Arizona regulators move to place gas plant moratorium on utilities
"The utility's proposal last spring called for gas-fired energy to grow from 26% of the utility's supply mix to 33% by 2032...An amendment from Commissioner Bob Burns said APS' load forecasts were "too aggressive" and "relied heavily on natural gas without adequate price sensitivity analyses."
Arizona regulators have refused to acknowledge the 15-year Integrated Resource Plans (IRP) filed by the state's investor-owned utilities, pushing them instead to consider more renewable energy and less natural gas-fired power.
The Arizona Corporation Commission also moved to place a moratorium on new gas plants 150 MW or larger through the end of this year, requiring utilities to consider energy storage and clean energy options first.
The IRP denials come as Arizona utility regulator Andy Tobin pushes a proposal for utilities to source 80% of their electricity from renewables and nuclear by 2050 and deploy 3,000 MW of energy storage by 2030.
A published decision is not yet available, but the commissioners' amendments signal how the agency envisions Arizona's energy landscape and the future of natural gas in the state.
"In an effort to protect ratepayers from potential unnecessary capital improvements in the near future and stranded asset costs in the long-term, this amendment places a temporary moratorium on new natural gas infrastructure pending Commission review and approval on a case by case basis," the gas plant moratorium amendment says.
Should utilities apply for a waiver, they must conduct an "independent analysis comparing the present and future costs between the specific natural gas procurement and alternative energy storage options."
Other amendments begin to reform the IRP process; order utilities to analyze portfolio options that "more closely resemble" the ACC's proposed energy modernization plans; and ensure regulators are able to review a broader set of portfolios in addition to those submitted by utilities.
Last year, APS told regulators that renewable energy and battery storage would help it provide service, but the utility would still lean heavily on natural gas to meet growing demand. The utility's proposal last spring called for gas-fired energy to grow from 26% of the utility's supply mix to 33% by 2032.
Tobin had already criticized the utility's draft plan to increase natural gas generation, calling on APS to develop "a more balanced and forward-looking perspective."
Tobin is also pushing for an 80% clean energy standard utilities must meet. Unveiled in January, his energy modernization plan would require utilities to deliver an increasing portion of their renewable energy during peak electricity demand hours, incentivizing storage deployment.
But while regulators are pressing for clean energy, the state's utilities have still been turning to natural gas. APS' plan called for adding 5.3 GW of gas generation by 2030, more than doubling its current capacity. Tucson Electric Power's plan included nearly 360 MW of new gas by 2032, a 30% increase in gas capacity.
An amendment from Commissioner Bob Burns said APS' load forecasts were "too aggressive" and "relied heavily on natural gas without adequate price sensitivity analyses."
Environmental advocates hailed the commission's move. Stacy Tellinghuisen, a senior climate policy analyst with Western Resource Advocates, in a statement called it a "thoughtful decision" that could save the state money as well as helping to maintain clean air and water. A previous analysis of APS' plan found that avoiding about 4,000 MW of the 5,500 MW of new gas capacity APS had planned, and instead using energy storage, efficiency and renewables, would save customers about $300 million.