Arizona regulators scaled back a program operated by the state’s largest utility designed to encourage energy efficiency, arguing they were trimming ineffective initiatives and eliminating unnecessary expenses.
On Wednesday, the all-Republican Arizona Corporation Commission voted unanimously to update Arizona Public Service programs that encourage customers to adopt energy-saving products and behaviors.
The commission rejected the utility’s request to expand those programs, also called its Demand Side Implementation Plan, and instead adopted a proposal by Chairman Kevin Thompson that slashed APS’ DSM budget from the $91 million proposed by the utility to $41 million.
The approved plan zeroes out the budget for programs that provide incentives for residential customers to make improvements to their homes, like installing energy-efficient appliances, and says homebuilders will receive no benefits.
It also removes the budget to provide customers with information, like mailers and online reports, intended to help them adopt “energy conservation behaviors.”
What’s left?
Thompson’s proposal retained a handful of APS’ existing programs, including those that contribute to the so-called “virtual power plants,” or the network of customer-owned devices that can help return power to the grid. It still includes Cool Rewards, which provides credits to customers who allow the utility to adjust their smart thermostat to reduce power consumption during times of high usage.
Kerri Carnes with APS told commissioners that last summer the program delivered 160 megawatts of power back to the grid. One megawatt can power about 160 homes, according to APS.
“It's the most significant component of our virtual power plant,” Carnes said.
The new plan approved by the commission also includes programs for schools and tribes and guarantees full funding to help low-income residents make their homes more resistant to extreme weather.
The plan also fully funds the Bring Your Own Device pilot program, which pays participating customers who contribute power stored in their own batteries back to the grid when demand is highest.
Sound investments or bloated pork?
Critics argued the program undercuts efforts to reduce energy consumption in Arizona as utilities are investing in new power plants and pipelines to meet demand that hits new highs every year, driven by population growth and the proliferation of data centers.
“They're tools used by customers, residential customers, every day to lower their bills and reduce energy use, and are very popular with customers for those reasons, and also because they are one of the few, if the only, tools that customers can use by themselves to reduce their energy and have control over,” said Dan Pozefsky, chief counsel for the state’s Residential Utility Consumer Office.
Utilities can recover costs through surcharges on customers. Thompson argued many of the programs are unnecessary subsidies paid for by all ratepayers, saying the budget was full of “pork and bloated spending.”
He pointed to incentives for “golf cart electrification” and electric off-road vehicles.
“The answer isn't, we have to keep it all. That's not working,” Thompson said.
Critics said that, while some modification may be justified, Thompson’s plan cut too deep into programs that have real benefits.
“Chair Thompson's proposed amendment number one is more akin to dealing with a bug problem in the kitchen by burning down the house,” said Will Greene with the Southwest Energy Efficiency Project.
In 2024, APS reported that 14% of its power came from the DSM program, tied with coal for the third-largest source in its portfolio.
Several stakeholders also said Thompson’s proposal, which was only introduced publicly a day before the meeting, needed more vetting.
“There has not been adequate time to really check with other stakeholders,” said Diane Brown with the Arizona PIRG Education Fund, who participated in stakeholder sessions with APS as it developed its original plan.
But Thompson said he has made his plans to pare back the DSM program known since he took office in 2023.
The vote comes months after the commission voted to begin the process to repeal efficiency rules requiring the state’s largest utilities to achieve annual energy savings.
EDITOR'S NOTE: The story has been updated to correct the spelling of Will Greene's name.
-
Arizona Public Service’s proposed rate hike faced criticism this week, as the state utility regulator held a public hearing. Residents told the Arizona Corporation Commission that the proposed rates are not affordable. -
Multiple water line breaks continue to plague parts of the South Rim at Grand Canyon National Park. -
Federal land managers are reopening their environmental review of a massive transmission line proposed across Nevada, a move conservation groups say could reshape how energy infrastructure is approved on public lands across the West. -
As metro Phoenix continues to sprawl, there’s a push and pull between the people and the wildlife that call this place home. It means resources — including habitats — are limited. But there are efforts to ensure wildlife have what they need to survive. -
For the last several years, there’s been an effort to give cities back some of their ability to regulate that market; the state generally took it away in 2016.
