Two years ago, Arizona was on the cusp of showing how a quintessential purple state could go green.
The state’s utility regulators had a bipartisan agreement on sweeping rules that would have set a 100 percent clean energy standard by 2050 for large regulated electric utilities. Advocates said it could have fueled a solar boom.
Politics, however, tanked the plan before a final vote. Despite an election last November that put more Democrats into statewide offices, including the governor’s seat, the Grand Canyon State now seems farther away than ever on a top-down plan to move the state away from fossil fuels.
“This state just does not have a conducive climate for clean energy policy,” said Amanda Ormond, who served as the head of the state’s energy office under two Republican governors from 1995-2001.
With the U.S. Congress split between parties, attention has turned to the state level for groundbreaking climate policy and implementation of billions of dollars in clean energy incentives approved as part of last year’s Inflation Reduction Act. Many so-called trifecta states controlled entirely by Democrats are charging ahead with aggressive climate agendas. Michigan Gov. Gretchen Whitmer, a Democrat whose party gained legislative control last November, has said she wants to pass a 100 percent clean power standard this year.
But Arizona is one of just 11 states where at least one branch of the legislature and the governor’s office are split among different parties. That makes it a compelling test case for how — and whether — battleground states can work on clean energy.
Add onto that the unique role of the Arizona Corporation Commission (ACC), the utility regulatory panel that is given so much power under the state constitution that it is considered a fourth branch of government. The elected commission now has a strong 4-1 Republican majority. It has moved away from setting clean energy standards and approved a controversial natural gas plant earlier this year.
Nick Myers, a Republican ACC commissioner elected in November, told E&E News that the panel is instead focused on “bringing regulatory stability back” and reducing “cost shifts,” or utility subsidization of certain products. That, he added, could include cutting back on incentives for solar energy, even as Democratic Gov. Katie Hobbs has tried to promote the energy transition.
Meanwhile, the legislative and executive branches are coming off a session defined by a record-breaking 143 vetoes by Hobbs. Republicans, who have narrow majorities in each chamber, pushed bills that would have restricted new clean energy construction or curtailed the ACC’s independence.
One of those bills, which failed by just one vote, would have codified a clean energy standard well below what had once been proposed in the state — an attempt to more or less end that debate.
Seeking durability
A 2022 study in the journal Climatic Change that examined state climate bills introduced between 2015 and 2020 found that about a third were bipartisan. Those bipartisan bills, the researchers found, tended to have more incentives for renewable energy or expansion of consumer choice for decarbonization, as opposed to bills with only support from Democrats that tended to impose emission standards or require clean energy mandates.
Dustin Tingley, a professor of government at Harvard University, said moving climate policy in purple states “takes way more work, but when it gets done it’s really good.”
“The literature in political science shows pretty clearly that you get a lot more durability from bipartisan compromise,” said Tingley, who recently co-authored a book about policymaking during the climate transition. “When you get a coalition, it creates good policy for people on both sides and it’s more likely to stick around.”
It’s unquestioned that Arizona has the potential to be a clean energy player. The U.S. Energy Information Administration found that the state has the second-highest solar potential in the country. As of 2022, just 11 percent of the state’s electricity came from solar and wind combined, the agency found, with another 29 percent from nuclear.
The state continues to embrace the clean energy manufacturing boom. According to data collected by Canary Media, Arizona saw more than $7 billion of new clean energy manufacturing investments announced between August 2022 and August 2023 — more than all but three other states.
Still, former Arizona regulator Bob Burns said there is more opportunity for the state to go back to its bipartisan tradition and do more to promote the energy transition. The key, he said, is educating voters on the ACC’s power — and the opportunities that a forward-thinking commission could bring.
“There’s a lot of interest in solar energy and clean energy, and one way to get there is a commission that is not unduly influenced by utilities,” Burns said. “We need to get voters to understand at the highest level what the commission does and who is running. That’s our opportunity to change the way things are.”
