Palo Verde Nuclear Generating Station could be forced to close if a renewable-energy ballot measure passes, the plant's owners said.
The state’s biggest electric company will mostly support a plan from state utility regulators to significantly boost the requirement for renewable energy.
Arizona Public Service Co.’s support for the plan comes as the utility actively campaigns against a similar renewable-energy measure whose backers are gathering signatures to get on the November ballot.
Both plans would dramatically increase the amount of renewable energy used in Arizona.
But there’s at least one big difference: The plan from Corporation Commissioner Andy Tobin would keep the Palo Verde Nuclear Generating Station west of Phoenix in operation. The ballot measure would threaten the plant with closure, APS officials contend.
Some experts see a bigger reason for having the ballot measure. They say APS and the commission can’t be trusted to deploy as much renewable energy as consumers want.
APS officials say such sweeping changes should be left to regulators who can amend them if things don’t go as planned and if the costs get too high for consumers.
“Commissioner Tobin set forth a really broad and bold plan,” said Kerri Carnes, APS manager of state regulation and compliance. “We are excited to continue participating in the dialogue and to see how it evolves going forward.”
What the differing plans would do
The Tobin plan would increase the requirement for renewable energy to 80 percent of a utility’s total demand by 2050 and count nuclear energy toward that goal.
The ballot measure would increase the requirement to 50 percent by 2030 and not count nuclear toward the goal.
The Corporation Commission now requires utilities to get 8 percent of their power from renewables this year, rising to 15 percent by 2025.
APS gets about 25 percent of its energy supply from Palo Verde, which so far is not counted toward the renewable-energy standard.
Tobin in January proposed increasing the requirement and including nuclear because it does not have the carbon emissions that contribute to climate change.
Carnes said Tobin’s plan is preferable to the ballot initiative because the commissioners can take the power grid’s reliability and the plan’s affordability into consideration, whereas the ballot initiative would lock in the requirement and leave regulators unable to amend the policy if needed.
“We think it allows flexibility,” Carnes said of the Tobin plan, which regulators could decide on in the next year.
Ballot advocates distrust APS
Some ballot initiative supporters applaud Tobin’s proposal to develop more renewable energy. But they say APS’ reluctance to expand renewables as readily as utilities in neighboring states means voters should have a say.
Kristin Mayes was on the Corporation Commission when the original renewable-energy standard was passed in 2006.
Mayes said that allowing the commission to set such a standard worked well a decade ago. Since then, she said, APS has taken a more active role politically to protect its profits by supporting commission candidates it sees as most favorable to the company’s requests from regulators, and campaigning against renewable energy increases.
“It’s just not a perfect world anymore and this is the only way that I think we can get this done,” said Mayes, now an Arizona State University law professor.
APS is widely believed to have contributed to the campaigns of two Republican regulators in 2014, and does not deny being the source of funds spent by nonprofits that don’t disclose their donors.
In 2016, the company openly campaigned on behalf of its preferred candidates for the Corporation Commission.
Mayes has previously worked on behalf of solar companies on ballot initiatives, but said she is not being paid by the Clean Energy for a Healthy Arizona campaign that is promoting the ballot initiative this year.
She also said she is not being paid by anyone with an interest in the issue and not speaking for her current employer, ASU.
“We have a utility in this state that is willing to spend millions and millions of dollars on campaigns,” Mayes said on a recent conference call with reporters.
She said she was voluntarily campaigning for the ballot measure because she believes it is necessary.
“It seems to me it is time to let the voters decide this issue.”
Mayes said passing the ballot initiative, which is getting funding from wealthy California political activist Tom Steyer, would help “solidify” the proposal Tobin is putting forth, and that the two could both be enacted.
She also said the ballot initiative was preferable because it includes incremental steps to increase the standard over time, which Tobin’s plan does not.
Tobin’s plan is likely to see a variety of amendments proposed by the Corporation Commission staff, other members and utilities before commissioners eventually vote on it.
Nuclear a key concern for utility
APS officials say the ballot initiative is unworkable for the company partly because it would force so much renewable energy onto the grid that by 2025, the company would have to shut down its coal-fired power plants and eventually the Palo Verde nuclear plant.
Palo Verde is the nation’s largest nuclear power plant and the nation’s biggest source of carbon-free electricity.
APS forecasts that an abundance of solar power on the grid in non-summer months would eliminate the need for coal and nuclear plants in the middle of the day.
