The Arizona Corporation Commission has repealed the renewable energy standard for electric utilities in the state, saying it’s time for renewables to “stand on their own two feet.”
Commissioners voted 5-0 on March 4 to end the Renewable Energy Standard and Tariff (REST) rules that were adopted in 2006.
The rules required utilities to obtain a certain percentage of retail electric sales from renewable resources, starting at 1.25% in the first year and growing to 15% in 2025 and beyond.
REST required utilities to acquire part of their renewable energy from distributed resources such as rooftop solar. The distributed resource requirement grew from 5% in 2007 to 30% after 2011, with half of the amount coming from homes.
Utilities were directed to file tariffs to recover costs of their REST programs. Since the rules took effect, utilities have collected about $2.3 billion from customers for commission-approved REST programs, according to a draft order the commission approved.
All three utilities covered by the rules met or exceeded the 14% renewable standard in place for 2024: Arizona Public Service with 16%; Tucson Electric Power with 22.9%; and UniSource Energy Services with 14%.
Commissioners said although the REST rules helped spur the adoption of renewable energy in the state, they are no longer needed.
“It served its purpose. It’s time to move on,” Commissioner Rene Lopez said. “[Renewables] have to basically stand on their own two feet, like every other [power producer] has to.”
Commissioners noted that utilities now must conduct all-source requests for proposals (RFPs), a requirement that wasn’t in place when the REST rules were adopted. Through the RFPs, utilities choose the least-cost option that reliably meets resource needs.
“The idea that the utilities aren’t going to keep prioritizing affordable renewables … is absurd,” Commissioner Kevin Thompson said.
The REST rule repeal has been in the works since early 2024. In August, the commission directed staff to open a rulemaking docket and hold public comment sessions on the matter. (See Arizona Renewable Standard on the Chopping Block.)
Of about 130 written comments filed, most were opposed to the repeal. Another 363 commenters submitted a form letter supporting the repeal, the draft order said.
During the March 4 meeting, speakers asked the commission to strengthen or revitalize the REST rules rather than repeal them.
“Deleting the REST will send a harmful signal to the clean energy industry, discouraging investment, innovation and job creation in Arizona,” said Sandy Bahr, director of the Sierra Club Grand Canyon chapter.
Alex Routhier, a senior policy advisor at Western Resource Advocates, said REST benefits have included insulating ratepayers from fuel cost risk, lowering peak demand costs, reducing pollution and decreasing water needs.
“It is very likely that over the history of the REST rules, the benefits have far outweighed the costs,” Routhier said.
In comments after the meeting, Brian Turner, senior director with Advanced Energy United, said large-scale renewable energy is “thriving” in Arizona. But another goal of the REST rules was to give residents easier access to affordable, flexible energy, helping to reduce electric bills, he said.
“We look forward to working with the commission on developing new policies that help expand these opportunities, support competition in the market, strengthen energy independence, and put low-cost power within reach of hardworking families and businesses across the state,” Turner said in a statement.
