Oct. 23, 2018 – Phoenix – Despite the bluster and fury of campaign ads, a close examination of studies shows that Proposition 127, The Clean Energy for a Healthy Arizona ballot initiative, would have only a modest impact on electricity bills.“Climate change needs to be addressed, the question is whether to do so through amending the state’s Constitution or via the Arizona Corporation Commission. Based on climate research, by 2030 the state may lose about one-sixth of its economic growth because of the more extreme heat caused by climate change and by 2090 the state’s economy may begin to contract,” noted Dr. Dave Wells, research director with the Grand Canyon Institute (GCI) and author of the policy paper Impact of 50% Renewal Portfolio Standard Under Prop. 127.GCI, a nonpartisan think tank, has not taken a position on Prop. 127 and conducted its analysis without payment from any organizations or individuals.Prop. 127 would increase the amount of electricity Arizona’s utilities must obtain from renewable sources to 50 percent by 2030. Utilities like APS have already achieved the current standard of utilizing 15 percent renewable energy by 2025. The initiative defines renewable energy as solar, wind, biomass, certain hydropower, geothermal, and landfill gas energies. It excludes current nuclear and hydro capacities.APS, the proposition’s main opponent, claims that if approved Prop. 127 will increase electricity bills by at least $1,000 annually and that the Palo Verde Nuclear Generating Station will likely be closed. The Clean Energy for a Healthy Arizona Committee, the proposition’s backer, claims that electricity bills will decrease slightly and Palo Verde will stay open. Whom to believe?
“APS has suggested they will have to close or sell their stake in Palo Verde if the proposition passes, which from a climate change mitigation perspective, would be a significant negative result of the initiative,” according Wells.
“However, as the largest and arguably most cost-effective nuclear plant in the country, that outcome seems improbable given development of the Western grid which distributes electricity amongst western states, continued demand for carbon-free energy especially from California’s carbon-free mandates, and the low marginal cost of production. In addition, APS cannot unilaterally close Palo Verde, and the other utilities with ownership stakes are very unlikely to agree.”
GCI’s analysis carefully reviewed two studies that used APS data inputs, one from ASU’s Seidman Research Institute in March and more recently one from Arizona’s Residential Utility Consumer Office (RUCO). Both studies arrived at similar conclusions according to GCI, with bills in today’s dollars going up by about $200 annually by 2030. By contrast, the Yes campaign’s analysis suggests bills go down by $30 in the same timeframe. GCI could not assess the Yes campaign’s claim due to limited details on that result.
“There are limitations with all studies, but the general connection that can be made is that any impact on electricity rates, whether an increase or small decrease, will be modest compared to APS’ claim that they will go up at least $1,000 per year,” according to Wells.
In August, the Seidman Research Institute did put out a memo to APS saying that bills would rise 117 percent or $1,900 per year. GCI’s analysis thoroughly debunks this claim. “The memo presents information that simply calculates a rate based on numbers provided by APS,” Wells said.
GCI conducted its analysis based on numbers it determined the Seidman Research Institute used in its research to calculate projected rates. As a result, GCI concludes that even if APS’ has accurately asserted that it will cost about $13 billion to comply with Prop. 127 from 2018-2030, “it is suspicious and worth questioning why the utility put $4.5 billion, one-third of that cost, into the one year it asked the Seidman Research Institute to calculate rates for, which was 2030.”
“These criticisms of the No Campaign should not be taken as an endorsement of the initiative by GCI,” said Wells. “California’s milder climate and much broader mix of renewable resources including wind and geothermal make compliance with these mandates easier. Prop. 127 was developed without stakeholder involvement as compared to California’s legislative process which included stakeholder input in developing its renewable energy mandates. If Prop. 127 passes, any problems with implementation in Arizona would likely require voter approval. However, Arizona can draw on mistakes made by California as an early adopter of renewable energy.”
In Arizona the alternative option would be to seek change through the Arizona Corporation Commission. Commissioner Andy Tobin already has a proposal to reach 80 percent clean energy by 2050, including nuclear and conservation, which is supported by utilities.
“If Arizona plans to make a proportional effort to mitigate the impact of climate change, the current portfolio standard needs to be dramatically upgraded. The question for Arizona voters is whether Prop. 127 is a desirable mechanism to do so,” said Wells.
Two GCI board members have taken public positions in favor Prop. 127 and one is co-chairing the Yes campaign. Both have recused themselves from contributing to or reviewing this policy paper.