As a result of fiscally responsible governance, Arizona is nationally known for an unrivaled business climate that has experienced soaring growth in recent years. While Arizonans are blessed with a smaller government and lower taxes than many states, there is one regulation that actually has the potential to unlock the path to sustainable economic growth for years to come.
Set by the Arizona Corporation Commission, the state’s Renewable Portfolio Standards require a portion of electricity from utilities to come from renewable energy sources. Currently, the RPS requirement is 15 percent by the year 2025 – a level that is no longer competitive with most other jurisdictions in the region.
Make no mistake about it – businesses don’t like mandates. However, from a conservative standpoint, there are many commonsense reasons to support the state’s renewable energy requirements. From staying competitive with neighboring states to providing new opportunities for small businesses and enhancing economic diversification, it is time for action to protect Arizona’s pro-growth future.
Remarkably, Arizona’s utility regulators are considering a potentially massive policy change that could change our clean-energy trajectory for decades to come. On May 30, the ACC will discuss whether this renewable standard should be optional, or a “goal,” rather than a requirement.
This action could unwind more than a decade of progress moving toward an economically sustainable future for all Arizonans. Let’s be clear: policies that increase the state’s sourcing of renewable energy send a signal to the business community that the market is open and thriving. Strengthening the standard, not weakening it, is the message that policymakers should be sending to businesses considering expansion plans in the region.
Arizona Can’t Be Left Behind
It’s our job as business owners to pursue the opportunity before us. Demand for clean energy is on the rise and the associated costs are rapidly decreasing. The economics of clean energy are rapidly changing, and, as business owners, we are rapidly responding to that change. For example, new solar is now less expensive than many conventional energy sources and therefore demand for that new solar is rising.
Over the past several years, many states have been strengthening their renewable portfolio standards and every one of Arizona’s neighboring states has instituted a higher standard.
Nevada and New Mexico have adopted a 50 percent requirement, Colorado’s is 30 percent by next year, Utah set a standard of 20 percent by 2025 and California’s standard is 60 percent by 2030. Arizona can’t continue to lag that far behind our neighbors without sacrificing our pro-growth reputation and blunting our existing competitive advantage in other areas.
Regardless of where you stand on the political spectrum, we can all agree that Arizona must continue to be the economic engine that propels our region and our nation. If decision makers don’t act accordingly, clean energy producers and buyers will take up shop in states across the border and never look back.
Diversification Is Key
One key to Arizona’s economic success has been a strong commitment to diversification. In the past year, a mix of manufacturing, real estate, retail trade, construction, finance and insurance industry growth has fueled the strongest economy the state has seen in years. Likewise, diversifying the energy portfolio is essential to ensuring that solid growth continues.
A recent report showed that clean energy projects have generated $9.4 billion to Arizona’s economy since 2001, creating nearly 18,000 jobs, $1.2 billion in wages and $16.7 million in state and local tax revenues.
Without action, these gains could be lost.
To most of us, innovation and government mandates rarely go hand in hand. But if Corporation commissioners don’t act to increase renewable standards, or worse, if they roll them back, Arizona’s economic future is at risk.
Without sensible requirements in place, utility giants will charge customers more and operate with few incentives to change course. Burgeoning industries will flee to our neighboring states, and consumers will be left with fewer choices in the market. That’s just bad policy and bad for the economic future of all Arizonans.
Joe Rinzel is Executive Director of Employers for Renewable Energy