Corporation Commission repeals efficiency standards as energy demand hits all-time high

The Arizona Corporation Commission this month repealed the state’s energy efficiency standards. They’d been in effect for about 15 years.

That followed utility regulators doing away with Arizona’s renewable energy standards. The GOP-controlled commission argued the rules were outdated and costing Arizona residents money. But critics of the move, like Diane Brown, say the opposite is true.

Brown is executive director of the Arizona Public Interest Research Group Education Fund.

Full conversation

MARK BRODIE: Good morning, Diane.

DIANE BROWN: Good morning, Mark. Thank you for having me.

MARK BRODIE: Of course, thank you for being here. So, let’s start with what exactly the energy efficiency standards were. What did they do?

DIANE BROWN: The Arizona energy efficiency standard was really set up to help ensure that the utilities were ranging programs for homes and businesses to help people reduce energy waste and save money on their electric bills. Wildly successful, and it’s a real shame that the commission did away with it.

MARK BRODIE: And this is things like, for example, helping insulate your house better, or caulk up your windows so energy didn’t leave, but also did it have to do with buying energy-efficient appliances, things like that?

DIANE BROWN: Yes. Each year, the utilities would propose different programs that would qualify, and they would change as technology changed. So, each year there would be improvements to the programs that were offered, but each program had to meet a cost-effectiveness test, and had to be verified by the commission’s staff to meet that test, which really was a barrier that no other resource had to make, and showed that it was successful through the financial savings and through just the energy that was saved in the process.

MARK BRODIE: So, one of the arguments that the commissioners made in doing away with this program is that technology is to the point now where it’s harder to buy an appliance, for example, that is not energy-efficient. So, why do we need these kinds of rules in place?

DIANE BROWN: That was one of the arguments, and I think, unfortunately, there was a lack of understanding that technology improves over time. Even appliances today that are far more efficient than they were 10, 15 years ago, they continue to improve. If you go to purchase an air conditioning unit, you have a variety of options of how efficient that unit might be. The more efficient, the more money you can save for your household or your business.

It’s not just appliances that are part of the standard, either. You mentioned weatherization. There were opportunities for energy audits that helped people find out where there were leaks in their home, and provide opportunities for sealing those up. Really, the program continued to evolve as technology evolved.

MARK BRODIE: So, do those programs just go away now?

DIANE BROWN: That is a great question. Hopefully not. The commission has said that each utility can continue to propose programs, and they’ll look at them on a … program-by-program basis.

Unfortunately, though, we’ve seen just in the last year, APS proposed a number of programs that the commission eliminated, even though each of those programs met that cost-effectiveness test. They also dramatically reduced the budget that APS had to provide its customers with these programs. In the case of UNS Gas, they also did away with programs, and so we’re not very confident that the programs will continue in a robust manner, nor that we will see the kind of financial and energy savings that we did under a standard.

MARK BRODIE: So, were these programs funded by money from the commission? Did the commission give, let’s say, APS or Tucson Electric X dollars to send people out to check to see if there are leaks under the door or something like that?

DIANE BROWN: The ratepayers for each of the utilities helped to finance the programs, usually, depending on the utility, depending on the year, a few dollars more on their monthly electric bill.

What’s really important to note here is that for every dollar spent in these programs, close to $4 was returned. So, one in four investment return, we think, is really substantial. A very conservative estimate, $1.7 billion in net savings have been realized through the energy efficiency standard. We don’t think that any one-off program or compilation of one-off programs is going to get that same level of return.

MARK BRODIE: I wonder if there’s a certain irony in the fact that this happened so recently, and we saw just this week SRP, APS saying that they’ve broken demand records for the amount of energy as the temperatures have been unbelievably hot.

DIANE BROWN: Excellent point. One of the big concerns that we have is reliability, and we know that anyone who is living in Arizona, particularly in the Valley with this heat, wants to make sure that when we turn on the air conditioner, when we turn on our light switch, that it’s going to work.

With the new load that we are expecting through data centers, large loads, population growth, the last thing we need to be doing is putting more strain on the grid. Without being more efficient, there’s going to be more strain on the grid, and there’s going to be more of a need for additional power sources, whether that be more gas, whether that be more solar, whatever it is. It’s going to cost ratepayers money, and energy efficiency saves money.

We also know that people are talking about affordability and having real challenges paying their bills this summer, and have been for a period of time. Any tool that is removed from helping people to have more affordable bills, to help make sure that we’re not wasting energy, is something that we really think policy makers should be focused on.

MARK BRODIE: So, Diane, quickly before we wrap up, if folks are looking at their utility bills and their jaws are hitting the ground, are there ways to help them figure out things to do absent these kinds of programs?

DIANE BROWN: Yes. We absolutely recommend all consumers contact their utility. Each utility does have some programs that can offer benefits to them. Look at their website, call them, ask about the various options, and all the options that they have to save money on your bill.

You can go to savingenergytips.org for a set of things you can do, some of them don’t cost a cent, to be more energy-efficient in your home. The state also has set up efficiencyarizona.com that offers some rebates on some of the appliances that we talked about earlier.

MARK BRODIE: All right. That is Diane Brown, executive director of the Arizona Public Interest Research Group Education Fund. Diane, thanks so much.

DIANE BROWN: Thank you for having us.