Senate panel approves legislation to override energy initiative mandate

State senators voted Wednesday to give utilities a way to avoid having to get half their electricity from renewable sources by 2030 even if voters mandate that they do so.

HB 2005 would not directly overrule the effects of the initiative being financed by California billionaire Tom Steyer. The Clean Energy for Healthy Arizonans measure, if approved by voters, would sharply boost existing commission rules that require that 15 percent of all power come from renewable sources like wind, solar and biomass by 2025.

And it would put those requirements in the Arizona Constitution, off limits to tinkering by state lawmakers unless they take the issue back to voters.

This legislation, approved on a party-line vote by the Republican-controlled Senate Government Committee, would spell out that any violation of the constitutional provision would be only a civil violation. And that could allow utilities in effect to thumb their nose at the mandate by paying a one-time fine that could be as little as $100 — and a maximum of just $5,000.

Sierra Club lobbyist Sandy Bahr told lawmakers it’s clear why the utilities want this measure: They’re looking for an escape clause if voters approve the measure.

“Everyone knows that if the cost of noncompliance is cheaper than the cost of compliance, entities will serve their shareholders, not consumers, and take the low road and pay the fines,” she said.

That led Sen. Juan Mendez, D-Tempe, to ask APS lobbyist Rod Ross whether it was the intent of the utility, which helped craft the legislation, to ignore the mandate if it is enacted by voters and simply pay the fine.

Ross did not deny that might happen. He said if APS were mandated to boost its renewable energy it would consult with lawmakers, regulators and others “and together come to a decision as to what the best course of action is to protect the state, its economy and its ratepayers.”

Central to the issue is whether voters can — and should — decide the question of what is an appropriate requirement for renewable energy.

The Arizona Constitution gives the power to set utility rates to the five-member Arizona Corporation Commission. And Arizona courts have ruled that, by extension, allows the panel to decide what is the appropriate mix of energy sources.

Using that authority the commission set that 15 percent goal from renewable sources by 2025.

This initiative would amend the constitution to boost that to 50 percent, and by 2030. It also would preclude a discussion already taking place at the commission to include nuclear power under the definition of “renewable.”

Backers have until July 5 to get at least 225,953 valid signatures on petitions to put the issue on the November ballot.

Ross told members of the Senate Government Committee that APS, which already has helped form a committee to fight the initiative, is not doing it out of self-interest.

“We feel like it’s important to protect the people of this state from an out-of-state initiative funded by a California billionaire that is attempting to raise our state’s and our residents’ energy prices, which is exactly what this initiative will do,” he said.

APS already is working with other utilities to form Arizonans for Affordable Electricity to fight the measure. This bill, also backed by Tucson Electric Power, UNS Energy and various electric cooperatives, would provide them an escape clause if voters do not view the measure as the utilities see it.

Sen. John Kavanagh, R-Fountain Hills, acknowledged the initiative might get the approval of the majority of voters. But he said that does not make it fair, saying the change will have a particularly harsh impact on the poor who probably pay a larger percentage of their earnings to pay the power bill than those who are well off.

“We have a responsibility to the people who elected us to protect them from economic devastation, not only in their utility bills, but this would have a massive negative effect on manufacturing and retail businesses,” Kavanagh said, calling the proposed standards “a draconian, unattainable goal.”

The idea that voters won’t comprehend the issue drew a sharp response from Sen. Lupe Contreras, D-Avondale.

“Saying that our voters in this state may not understand or may not vote the right way when it comes to certain issues that are before them is rude,” he said. And Mendez said the measure “is nothing more than a corporation using the Legislature to absolve themselves of having to comply with clean energy regulation and health standards.”

Sen. David Farnsworth, R-Mesa, took a slap at the fact that the initiative is being funded by Steyer and his advocacy group, NextGen America. Steyer, a Californian, has announced he will spend $30 million to help Democrats retake the U.S. House in 2018 with one goal being impeaching President Trump.

“It’s people coming into Arizona and trying to buy Arizona laws,” Farnsworth said.

The proposal faces an uncertain legal future even if the measure gets approval of the full Senate, where it now goes, as well as OK by the House and the signature of Gov. Doug Ducey. Attorney Jim Barton who represents initiative organizers, said its unconstitutional and vowed a legal challenge if voters approve the new standard and utilities seek to use this bill to avoid compliance.