Arizona regulator proposes adding nuclear power to renewable-energy rules

STORY HIGHLIGHTS

• Regulator Andy Tobin is proposing altering the state renewable-energy standard
• He proposes a new standard aimed at peak demand as well as counting nuclear energy
• The state houses the most productive nuclear-power plant in the country

State utility regulator Andy Tobin is proposing to effectively reduce state renewable-energy rules by counting nuclear energy as a renewable power source to compete with solar and wind.

Environmental advocates, even those who support nuclear energy, generally don't consider nuclear-power plants as renewable energy because the uranium that fuels them must be mined from the earth.

The country's most productive nuclear plant, Palo Verde Nuclear Generating Station, is about 50 miles west of Phoenix and supplies about a fourth of the electricity for the state's biggest power company. Counting the production of that plant toward any renewable-energy goal would effectively reduce the amount of solar, wind or other resources needed to meet the goal.

The Arizona Renewable Energy Standard and Tariff requires that utilities such as Arizona Public Service Co. get 15 percent of their power from renewable sources by 2025. Solar, wind, geothermal and other renewable sources count toward the goal. Nuclear doesn't.

Doug Little, chairman of the five elected Arizona Corporation Commission members who set utility rates and policies, proposed doubling the standard in August. Tobin and others have submitted comments on the matter, which could see a vote late this summer.

'Clean Peak Standard' supported

Tobin's letter suggests he never supported the state's Renewable Energy Standard when it was passed in 2006, and that he supported subsequent efforts by the state Legislature and the Goldwater Institute to alter it.

The letter says he supports a "Clean Peak Standard" that would include traditional renewable sources such as solar and wind, but also the amount of nuclear energy that power plants produce when electricity demand is highest.

"The Clean Peak Standard offers great promise in moving the commission away from an obsolete commitment to arbitrary renewable energy goals that ignore significant zero-emission resources like Palo Verde Nuclear Generating Station or other emerging technologies like energy storage," Tobin wrote.

Little said doubling the standard would put Arizona more in line with other Western states' renewable-energy goals.

Little is concerned utilities could become too reliant on natural-gas-fired power plants. He said increasing the use of renewables could help utilities keep their coal-fired power plants open.

Doesn't want to see standard expanded

Tobin was appointed earlier this year by Gov. Doug Ducey, and in November was elected to a four-year term on the commission. His policy adviser, Matt Gress, said that Tobin was careful to avoid stating the Renewable Energy Standard was bad policy, but that he does not want to see it expanded.

Gress said Tobin wants more focus on peak energy demand, rather than renewable power that feeds into the grid at inopportune times. He said battery storage would benefit from the proposal.

"Pairing renewable energy like solar or wind with storage was a way to achieve that," Gress said. "A Clean Peak Standard incentivizes utilities to harness that technology to shift their resources throughout the day into that peak period."

Tobin's proposal mirrors previous attempts by state Sen. Debbie Lesko to amend the renewable-energy rules. Lesko in 2010 tried to pass a bill that would have nullified the renewable-energy rules by including nuclear in the definition of renewable resources. APS already gets so much power from the Palo Verde plant that no additional solar or wind would have been needed to meet the standard. APS will get about 26 percent of its total electricity next year from Palo Verde, according to the utility's most recent projections.

Then in 2012, Lesko tried to pass a bill requiring all rules for renewable energy at the commission would need additional approval from state lawmakers. Tobin's letter said that he and fellow Commissioner Tom Forese both supported that effort when they were state lawmakers.

'Peak demand' hours at issue

Tobin's suggestion is more nuanced than Lesko's bill, but could have a similar effect.

The Renewable Energy Standard simply states that a portion of the total energy supplied by a utility needs to be from renewable sources such as solar and wind. But one problem is that those sources don't always generate power when it is needed the most, the so called "peak demand" hours of the year.

For example, the Phoenix area generally demands the most electricity around sundown on hot summer afternoons, when people come home from work and school and turn on air conditioners, and when businesses remain open. Solar panels don't generate much electricity at sundown.

The Residential Utility Consumer Office, or RUCO, suggested a Clean Peak Standard to address the misalignment of renewable-power production and peak energy demand. RUCO is a state agency created by the Legislature to advocate on behalf of residential utility customers, acting as their voice in utility rate cases at the commission.

RUCO's proposal would only count energy supplied during the peak hours of demand each year. Tobin suggests that nuclear energy should be included in such a standard.

"However he wants to characterize it, nuclear power is not renewable," said Sandy Bahr, director of the Grand Canyon Chapter of the Sierra Club. "Defining it as renewable is contrary to common sense."

Solar-power investment a concern

Bahr said the proposal would discourage investment in solar power.

"Either they are trying to get rid of (the Renewable Energy Standard) without really saying it, and they are politicians, right, so maybe they are figuring people won't figure it out and see through it," she said. "Or this proposal is to sink any effort to increase it. Either way, he is not genuinely trying to promote renewable energy."

Briana Kobor, a program director with the non-profit Vote Solar in Oakland, Calif., said Tobin's proposal misses the intention of policies such as the Renewable Energy Standard, which is to promote new energy development, not credit existing power plants like Palo Verde.

"While we believe it may be worthwhile to look at policies that specifically promote renewable resources that meet peak demand, extending a Clean Peak Standard to existing resources like the Palo Verde nuclear plant simply moves the fence to include an existing resource, which doesn’t accomplish any of the goals the program would be designed for," Kobor said.

Incentive for more on-peak energy

The Clean Peak Standard proposal was written by RUCO consultant Lon Huber. Public records show that Huber coordinated with officials from APS to "shape" the ongoing decision at the Corporation Commission regarding the value of rooftop solar panels.

Huber's concept of a Clean Peak Standard has received favorable national attention, though unlike Tobin, his initial proposal did not suggest including nuclear power in the standard.

Huber said Monday that if nuclear power is included in the standard, the standard would need to be set considerably higher to create an incentive for more on-peak energy in the future.

"That would show an appreciation for Palo Verde but also for future capacity additions," he said.

The key issue for RUCO, he said, is adding new resources aimed at meeting the growing peak demand, not recognizing power plants already built.

Little, who opened the proceeding on the renewable-energy rules, said including nuclear into clean-energy plans is gaining attention nationwide as some nuclear plants shut down, but that Palo Verde is under no such threat.

"What is our real objective, to encourage renewables or to reduce carbon?" Little said. "If the objective is to reduce carbon emissions, we should encourage people to hang on to the biggest carbon-free resources they have, which are these nuclear plants."