Clean energy advocates and public interest groups call on Arizona Corporation Commission to protect ratepayers and ensure transparency in billion-dollar utility market decision

Summary

• Joint letter: Clean energy advocacy and public interest groups urge the Arizona Corporation Commission to mandate transparency in regional electricity market decisions.
• Electricity demand: Over the next 15 years, electricity demand in Arizona is estimated to see a 40% increase, largely due to data centers and double-digit rate hikes.
• Transparency: Arizona utilities are moving toward long-term commitments without providing the public with insight into their choices that will affect electricity costs, access to reliable power and clean energy development.

PHOENIX — As record-breaking summer heat pushes power demand to new highs, clean energy advocacy and public interest groups delivered a letter to the Arizona Corporation Commission today, urging the regulatory body to mandate transparency before Arizona’s utilities make long-term, multi-billion-dollar commitments to regional electricity markets — a coordinating platform for utilities. Currently, the Western U.S. is transforming the way it shares electric power, with two competing markets taking shape that will allow utilities to buy and sell power across the wider region.

The groups are calling on the Arizona Corporation Commission to use its statutory authority to require that Arizona's utilities use transparent, data-driven analysis when deciding which energy market to join. Currently, Arizona utilities are moving toward long-term market commitments without providing the public or the Arizona Corporation Commission with comprehensive, side-by-side analyses to justify their choices that will affect electricity costs, access to reliable power and clean energy development.

With Arizona estimating a 40% increase in peak electricity demand over the next 15 years, largely due to data center construction, and utilities proposing double-digit rate hikes, such as a nearly 15% residential increase proposed by Arizona Public Service, advocates argue that massive operational decisions cannot be made behind closed doors.

"The choice of which regional energy market Arizona utilities join is a generational decision that will impact affordability and reliability of the state’s electric system, and its overall economy, for decades,” said Alex DeGolia, Senior Director of Clean Electricity at the Environmental Defense Fund. “The ACC must step in to ensure these large decisions are made in the public interest, rather than allowing utilities to move forward without proving they are making the best choices for Arizonans."

The coalition’s letter highlights that the ACC possesses clear, well-established ratemaking and permissive regulatory authority to oversee these consequential decisions. The Commission is legally obligated to ensure costs passed to consumers are "prudent."

"The greater the number of participating utilities and broader the geography of a market the more opportunities are created for energy trading. Trading is crucial to keep costs low as Arizona faces unprecedented demand growth and extreme weather,” said Amanda Ormond, Director of Western Grid Group. “A broad, integrated regional market allows utilities to pull in low-cost power during times of grid stress and reduces the risk of outages during heat waves. We need the ACC to ensure our utilities are relying on transparent, data-driven analysis to make these massive decisions that will dictate reliability of and costs for electricity into the future."

Independent modeling for APS, SRP and TEP shows that participating in a larger, highly integrated West-wide market could save Arizona ratepayers nearly $115 million per year.

"Arizonans are already struggling to keep up with drastic utility rate hikes that far outpace national inflation," said Madison Rock, Deputy Executive Director of Arizonans for a Clean Economy. "Families and local businesses cannot afford to absorb the hidden costs of a suboptimal market choice made behind closed doors. We are calling on the Commission to protect our wallets, and require utilities to transparently prove with data that their decisions will deliver the most affordable, stable rates to Arizona ratepayers."

The coalition strongly urges the ACC to fulfill its public interest mandate, and subject utility plans to meaningful stakeholder review before any binding commitments are made and irrevocable actions are taken. Specifically, they request the Commission immediately revive Docket No. E-00000A-21-0271 to evaluate the profound economic and operational impacts of utilities joining the Extended Day-Ahead Market versus the Southwest Power Pool’s Markets+.

Read the full coalition letter submitted to the Arizona Corporation Commission here.