monopoly utilities (APS, TEP, and UNS) are required to submit an Integrated Resource Plan (resource plan) to the Commission. These resource plans must project the expected load (demand from customers) over the next fifteen years and then outline how the utility plans to meet it – whether that is with coal, nuclear, natural gas, solar, wind, or other sources.

Unsurprisingly, the submitted plans are ESG plans through and through with radical Net Zero commitments that completely retire coal generation, add very little new natural gas, and instead rely almost entirely on unreliable and costly solar, wind, and battery storage. In TEP’s submitted plan, they begin by outlining their commitment to going Net Zero by 2050 and outline a plan for a ratepayer-funded “Net Zero Hero” campaign to push Arizonans to use less energy. The APS plan is the same, because they both begin with the same primary goal: going “green.”

Renewable Mandates Cost Ratepayers Billions

One problem (among many) is that, if approved by the Commission, these plans will cost Arizona ratepayers billions. The Commission knows this. The 2006 15% renewable mandate has cost ratepayers over $1 billion to date and their own 2021 study estimated going Net Zero by 2050 would cost ratepayers $6 billion. The utilities know this too. In 2018, they submitted ballot arguments opposing Prop 127 arguing that going renewable would cost the average ratepayer $1,250 annually.

Even more recently, the Club published a paper authored by economist Stephen Moore, finding that ratepayers in states with “renewable” energy mandates (like the goals our utilities have voluntarily committed themselves to) paid 44% more for electricity last year than those who live in states without any mandates. Further, going “Net Zero” by 2050 would increase utility costs by 78% – nearly doubling utility bills for Arizonans.

It’s clear that climate commitments cost billions, and that’s why the federal government, on behalf of the green energy lobby, is pouring trillions of dollars in tax credits to subsidize it – on their own they cannot compete. Even with those subsidies, going “green” will increase costs of electricity and result in blackouts.

The Plans are Irredeemably Wedded to ESG

Why would the utilities choose this path? Simple: in order to maintain a good ESG score with international banks and investors who have no interest in the reliability of Arizona’s grid, they have to. In fact, even the modeling software they use to craft their plans is now owned by Blackstone and Vista Equity Partners, two of the largest private equity firms who are at the tip of the spear pushing ESG. Even worse, the parent companies of our utilities have tied executive compensation to meeting “renewable” energy goals. In other words, the profits of out of state executives substantially increase if the utilities go Net Zero.

These plans will determine the direction of Arizona’s energy future – whether we follow the path of California with sky high rates and rolling blackouts, or we ensure affordable, reliable, and plentiful energy into the future. These ESG plans push us down the former, and that’s why the Commission must reject them outright to protect ratepayers and ensure just and reasonable rates.

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