Key Points:

• Bill targets $2.3 billion in taxation that some lawmakers consider overcharges 

• If approved, the state would lose $687 million in tax revenue

• Attorney general calls the plan “a scam”

Saying electric customers paid too much for years, two Republican lawmakers have a plan to pay it back — sort of — over the next 20 years.

But the $2.3 billion that Reps. David Marshall of Snowflake and Ralph Heap of Mesa want to recover would not come from the utilities that collected the money. Instead, it would come out of the money the state would have otherwise collected in sales taxes on customer bills — a move that could cut state revenue by more than $687 million.

Heap defended the plan.

“We want to do things to help the ratepayers,” he told Capitol Media Services.

“I think that’s one of the chief responsibilities of the corporation commissioners,” Heap continued, saying ratepayers “have had little defense over the past couple of years.”

But there’s a political component to all of this.

Marshall and Heap are running this year to be the GOP nominees for the two seats up for grabs at the five-member Arizona Corporation Commission, the public body responsible for setting utility rates. Recruited by Sen. Jake Hoffman, the chair of the Arizona Freedom Caucus, the two are trying to oust incumbents Kevin Thompson and Nick Myers, both Republicans.

Central to the claim of overcharging are rules adopted two decades ago. They set a target for utilities to obtain 15% of their power from renewable sources by 2025.

Utilities had separate requirements to meet energy efficiency standards.

More recently, the current commissioners — including Thompson and Myers — voted to scrap the standards, noting that most utilities already had met them.

By that time, commissioners said that the surcharges that utilities were allowed to collect to meet the renewable energy standards had reached $2.3 billion. And that is the money that House Bill 2269, proposed by Marshall and Heap, seeks to recover for consumers.

The method they have chosen is to eliminate the state sales tax paid by customers — added automatically to their utility bills — until as they say, the $2.3 billion — has been “paid back to Arizona residents,” or the end of 2046, whichever occurs first.

But it’s not exactly a refund.

Many of the customers who paid the extra cash utilities were allowed to collect are no longer here. Instead, the beneficiaries would be current and future customers.

“While we’re unsure of any legal way to get ratepayers’ money back, there are things we can do to help reduce costs today,” Marshall said in a prepared statement. “In my opinion, the next best thing we can do is to provide justice by eliminating taxes on electric and gas going forward.”

But here, too, there’s a political element.

Heap blames Kris Mayes, currently the Democratic attorney general and up for reelection this year, for the extra charges. Mayes, then a Republican, served on the commission and helped create the renewable energy and energy efficiency standards.

“Kris Mayes catered to outside special interests and adopted expensive renewable energy surcharges that cost ratepayers more than $2.3 billion over the last 20 years,” Heap said. What that created, he said, was a “special interest slush fund (which) also led to foreign-owned boondoggles like the Solana Generating Station.”

The plant, built by a Spanish company and opened in 2014, was designed to use sunlight to heat molten salt, providing electricity for several hours after sunset. While still online and delivering power to Arizona Public Service, it was beset by problems, including failing to deliver the promised power and various air quality violations.

Eliminating the sales tax could prove politically difficult: In the most recent fiscal year, utilities generated more than $687 million according to the Arizona Department of Revenue.

That point did not go unnoticed by Mayes.

In a statement of her own, the attorney general pointed out she is interceding in current rate hike requests by both Arizona Public Service and Tucson Electric Power, saying, “it would squeeze hundreds more out of Arizona families.

“Reps. Marshall and Heap are pushing a bill that would blow a hole in the state budget,” Mayes said. “That’s not relief, it’s a scam.”

And Mayes defended the renewable energy standards, pointing out it was an all-Republican commission that approved them. She called them “common-sense energy policies that cut pollution and created tens of thousands of high-paying jobs.”

The $687 million price tag, however, is the biggest barrier to the proposal.

Republican lawmakers already are advancing their own tax cut plan, one modeled after the “Big Beautiful Bill” approved last year by Congress. It has an annual price tag in the $440 million range.

But Marshall said that eliminating the sales tax on utilities — regardless of what happened in the past — is good public policy.

“Taxing electric and gas utilities creates a perverse incentive for the government to support increased rate hikes,” he said.

“If rates go up, the state gets more money,” Marshall said in his statement. “That leads some to view rate increases as a source of potential funds for their liberal pet projects.”

But Marshall did not immediately respond to questions about that claim, particularly as the commission approves rate increases without legislative input.

The legislation is set up so that when the sales tax exemption ends — either when the $2.3 billion has been reached or in 2046 — the levy would return automatically. At that point, Marshall said it would be up to the then-current lawmakers to decide whether to keep the exemption.