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Corp. Comm. barred from adopting more stringent renewable energy standards

A panel of senators today approved legislation to bar the Arizona Corporation Commission from adopting renewable energy standards that are more stringent than what is currently in place.

Many consider the bill an attempt by lawmakers to assert control over the state’s energy policy, but critics said it infringes on the commission’s constitutional authority to set rates for public utility companies.

The measure that received approval in the Senate Government Reform Committee is a scaled-down version of a proposal that earlier passed the House of Representatives.

The original proposal would have required legislative approval for changes to regulations or new rules adopted by the Corporation Commission.

The measure, HB2789, was amended in committee to freeze the renewable energy standards adopted by the Commission in 2006. Those standards require utilities to generate 15 percent of their energy from renewable resources by 2025.

Critics said both the underlying proposal and the amended version violate the Arizona Constitution.

They also fear the legislation will set back the state’s efforts to attract jobs in the renewable energy industry.

But Sen. Rick Murphy, a Republican from Peoria and chairman of the panel, said the bill doesn’t overturn the Corporation Commission’s current renewable energy standard.

“All this does is say that the Legislature sets policy on mandates for solar energy. It doesn’t mean that utilities can’t use solar energy,” Murphy said.

At points, the discussion delved into the viability of the solar industry.

Industry critics said it relies on government subsidy, which taxpayers are being forced to pay for a technology that isn’t viable. They added that the solar energy industry should stand on its own in the same way that other technologies have to fight for marketability and survival.

But supporters said that, with some government help, Arizona is well-positioned to become a national leader in solar energy, which, in turn, would bring in jobs to the state.

They added that government has always played a role in promoting industries and cited incentives to the “fossil fuel” industry.

During the hearing, Sandy Bahr, director of the Sierra Club Grand Canyon Chapter, said solar and other renewable energy will become cheaper to produce over time.

Much of the discussion focused on whether the Corporation Commission has the authority to set renewable energy policy.

Clint Bolick, the lead attorney for the Goldwater Institute, said the bill doesn’t deal with the Corporation Commission’s rate-making authority.

“It simply says that, if you want to keep additional regulations on the utility companies, you must convince 47 members of the Legislature,” Bolick said, referring to the vote threshold needed to pass a bill: 16 senators and 31 representatives.

“It is essential for this body to reclaim its authority over energy policy and the regulation of corporations. It is essentially…the main reason that we need to protect utility consumers against spiraling upward costs,” Bolick said, adding that if any litigation were to ensure, the Goldwater Institute would be happy to defend the state at “no charge.”

Sen. Steve Smith, a Republican from Maricopa, said the state Constitution says the commission has authority to adopt “reasonable” public utility rates.

“When you start potentially mandating what many of us would think (are) unreasonable rates or mandates, that’s where that slippery slope starts, for me at least,” he said.

But John MacDonald, who lobbies for the Solar Energy Industries Association, said the Goldwater Institute already essentially made the same argument before the courts.

“At each step along the way, the court looked at the Constitution and said, ‘We disagree’,” he said.

In June 2008, the Goldwater Institute launched a lawsuit against the renewable energy standards, arguing that the Corporation Commission did not have the authority to implement them. A trial court disagreed, saying that the standards fell under the exclusive rate-making authority given to the Commission by the Constitution.

In 2011, an appellate court upheld the lower court’s ruling. The Goldwater Institute appealed to the Arizona Supreme Court, but the high court declined to hear the case, essentially upholding the appellate ruling.

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