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January 24, 2013

Host: Ted Simons

Arizona Renewable Energy Future

  |   Video
  • Renewable energy advocates are concerned that the new Arizona Corporation Commission will slow Arizona’s renewable energy momentum. Former Corporation Commissioner Kris Mayes and Solar industry representative Lon Huber talk about some of the related issues the Commission will have an opportunity to decide.
  • Kris Mayes - Former Arizona Corporation Commissioner
  • Lon Huber - Solar Industry Representative
Category: Energy   |   Keywords: energy, renewable, future, ,

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Ted Simons: Good evening and welcome To "Arizona Horizon." I'm Ted Simons. The Arizona corporation commission, with its new mix Of members, is meeting this Week and taking a look at the renewable energy plans of the utilities the commission regulates. Back in 2006, the commission passed a rule that requires public utilities get 15% of their energy from renewable sources by 2025. After rapid progress, Utilities are now ahead of The game. What that means for current solar programs and incentives Is unclear. Here to give us a better idea Of what to expect is former Arizona corporation commission chair Kris Mayes, now the faculty director for the Program on law and sustainability at ASU's Sandra Day O'Connor college Of law. And Lon Huber, an energy Policy specialist who Represents the solar energy industries association. Good to have you both here. Thank you for joining us. Kris, we will start with you. What you have seen and heard down there.

Kris Mayes: They had a meeting this week which everybody is buzzing about in which they made decisions that I think surprised a lot of people in the solar industry. Took a lot of people by surprise. Essentially eliminated some solar incentives for certain categories, including commercial solar, commercial rooftops, and did some other things that I think, you know, a lot of people are saying that is, you know, wasn't the most pro solar decision that the commission has ever made. Probably the opposite of that.

Ted Simons: You mentioned a surprise, but considering the makeup of the commission, that much of a surprise?

Kris Mayes: You know, I think that is a fair point. I mean, clearly the commission was going in a much more conservative direction. Despite the fact as you know, renewable energy standard was established by an all republican commission. I was on the commission. I'm a republican. But this commission is all republican again, and much more conservative, much more inclined, I think, to sort of the reject renewable energy standard notions of a mandate and the renewable energy standard. That being said, I don't think anybody expected them on their first decision to come in and slash entire programs. That I think is the issue.

Ted Simons: How much of a surprise for you?

Lon Huber: A bit of a shock to the industry, to be honest. The impact of it is far reaching. The decision. And we're still working with the commission and commissioners to really break down the impact for the industry and what exactly their decision meant for us.

Ted Simons: Talk to us about what exactly the decision was.

Lon Huber: The first decision was to essentially zero out commercial incentive programs for businesses. For instance, if a, say a Wal-Mart wants to put up solar panels, they no longer have the support needed, you know, that was there in the past to do that essentially. So, you know, that -- it -- it is tough -- you know, the commercial side of things. You have to make things pencil and you have to compete against a regulated monopoly. These incentives and have been declining rapidly over the years but we weren’t at this point that we self-sufficient just yet. I would say we are 80 percent there but just that last bit was-

I think Lon is making a very good point which is when we established the renewal energy standard we never believed that these incentives would last forever. We believed that over time we should phase them out. The problem with sort of abruptly discontinuing incentives for commercial rooftop solar radically decreasing what goes to residential solar, and solar on roof tops at home in an abrupt way right now, is that we haven’t quite got over the hump where solar is completive. It is very close. Very close. Within probably a couple of years. To do it now, I think, you know, is what people have -- scratching their heads about.

Ted Simons: I want to get back to that in a second. You mentioned the rooftop residential, reduced, eliminated, and what happened? What does that mean if I was thinking I wouldn't mind putting solar things on my roof.

Lon Huber: Residential, still incentives available. Residential market has just great strides in cost declines. Very close to the point where the market is self-sufficient. I would say commercial is 80%. Residential is 95%, right? And you know, you -- you still have about what they call an up front incentive and it is 10 cents a watt. Typical-sized system, 7KW, you would get $700 for instance. So, it certainly helps, but it is not the main driver of that technology.

