Key report likely overstated costs of Arizona’s Clean Energy Rules, new analysis finds

A recent report commissioned by the Arizona Corporation Commission likely overstated the costs for utilities to increase their clean electricity resources in coming years, presenting a flawed outlook at the effects of the state’s proposed Clean Energy Rules, according to the Arizona Technology Council and the sustainability nonprofit Ceres.

The two groups today released a technical memo produced by the renowned national consultancy Energy Futures Group, analyzing the original report released by Ascend Analytics in August. Ascend was hired by the ACC to forecast the costs to Arizona utilities of the proposed Clean Energy Rules, which would require utilities to provide 100% carbon-free power by 2070 and meet key benchmarks along the way. 

The Energy Futures Group memo shows that the Ascend report and the utility-provided modeling that guided its estimates were rife with inconsistencies and shortcomings, likely leading to inflated cost projections for the rules.

“The ACC hired Ascend Analytics to provide an objective examination of Arizona’s ambitious and achievable Clean Energy Rules. Unfortunately, that expectation was not met,” said Jennifer Helfrich, senior manager of state policy, Ceres. “Due to several technical issues, the cost estimates for the Clean Energy Rules appear to be based on flawed and in some cases inaccurate assumptions that make the switch to a clean-energy future seem far more costly than it will be. We need clean energy to confront the climate crisis, and states across the country are proving that they can make this transition affordably and reliably, while generating significant new jobs, innovation, and economic growth. The new analysis from Energy Futures Group should give the Arizona Corporation Commission confidence to move ahead and finalize the Clean Energy Rules.”

According to the Energy Futures Group memo, the costs of the clean energy transition were likely inflated for Arizona Public Service in particular, largely because of faulty cost assumptions provided by the utility. For example, APS assumed costs for solar and wind power that are much higher than industry standards, and likely further inflated costs by failing to account for various tax credits for clean energy development. The modeling in the Ascend report also underestimated short-term gas costs, making the costs of fossil-fueled electricity seem cheaper than it should. 

The memo details additional issues with the Ascend report, including its cost forecasts for Tucson Electric Power and UNS Electric.

“Energy Futures Group’s independent assessment of the Ascend Analytics report provides a transparent and consistent approach to the utility Integrated Resource Planning and equips the Commission with an objective assessment of the costs associated with meeting the Clean Energy Rules,” said Steven G. Zylstra, president and CEO of the Arizona Technology Council. “These rules are not only critical to a safer, cleaner Arizona, but also to the growth of our economy and technology industry. We’re proud to support the independent assessment of Ascend’s findings developed by our friends at the Energy Futures Group, developed on behalf of the Arizona Technology Council and our partner Ceres.”

In a letter documenting the Ascend report’s flaws, the Arizona Technology Council and Ceres cautioned ACC Commissioners against relying on the report to guide their decisions about the Clean Energy Rules. 

Businesses across Arizona have supported the Clean Energy Rules, including more than 30 companies and trade groups that wrote to the ACC in August to emphasize “the significant opportunity presented by carbon-free energy resources” for the economy and public health. Those signatories included Apple, Ball Corp, IKEA, Mars, Microsoft, and Siemens.

About Ceres
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.

About the Arizona Technology Council
The Arizona Technology Council is Arizona’s premier trade association for science and technology companies. Recognized as having a diverse professional business community, Council members work towards furthering the advancement of technology in Arizona through leadership, education, legislation and social action. The Council offers numerous events, educational forums and business conferences that bring together leaders, visionaries and community members to make an impact on the technology industry. These interactions contribute to the Council’s culture of growing member businesses and transforming technology in Arizona. To become a member or to learn more about the Arizona Technology Council, please visit www.aztechcouncil.org.