A ‘missed opportunity’
As states debated and established goals in recent decades that would push their utilities or government agencies to purchase certain amounts of clean energy, Arizona could never settle on a strategy to expand beyond a 2006 requirement that regulated utilities get 15 percent of their power from renewables by 2025.
There was a 2018 ballot measure that would have required 50 percent renewable power sales from major regulated utilities by 2030, which ultimately failed.
At the same time, ACC members were kicking around their own clean energy plan, debating whether those standards should include nuclear power and how substantial the requirement should be. It took until 2020 for a bipartisan compromise at the ACC between Burns, a Republican, and Democrat Sandra Kennedy to be announced. It would have required the state to reach carbon-emission free electricity by 2050 with an interim target of 50 percent renewable energy by 2030.
That plan passed an initial commission vote, but it was ultimately amended to make the requirements nonbinding goals, giving more flexibility to utilities. Democrats voted down that version in May 2021. A last-minute reprise that would have pushed the 100 percent carbon-free energy deadline to 2070 — well after most other states — ultimately failed.
Burns, who left the commission in January 2021, said in an interview last month that the outcome marked a setback because a state standard that had utility buy-in would have directed the future fuel mix. While some critics balked at what they said was a state mandate that would raise costs, Burns said the measure would have allowed waivers for utilities that could not comply — and followed where the market was going.
“My understanding looking at other states was that solar was winning a lot of bids for generation because it’s so low cost,” Burns said.
While the clean energy standard was under debate, Arizona’s largest electric utilities all publicly adopted clean energy plans. Arizona Public Service Co., for example, said it would achieve 100 percent zero-carbon electricity by 2050, while Tucson Electric Power Co. pledged to get more than 70 percent of its power from wind and solar by 2035. Salt River Project (SRP), the state’s largest nonprofit electric utility, pledged to reduce carbon emissions by 90 percent of 2005 levels by 2050. SRP would not have been covered by the state rule because it is not regulated by the ACC.
APS spokesperson Ann Porter said in an email that the company “supported the commission’s efforts” and is “committed to doing our part.” Porter added that the company would follow standards passed by the state and that “current efforts have resulted in an energy mix that is already more than 50 percent clean, today.”
A spokesperson for SRP said the company would not have been affected by the ACC proposal. Tucson Electric did not return a request for comment.
In a 2022 statement, then-ACC Chair Lea Márquez Peterson praised utility commitments, saying they represented “a monumental shift and a completely independent position for our state, free of any special interests.”
Sandy Bahr, director of the Sierra Club’s Grand Canyon chapter, said corporate pledges can’t always be counted on, especially as utilities have raised questions about the reliability of renewables amid record-breaking demand. A state policy, she said, would put teeth behind the goals.
“The commission can signal that it’s friendly to fossil fuels and that it’s not going to push very hard on renewables, which is just a missed opportunity,” said Bahr.
Crucially, Burns said, the clean energy standard was part of a broader package of proposals to overhaul how regulators reviewed utilities’ long-term and rate-setting plans. Burns said that would have allowed more input throughout utilities’ planning processes, shedding more sunlight on how electricity sources are chosen and how they impact ratepayers.
“My opinion, having been on that panel for eight years, is that commissioners aren’t as involved as they should be. But it’s not their fault,” Burns said. “I wanted to empower the commission and staff and stakeholders to have more say in how things were done.”
The clean energy standard, Burns lamented, overshadowed most of those reforms in an ugly fight that he said led to such vitriol that his policy adviser would sometimes leave the office in tears.
The future of the policy was in a way on the ballot last November, when two ACC seats were up. If two Democrats, including the incumbent Kennedy, were elected, the party would have gained majority control and likely would have revived the clean energy debate.
Instead, two new Republicans — Myers, a former ACC policy adviser, and then-Mesa City Council member Kevin Thompson — won seats on the commission. They were two of only four statewide races in Arizona won by Republicans in a year that a crucial Senate seat and the governor’s office were both up for grabs.