Ted Simons: Okay. Back to your point with the idea being that they can't -- it is not quite self-sufficient. It's getting there. Is the commission saying this is close enough to self-sufficiency, time to stand up on your own? Or is this purely ideological.

Kris Mayes: I think ideology plays a strong role in this. I am not a big believer in that. Especially in utility regulation. But I do think there is a sense down there right now that, you know, the cost of solar has come down pretty rapidly, which is true. We have been successful. The renewable energy standard has had a great impact on reducing the cost of solar. And that some of these technologies should be able to stand on their own. They're not quite there. I think the other thing, you know, that apparently there was an amendment that was offered that would have actually reduced the overall renewable energy standard target from 15% to something like 11%.

Lon Huber: 11 for tp --

Kris Mayes: Tucson electric power and more than that for APS. I think, you know, also struck people as odd given the fact that the -- you know, solar has never been more popular among Arizonans. The idea that we would go backwards instead of increasing that amount didn't make sense.

Ted Simons: How far backwards would we go?

Lon Huber: It's tough to tell. In the past, the industry -- to be fair, we've maybe raised the voice a little too loud sometimes when we saw a dramatic drop in incentives, right. But we were always able to meet that target. There is, you know, there is something to aim for. Costs down, both on, you know, soft costs, labor, customer acquisition and hard costs like modules, right. But the interesting part is that this commercial -- it is not reducing the incentive, it is zeroing out the entire program is what happened. It is an entirely different ball game. For instance, one installer at the meeting, he had 50 people down in Tuscon, and will probably have to reduce it to about 10 people. The industry has been such a bright spot during this recession. 270 companies, 10,000 jobs, billions in investment, and it is tough to see, you know, have that possibility of a market sector just go in rapid decline like that.

Ted Simons: You mentioned the idea of reducing the renewable energy standard. I remember hearing from the candidates, each and -- well, each and everyone of the major candidates, that's the law, that's in place. Not going to mess with it. It sounds like they want to mess with it.

Kris Mayes: To be fair, I believe they punted on that particular proposal. The folks who ran for office this time have not yet voted on that. Certainly I think that is a fair question of them. Perhaps there was not great understanding about what some of these amendments would actually do in that regard. But I think, you know, to Lon's point, the industry and those who support solar have a job to do here, which is to really go down to these commissioners and say, look, we understand your concerns. We understand you're concerned about rate payers. That's legitimate. That's your job. We understand where you are coming from ideologically. Here is out plan for over the next five year getting off these incentives and getting to a point of total competition -- I think if the industry lays out a clear plan for that, they can make an argument to the commissioners that we don't need to abruptly cease these programs.

Lon Huber: We understand the issues. Commissioners made it clear. We are here to watch repair costs, not only invest in the future but watch for rate payers there are other ways to do it other than ending a commercial program. That will save about four cents every month from an average residential bill for instance. We can find other ways to get that same savings. Still have a program in place. We look forward to work with the commission to find ways to get at their goal but without the collateral damage --

Ted Simons: That kind of a plan, has it been articulated or formulated? Have they heard the message?

Lon Huber: Well, we're still working on getting -- on getting it put together. Right now, it is just, you know, businesses just doing the best they can to lower the price, to lower the price. And, you know, that was really our plan was just get down -- get costs down as fast as possible. I think you're right. Maybe we can lay out, hey, this is where we think incentives are in two years or three years. Residential might be fine next year without one. Commercial still needs a few more years and maybe we can work financing and a few other angles. I think, you know, that is something that we are going to have to work on.

Ted Simons: And yet the cliche, elections have consequences. These folks were elected. Chairman stump basically said he the push for the cheapest form of energy available. He will ensure power that is affordable, reliable and abundant. Not going to cheerlead, wager or bet I think was the word he used on something that he is not sure about. Surprise in some respects on method and action but behind that it is pretty clear what these folks are thinking.

Kris Mayes: Well that is true. I know commissioner Stump very well -- also ran as the solar team for office. I think he would say that he supports solar. He just wants to make sure that we continue to put pressure on it to do what it needs to do in terms of price and get the price down. But I think that, you know, we really have to consider, you know, the need to maintain the stability of this market. And not do things that abruptly, you know, change, you know, without notice to the industry. And I -- I just think that we should also note that the incredible success story here. The fact that we are at this point right now where solar has almost got to the point where it doesn't need these incentives that we started back in 2006, at least for the residential market, that is a great thing.

