For a decade, the commission has required the state's electricity providers to produce a tiny fraction of their power from renewable resources such as solar, wind or landfill gas. While the target for last year was only 1 percent of total energy sold, with 60 percent of that coming from solar facilities, none of Arizona's utility companies could achieve the goal. Tucson Electric Power came closest, meeting about two-thirds of the target.
Despite the shortfall, the commission in March radically raised the standards. Listing advantages such as future reliability, as well as price comparisons with other fuel sources, the ACC voted to slowly increase the renewable energy requirement to 15 percent by 2025.
"We agree with the commission about the need to expand the 'environmental portfolio,'" says TEP spokesman Joe Salkowski, "but we have some concerns about the amount of money it will take to achieve the goals. ... There is a balance between costs and benefits, and we need to strike that balance with our customers and the community."
TEP has already invested more than $32 million on developing renewable energy, including burning methane gas from the Los Reales landfill at its coal-fired plant on South Palo Verde Road. It has also installed one of the world's largest "solar" farms, a 44-acre facility in Springerville, Ariz.
Even though the Corporation Commission permits utility companies to collect a small environmental energy surcharge from their customers, TEP has still lost in excess of $7 million in the renewable-electricity business.
To meet its recently expanded goals, the commission will allow TEP to increase the monthly surcharge, suggesting a household figure of $1.05, or triple the current allowance. Given the ACC renewable energy mandate, Salkowski says the company believes the figure will have to be even higher than that.
How these additional funds will be spent by the utility remains under discussion, but Salkowski points out the commission is placing great emphasis on "distributed generation." This category of energy production can include a number of renewable sources, but is often associated with solar collectors located at a customer's home.
The ACC has mandated that within six years, 30 percent of its new energy standard must be met by this type of electricity, with half being supplied from residential locations. Presently, however, TEP produces only a minuscule amount of power from residential "distributed generation."
The utility has two programs in place to encourage this type of energy. One of them is GreenWatts, a fund into which TEP customers can voluntarily pay to invest in renewable sources of power. With approximately 1,500 participants, TEP has received more than $310,000 in "green" revenue.
The utility's other program is SunShare, which helps people buy solar equipment and pays for any excess energy they provide to the company. Despite the financial incentives, less than 200 households have taken advantage of this program.
Valerie Rauluk, a solar consultant and member of the Tucson-Pima Metropolitan Energy Commission, criticizes TEP for its shortcomings with "distributed generation." She believes the company must do much more to encourage individual participation.
"To date, TEP has been more interested in building large (renewable energy) facilities on its own property," Rauluk says. "Arizona Public Service (of Phoenix) has set a customer rebate level that made more sense. It was $4 a watt compared to $2.70 for TEP. Plus, it was easier to participate in the APS program, so they had no problem getting customers."
Salkowski disputes those figures, pointing out that both have been lowered recently, and that program participants largely chose the equipment purchase subsidy, not the electrical rebate. He also emphasizes that, on a percentage basis, TEP has more solar customers involved than APS.
Despite the opinion of TEP, Rauluk is convinced the Corporation Commission's renewable-energy goals can be accomplished. "Absolutely," she says of meeting the targets, "if the incentive structure (for household solar use) is designed right."
SunShare participant Tracy Williams has nothing but good things to say about the program. In addition to its tax advantages, financial rebates for solar equipment and lower electricity bills, she lists TEP's cooperation and friendliness.
On the other hand, Williams says: "More people should be taking advantage of this program. It just makes sense. Tucson should be a leader in this."
For his part, Salkowski wonders how TEP can convince more customers to invest in a solar system where the financial payoff may be longer than 10 years. Home builder John Wesley Miller, an outspoken proponent of solar energy, has the same question.
"If people have $150,000 to spend on a house," Miller says, "and a solar system costs $10,000, they'll opt for a bigger house instead. We need to educate them to longer-term thinking, to look at the environmental profits from a long-term investment."
Miller, whose Armory Park del Sol subdivision has solar hot-water heaters as well as solar energy producers as part of every home, also thinks changes need to occur in the building industry. To encourage that, he is involved with a "green" building committee of the Southern Arizona Homebuilders Association and is having conversations with Pima County officials about providing "green" building incentives.
"We need to focus on the sustainability of 'green' building, through energy and water conservation, encouraging recycling and waste reduction," Miller says. "What can we do as builders to make a difference in our environment? I want to be able to say proudly that as builders, we're environmentalists. We're making great strides in that direction."