That split may say less about Arizonans’ feelings about utility and energy policy than their feelings about the far-right candidates on the top of the ticket, said Tom Volgy, a professor of political science at the University of Arizona. Volgy said most voters are unfamiliar with the ACC and put less thought into their choice than they did at the top of the ticket.
“You can get overwhelmed by all the other stuff going on with an election that you just get overwhelmed,” said Volgy, who also served as mayor of Tucson for four years as a Democrat. “When that happens in Arizona, people resort back to their party affiliations and that’s generally a big advantage for Republicans.”
‘We don’t like mandates’
After about nine months on the commission, Myers said a clean energy standard is “not a can of worms I want to reopen.” The past failure, he said, was not about distaste for sustainability, but rather the mechanism.
“We’re Arizona. We don’t like mandates, and we don’t like subsidies,” he said. “The utilities are the ones out there looking at trends, and they have plans, so why would we dictate what their plans should be?”
Instead, Myers said commissioners are working on giving more regulatory certainty to utilities, simplifying commission rules and removing policies that he said unfairly drive up costs for some customers in order to incentivize certain technologies.
For example, the panel voted in March on a new policy regarding community solar, where solar projects are owned by — and benefit — multiple businesses or homes in an area. The final version makes the program optional for utilities and sets a fluctuating, sub-retail price for energy those projects produce. While that is intended to keep overall utility rates down, advocates say the design does not embrace the specific benefits of community solar.
Myers has also spearheaded an effort to reduce the state’s net metering program, which reimburses customers who have rooftop solar for selling excess power back to electric utilities. Under a program adopted in 2008, the rates customers can get is scheduled to drop up to 10 percent each year.
In August, Myers proposed an amendment that would have imposed deeper cuts, which he said would make up for a pause imposed during the Covid-19 pandemic. The amendment was tabled, but the commission could vote as early as October to reopen the entire net metering program to adjust the rate or other aspects.
Myers, who could not discuss details of the rulemaking, said it fits into his efforts to eliminate “cost shift,” since nonsolar customers of utilities end up indirectly paying for the power purchased under net metering.
But critics say the decision is yet another move that could crimp the solar market at a time when the technology has dropped in price and there are robust incentives from the federal government.
“If the rates drop, you can expect even fewer customers to install solar and that could have a huge impact on revenue and operations for the solar industry,” said Autumn Johnson, executive director of the Arizona Solar Energy Industries Association.
She added that the net metering debate seems driven more by politics than by the commission’s stated goal of regulatory certainty.
“Redoing decisions that a previous commission made just because you don’t like them doesn’t seem good for certainty,” Johnson said.
Ormond, the former energy office head, said the typically sleepy ACC proceedings have now become more politicized, part of a broader shift to the right among national Republicans.
“When people are showing up at rate cases and docket hearings to warn about Agenda 21, I’m not sure that’s a stakeholder who’s deeply engaged in the process,” Ormond said, referring to a conservative conspiracy theory about a nonbinding United Nations sustainability plan. “It’s challenging when the process gets more political.”
The Arizona Legislature, meanwhile, has a more limited constitutional role in setting energy policy than the ACC. It also has not done much with it.
In the most recent legislative session that ended in July, Republican lawmakers passed a bill that would have required utilities to prioritize grid reliability and affordability rather than sustainability or emissions when lining up energy sources. Another bill would have placed new requirements on solar and wind plants, including a requirement to post bonds if the owner goes bankrupt.
Hobbs vetoed both bills, saying in a veto message that the latter bill “would have a deep chilling effect on renewable energy development in Arizona.”
Another bill, which failed in the Senate after passing the House, would have stripped power from the ACC by requiring that lawmakers ratify any proposed rule that would have cost more than $500,000 over two years.
“I guess I shouldn’t be surprised because of the way the legislature has been moving, but I am surprised at how extreme some of the bills were,” said the Sierra Club’s Bahr. “I thought there might be areas where they could come together, especially when there’s money on the table from the Inflation Reduction Act. In the past, they might have found a way to leverage those dollars. But there’s none of that right now.”
