The Energy 202: Arizona’s biggest utility, which fought renewables in 2018, now wants to go carbon-free

Source: By Dino Grandoni, Washington Post • Posted: Wednesday, January 22, 2020

 

Arizona Public Service chairman and CEO Jeff Guldner poses for a portrait Tuesday, Jan. 21, 2020, in Phoenix. (AP Photo/Ross D. Franklin)

Arizona’s biggest electric utility spent millions of dollars in 2018 to defeat a renewable energy ballot initiative. Just two years later, it now says it wants to get all of its power from carbon-free sources.

As Steven Mufson and I report this morning, Arizona Public Service announced an ambitious plan to wean itself entirely off fossil fuels by 2050, with the intermediate goal of getting nearly two-thirds of its electricity from nuclear and renewable sources by 2030.

The drastic about-face for the electric utility is a sign of how the political climate has changed.

Voters rejected the measure shifting the state to renewables in the 2018 election, even after billionaire environmentalist Tom Steyer’s campaign in support of the ballot measure known as Proposition 127 brought the total amount spent on both sides to at least $62.8 million. APS’s announcement makes it less likely there will another big ballot initiative fight in future elections.

“I am very encouraged by the news from Arizona Public Service this morning and I am also happy that our efforts behind Proposition 127 in 2018 are finally moving Arizona to a more clean energy future,” Steyer, who is now a Democratic candidate for president, said in a statement Wednesday morning. “The plan put forth by APS shows that when public interest advocates keep pushing energy companies, they can get real results.”

In its own news release, APS said that after the ballot initiative fight the utility “took a hard look at our generation mix and future plans” when setting its carbon-free energy goals.

APS’s plan, which is not legally binding, outstrips the modest renewable requirements already on the books in Arizona that mandate that it rely on renewable energy for 15 percent of supplies by 2025. Yet it’s especially striking since the electric utility poured $37.9 million into a campaign to defeat the ballot initiative, which would have required APS to meet a similar goal — generating 50 percent of its power from renewable sources by 2030.

The decision comes just two months into the tenure of the utility’s new chief executive, Jeff Guldner, who told state regulators last week that APS will not fund candidates for the commission that regulates the utility. That also represents a reversal. In 2016, the utility and its parent, Pinnacle West Capital, gave at least $4.2 million to a political action committee that promoted members of the Arizona Corporation Commission who were sympathetic to the company’s views.

“As chairman and CEO of both APS and Pinnacle West, I can say under my leadership Pinnacle West and APS and any of our affiliates will neither directly or indirectly participate in any election of any corporation commissioner through either financial or in-kind support,” Guldner said in an appearance at the commission Jan. 14.

Investors welcomed the change in tone. “We see value in [Pinnacle West] under new leadership that is already taking tangible steps to improve the regulatory relationship in Arizona,” the electric utilities analysts at Credit Suisse said a report to investors on Tuesday.

Right now, coal, natural gas and nuclear power each represent about a quarter of the electricity APS generates.

One way APS says it plans to meet its new goals is by ceasing to generate electricity from burning coal by 2031. The company currently has majority stakes in two large coal-fired power plants, according to a report prepared for the Sierra Club by Strategen Consulting. The report said that keeping open the aging coal plants, which are 50 and 51 years old each, was uneconomic.

Crucial to APS’s energy mix — both now and going forward — is the Palo Verde Nuclear Generating Station in western Arizona, the nation’s largest nuclear power plant. The station, which doesn’t emit greenhouse gases and which APS co-owns and operates, is licensed to run into the 2040s.

But APS said it will rely on existing gas-fired power in the “near term” to make “a sensible transition to clean generating sources.” Over the long term, the utility plans to build large storage facilities, including a previously announced 850-megawatt expansion.

Ultimately, the utility said that it will meet its new targets with a combination of renewable resources, and it added that it is banking on technological advances to eventually eliminate the need for natural gas while maintaining reliable service.

With its huge sun-drenched deserts, Arizona ranked second in the nation in total solar energy generation in 2017, according to the U.S. Energy Information Administration. But that is only a fraction of the state’s potential to draw power from the sun.