Those plants are not designed to switch on and off to meet demand; they stay on for weeks or months at a time.
It takes Palo Verde about three days to go from a shutdown to full power, said Jack Cadogan, the plant’s senior vice president of site operations.
“It’s a major undertaking for us to start the plant that requires a concerted effort of hundreds of people,” he said. “Normally this is not a challenge because it happens infrequently — only once every 18 months of 24/7 continuous operation.”
That also would create problems for the plant’s 2,000-some employees, said Jeff Burke, APS’ resource planning director. If the plant doesn’t crank out energy around the clock all year, it is not worth the cost of maintaining and staffing.
APS also couldn’t simply sell the surplus power to neighboring states, he said.
“Everybody else in the West is doing a very similar thing, including California,” Burke said.
In mild-weather months when demand is low, California utilities sometimes pay Arizona to take excess solar power.
APS reports that last year, there were 149 days when it was paid to take energy from California, and so far this year, it has done so on 52 days.
Arizona could do that, too, but only for a short window before it becomes cost-ineffective.
And Burke said the surplus can’t necessarily go to some states like Utah because of constraints on the grid.
“It is limited by transmission access,” he said. “Just because we are neighbors does not mean power can flow that direction. We have some limited access to other states, but most of it (transmission lines) goes to the west.”
Supporters downplay APS cost concerns
APS officials have said the cost of complying with the ballot initiative would double the average customer bill for the utility, but supporters say that is poor speculation.
APS did not provide an estimate for complying with Tobin’s proposal in its written response filed with the commission.
The key driver in APS’ cost estimate for the ballot measure is the closure of Palo Verde.
Mayes said costs of renewables are falling, and other states require more renewable use than Arizona without imposing big rate hikes on customers.
“It was our hope when passing the renewable-energy standard that by requiring utilities to invest in renewables, we would … drive down the price of renewables,” Mayes said. “And that is exactly what happened. In fact, it happened beyond our wildest imaginations.”
Wesley Herche, a former U.S. Defense Department intelligence officer who now researches energy policy at ASU, said research has shown no correlation between states with high renewable-energy standards and rate hikes.
Also, Arizona has imposed rate hikes similar to states with higher renewable-energy targets, despite its lower standard.
Like Mayes, Herche said he was neither being compensated for his views nor speaking for ASU.
“Certainly it seems to be the case in other states this is doable,” Herche, who was on the call with reporters, said.
Utilities support Tobin plan with caution
APS still has concerns about how much Tobin’s plan would cost and whether battery technology will develop fast enough to help the utility make the best use of solar.
“This clean-energy definition appropriately recognizes the Palo Verde Generating Station as an integral part of the state’s ability to meet the plan’s ambitious energy goals,” Carnes wrote in the APS response to Tobin’s plan.
Also, she said the 20-year timeline to add that much renewable energy is a concern.
“The 32-year gap between today and 2050 is daunting under any circumstances and particularly so when factoring in the rate at which new technologies are being developed,” the APS response said.
APS is adding battery storage to its grid to capture solar power generated in the middle of the day, when demand is low, and use it later in the afternoon, when customers use more air conditioning.
Tobin’s plans call for 3,000 megawatts of energy storage statewide by 2030. This would likely be batteries, but could also be other technologies.
One megawatt of capacity from a power plant or battery can serve about 250 homes. Three thousand megawatts of batteries would be enough to light 750,000 homes.
The cost of that much storage to the utilities and their customers is yet to be determined. It would be prohibitively expensive to add enough batteries to serve hundreds of thousands of customers’ demand today, but the prices are falling.
SRP supportive of nuclear, too
Salt River Project is the state’s second-largest utility and would be subject to neither the ballot initiative nor Tobin’s plan, as it is a municipal utility and not regulated by the Corporation Commission.
But the measures could affect SRP because it’s a part owner of Palo Verde and supports keeping the plant open. Commissioner Robert Burns requested affected utilities, including SRP, submit comments on the proposal.
SRP filed comments to Tobin’s plan that were generally supportive.
The company also is considering a new nuclear facility to be built in the 2030 timeframe, the company said in its response, and is investigating potential sites for a new nuclear plant in the state.
“SRP is taking measured steps to evaluate and preserve the long-term option for new nuclear generation in the late-2030 timeframe,” the company said.
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