Ted Simons: The idea of again putting pressure on solar to reduce price points and these sorts of things, do the industry need this pressure? Could that be a good for the industry?

Lon Huber: I think it is healthy, the right amount, everything in balance. I will say if you look at the utility plans for cost project and analysis that they have done for ultimately scale, solar is competitive with new conventional sources of energy. Either less than the cost or equal to a new coal plant. So on the utility scale we have gotten to a point on a parody scale for a new generation. Obviously more expensive than a 1960 coal plant, but everything is more expensive than that. I think the pressure has been great. Arizona has done so well, taking a gradual approach, which fits into chairman stump's speech. They have taken this approach where, yeah, we have been ahead of our targets, our yearly targets and the rest. But we didn't create a stop and start market. Oh, we're ahead and now let's stop. Hey, if you can meet these cost declines, we will continue it. Other states didn't take that approach. We are ahead and we are going to stop creating a boom and bust style. Companies couldn't invest, couldn't plan and they couldn't bring their costs down. Arizona we have some of the most cost-competitive installations in the country. One of the first markets where we don't really need an incentive for residential. We have a great story. My hope is that the current commission can see that and, you know, learn that it might be worth that investment now, even if we are going over our yearly targets. In the long run, it will save rate payers money.

Ted Simons: Good conversation. Good to have you both here. Thank you for joining us.

The Arizona We Want 2.0

  |   Video
  • Dr. Lattie Coor, Chairman and CEO of the Center for the Future of Arizona, talks about the latest update to the Center’s 2009 report, 'The Arizona We Want.'
  • Dr. Lattie Coor - Chairman and CEO, Center for the Future of Arizona
Category: Community   |   Keywords: arizona, community, CEO, future, ,

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Ted Simons: In 2009, the center for The future of Arizona Published a report titled "The Arizona we want." it represented a vision for The state based on citizen-driven data. Today an update was released In the form of a new report called "the Arizona we want 2.0." here to tell us what's Changed is Dr. Lattie Coor, chairman and CEO of the Center for the future of Arizona. Good to see you again. Thank you for joining us.

Dr. Lattie Coor: Thank you, good to be here, Ted.

Ted Simons: The original report, what was it designed to do and why was it necessary to update?

Dr. Lattie Coor: We were interested in finding the citizens' voice for establishing a framework for Arizona's future. That is why we went to the gallop organization and got the most exhaustive voice that has ever been done about Arizona. What people wanted. What they liked. What their basic characteristics were about thinking about the future. And from it we found eight major goals that citizens identified. Education, job creation, access to health care. But interestingly, some civic engagement goals that were part of it as well. We began taking the report all over the state, more than 100 meetings. We invited Arizonans to take the gallop poll. Over 10,000 did that so that they could see how their views matched with Arizonans and we invited organizations to do the same so that they could get a view of how their whole group stood with respect to Arizonans views in general. From all of these discussions, meetings, and explorations, we gathered a much deeper sense of how we could then take what we learned three years ago and put it in to a form of specific actionable items for each one of those eight goals. Items that are true to the citizen voice and the gallon poll, but that items increasingly aligned with other leadership organizations in Arizona that are trying to advance those goals.

Ted Simons: So, with that in mind, 2009 report is released and you have some ideas on how to move forward. We fast forward to now. Were some of those goals met and how did we do? How are we doing?

Dr. Lattie Coor: Some of the goals have been met, most importantly, think the stage has been set to now move from more actively into the future. Let's take education. Citizens wanted students to graduate high school, college and or career ready. Measured by national and international standards. We have on the table, passed by the Arizona legislature common Coor standards and the new assessment that will replace AMES could PARK-- they be absolute prototypes of that kind of improvement that the citizens were calling for. In this report, we identify that and we say here is a goal now. Let's take this one and all get behind making sure it is funded properly and accomplished in 2014 to 2016.

Ted Simons: Did you find trajectories of ideas or thoughts that -- did they change at all from one report to another?

