Arizona regulators will vote this week on whether to officially begin the process to repeal renewable energy standards for many of the state’s electric utilities that were first adopted 19 years ago.
Last year, the Arizona Corporation Commission took the first steps to repeal the Renewable Energy Standard and Tariff, or REST, rules. The rules require many utility companies to obtain at least 15% of their electricity from renewable sources, with 30% of that coming from sources like residential rooftop solar panels.
At the time, former Commissioner Jim O’Connor, then the chairman of the Republican-controlled commission, argued the market, not regulators, should determine how much renewable energy is purchased by the state’s utilities.
“When the hefty, federally-subsidized tax incentives expire, this may leave our ratepayers holding the proverbial bag if there are mandates requiring actions that are not supported by the marketplace,” O’Connor said, referencing federal solar tax incentives, many of which were rolled back by Republicans this year as a part of President Donald Trump’s One Big Beautiful Bill Act.
Current Commission Chair Kevin Thompson, who also voted to start the repeal process last year, has echoed that sentiment.
“We wanted to make sure that the market is controlling and dictating how solar interacts with the grid,” he said earlier this year.
But critics argue Arizona’s utilities aren’t subject to typical market pressures, because most operate as de facto monopolies.
“So for them to talk about a market is pretty laughable, because there's not really a market that operates to influence the behavior of these utilities,” said Sandy Bahr, director of the Sierra Club’s Grand Canyon Chapter.
O’Connor said “the rule has served its purpose” as Arizona’s overall electricity generation exceeded the 15% mark.
In 2024, Arizona derived 20% of its electricity from renewable sources, according to the U.S. Energy Information Administration.
Arizona Public Service and Tucson Electric Power, two of the state’s largest utilities, obtained 19% and 22% of their overall portfolio from renewables, according to the companies.
But renewable advocates argue those figures are misleading, given the state’s population and energy generation needs are expected to grow significant in the near future.
“These figures fall short of the 15% threshold when considering growth expectations and cast doubt on assertions that the standard is no longer necessary,” according to a letter to the Commission from Vote Solar, Solar United Neighbors and the Arizona Solar Energy Industries Association.
Democratic Attorney General Kris Mayes also opposes the rule change.
Mayes, who voted to adopt the Rest Rules when she served on the Commission in 2006, argued removing them will cause power bills to increase and credited the Rest Rules for driving down the cost of renewable energy in the state.
“The cost of wind and solar resources have declined concurrently with the REST Rules,” Mayes wrote to the Commission. “Utility-scale solar costs have fallen by 84% since 2009, and utility scale wind costs are down 55% over the same period. Both utility-scale wind and solar are cheaper to construct than new natural gas, coal, or nuclear plants.”
The attorney general also alleged the commission isn’t following the proper procedures to repeal the rule, which could violate state law. Mayes said the commission established the Rest Rules through a so-called ratemaking process, which is a more extensive review the rulemaking process employed by the commission now.
Mayes argued the current commission must follow that same ratemaking process to repeal the rule.
"Ratemaking decisions must be just and reasonable, which means they must be supported by substantial evidence, not arbitrary, and lawfully made,” Mayes argued. “The Commission's decision must be based on high-quality evidence, not speculation and conjecture.”
The Commission is scheduled to vote on Aug. 14 to direct its staff to begin the formal repeal process. A final vote to repeal the rules could then happen in mid-2026 following public hearings and other required steps, according to the Corporation Commission.
EDITOR'S NOTE: This story has been updated to clarify that the Arizona Corporation Commission will take a vote on Aug. 14 on whether to begin the official process repeal the REST Rules.
