Arizona Resource Planning Process Seeing Changes
Resource planning is a critical task for energy utilities. It is also of great interest to regulators, ratepayers and other industry members such as renewable energy companies.
In Arizona, the major energy utilities referred to as Load Serving Entities (“LSE”), except for Salt River Project (“SRP”), must file an integrated resource plan (“IRP”) with the Arizona Corporation Commission (“ACC”) every other year. SRP is deemed a quasi-governmental entity and, therefore, is not regulated by the ACC except in very limited areas. Once the IRPs are filed, they become the subject of stakeholder workshops and ACC Staff review and evaluation. Staff often hires a third party consultant to evaluate the IRPs. The Staff then prepares a proposed order. The IRPs, the study and the proposed order are reviewed by the ACC at an open meeting, after which the ACC issues an order. This entire process often takes a year.
At its April Open Meeting, the ACC reviewed and discussed the 2014 IRPs of Arizona Public Service Company (“APS”), Tucson Electric Power (“TEP”), UNS Electric (“UNS”) and the Arizona Electric Power Cooperative (“AEPCo”). (A.C.C. Docket No. E-00000V-13-0070). APS and TEP are much larger than UNS and AEPCo, and my remaining comments focus primarily on APS and TEP.
Under the current ACC rules, the ACC does not “approve” the IRPs but merely “acknowledges” the IRPs through the issuance of an order. (Arizona Administrative Code R14-2-701 through 706). An LSE can ask for a particular project to be approved, but for the most part IRPs have historically just been acknowledged.
The most recent IRPs include a reduction in coal resources, a significant expansion of natural gas resources and a more modest increase in renewable resources. Several individual commissioners prepared amendments to the proposed order. Many of those amendments were adopted as part of the final decision (A.C.C. Decision No. 75068). It is clear from the Open Meeting discussion that the ACC wants to more actively monitor the IRP process and is now willing to “approve” not just acknowledge the IRPs. The LSEs prefer an approval because it provides them more support for a prudency finding in future rate cases.
Specifically, the commissioner amendments did the following:
- Put more emphasis on the three year Action Plans each LSE must file including requiring that Action Plans be amended to describe whenever any substantial change is made. An Action Plan describes the filing LSE’s process for preparing its next IRP and for implementing its current IRP.
- Required that the Action Plans discuss the costs and benefits of new technologies being considered as well as EIM (Energy Imbalance Market) participation.
- Provided that the ACC will “approve” these Action Plans although the approval will not constitute approval of any individual project for rate making purposes.
- Required that LSEs specifically include (or explain why they are excluded) energy storage, small modular nuclear reactors, expanded renewables and expanded energy efficiency/demand response.
- Required that LSEs discuss plans for aging generation plants.
- Provided for ACC-hosted pre-filing stakeholder workshops. The ACC-hosted workshop will be in addition to LSE-hosted pre-filing workshops.
Industry participants should be encouraged by these changes because they indicate that the ACC seeks to be more involved in the process, to make the process more transparent and to increase stakeholder participation.