Arizona regulators at odds over PURPA implementation
An Arizona utility regulator is pressuring his colleagues to alter the state's implementation of the Public Utility Regulatory Policy Act (PURPA), arguing Arizona could miss out on $500 million in solar development without action on the federal law.
Commissioner Andy Tobin last week wrote to Arizona Corporation Commission Chairman Bob Burns asking him to put a PURPA reform item on this month's open meeting agenda. Burns declined, though an internal planning document shows he considered including the item late last month.
Tobin's proposal would establish a 15-year contract term for qualifying facilities under PURPA, which he says would spur investment in solar facilities before federal tax credits decrease at the end of the year. The ACC monthly meeting is scheduled for Tuesday and Wednesday.
Tobin's letter to Burns illustrates ongoing debate in Arizona over how to implement PURPA, a 1978 law that directs utilities to buy power from qualifying renewable energy facilities.
In December, the ACC regulators called for hearings on how to set contract terms for PURPA resources, which are left up to state commissions under the law. The next month, an administrative law judge set Nov. 13, 2019, as the first day for those hearings.
The schedule drew opposition from Tobin, who argued that solar developers would drop their projects or move them to other states if they are forced to wait nearly a year for contract clarifications. At the end of 2019, the federal investment tax credit for solar resources will drop from 30% to 26%, making the timing of the proceeding significant.
To accelerate the process, Tobin wants the ACC to set short-term contract rules for PURPA projects that can be deployed before the Nov. 2019 hearing. Under his proposal, PURPA resources sited this year would receive 15-year contracts — a term likely long enough to incentivize solar investment.
Last month, Burns placed Tobin's PURPA proposal on the ACC open meeting schedule, but removed it shortly before the meeting without explanation.
In response, Tobin requested that Burns — who controls the ACC agenda — place his PURPA proposal on the docket for this week's open meeting. But after apparent consideration, Burns declined, not listing the item on the official agenda.
An internal planning document for the meeting obtained by Utility Dive shows that Burns considered scheduling debate on Tobin's resolution, listing it as item no. 25 in a draft agenda dated Feb. 27. The document was shared by a source who requested anonymity because they were not authorized to release it publicly.
A spokesperson for Burns' office confirmed the authenticity of the planning document, but declined to comment on it or the PURPA issue.
In response to the exclusion of his resolution, Tobin wrote to Burns last week asking him to place the item on the agenda.
"The Commission's ability to have these kinds of expedient and open discussions ... seems to be restricted," he wrote. "While our Utilities Division has advised the Chairman in the past that 'Staff's goal is not to stop the commissioners from having a dialogue,' the Commission has failed to have the open dialogue in public regarding the Commission's 1981 [PURPA] Policy or any pending [PURPA resolution]."
Utilities like Arizona Public Service and Tucson Electric Power argue they can site renewable energy more cost effectively on their own than through PURPA, which mandates that qualifying facilities be paid the utility's avoided cost for other generation. Tobin's letter emphasizes that his 15-year contract proposal would only apply to facilities built this year, and the ACC could reshape those contract provisions in the future.
"It is entirely possible, for example, that the Commission could find that the intent of the 1981 [PURPA] Policy requires 15-year contract terms, but also find that contract terms for TEP of 5 years, for UNS of 2 years, and for APS of 10 years are reasonable exceptions to the 1981 Policy, based on the individual evidence each utility presents in its respective proceedings," Tobin wrote.
Follow Gavin Bade on Twitter