Dr. Lattie Coor: No, they have been quite constant. Citizen voices remain quite constant. What has happened there has been movement, some kind of uneven movement, but nevertheless movement towards the goals that now can we think be captured and put in very specific terms. Management consultants say to any organization, if you can't put your mission and goals on a single card and put it in your shirt pocket, you will never get there. We have tried to take these eight goals and put them in those clear, explicit ways that we will be -- that can go in our shirt pocket, all of us, as to where Arizona itself is going.

Ted Simons: Do you see the results of the polls maybe in this area and the results of political elections in which we elect folks to achieve these goals in this side? I mean, is there a bit of a disconnect? I think some folks would say there is.

Dr. Lattie Coor: There is a big disconnect. There are some instances where it is, but there is a big disconnect. Unfortunately, the election cycle does not usually focus specifically on the kinds of things that are stated here. They may have larger goals. Let's take job creation for example. Arizona we want 2.0 says 75,000 jobs should be created. Now, that is constant with what the Arizona commerce authority is talking about. There is that policy. But it has never been part of the electoral process. It also says makes sure that the jobs raise the salary by about 30% over the existing salaries. Get high-quality, good-paying jobs, in fact. And there have been steps taken with them, but it is rarely part of the election cycle.

Ted Simons: There are incentive programs that require big-time jobs or high-paying jobs to get those incentives. That process seems to be working a little bit but you are saying it could work a little more.

Dr. Lattie Coor: It could work a bit more and we can be much more specific about it, it will work even better.

Ted Simons: Did health care change because of the affordable care act? In 2009, health care was A and it turned into B. How much of a difference did that make?

Dr. Lattie Coor: I think it depends on how the governor's proposal to embrace the Medicaid through access affairs in the legislature. That will make a major difference in terms of the reach of health care into the population, and I think quite significantly so.

Ted Simons: So, the study basically helps citizens and helps leaders with agendas and with benchmarks and these sorts of things. Do you move the benchmarks just a touch out of reach to keep things moving forward? How do you work things?

Dr. Lattie Coor: You never want to do something that isn't a significant goal. So, we have set them in ways that -- to us are represented in what this report calls for, but they're reach goals. They're accomplishable goals, but they're reach goals. And everyone one of them is understandable. Measurable, embraceable. We believe they can become in a sense the way all of us think about what we should be doing to make Arizona the place we want it to be.

Ted Simons: You talked about education and job creation. We mentioned health care. Things like the environment. What are people saying there, where do you think and your organization and judging from what people are saying, where should we be going?

Dr. Lattie Coor: Get active in sending -- reduce the forest fires. 30,000 acres a year this report calls for annually. Modernize the state trust land process. But as you do so, protect 600,000 acres for open space and natural areas. So, it helps to move that forward. Let me tell you one of the most interesting things we think has come from this. Five of the goals are conventional policy goals. Leader-led goals. You need policies made to make them happen. Three of the goals, recruiting and retaining talented young people. Our study found that Arizonans don't think Arizona is a good place for talented young people. Very significant for the health of the state. And get much more heavily engaged in civic engagement affairs, register, vote, discuss your political issues and in building the community. Those are citizen driven goals. What we have realized if you strengthen the citizen driven goals, you in turn put yourself in a position of much more positively affecting the policy-driven goals.

Ted Simons: I have about a minute left here. It is not necessarily a horse race with citizen here and leader here, but which side seems to be taking the most action so far?

Dr. Lattie Coor: I think both, but I think there is a growing -- activities going on now. O'Connor house has a project called speak out Arizona. 200 organizations. Getting citizens to be much more interested in the issues. Embracing the issues. The alliance for nonprofit organizations, 5 or 600 organizations in that, are doing the same. So, I think there is a growing potential that is showing itself on the citizen-based side of the ledger.

Ted Simons: With that said, what do you want people to take from this report?

Dr. Lattie Coor: That there is a clear way of expressing what Arizona's goals should be for the future. Look at this, at “the Arizona we” and embrace it. Organizations get yourselves behind it and let's make sure that we move each of these goals forward.

Ted Simons: Another update in three years or so.

Dr. Lattie Coor: I will be here.

Ted Simons: Thank you.