RPS Arizona
(Last updated on July 1st, 2004)

RENEWABLE PORTFOLIO STANDARDS-STATE SUMMARY

I. POLICY
II. ADMINISTRATION
III. FINANCING
IV. CRITICAL ELEMENTS
V. POLICY/PROGRAM ASSESSMENT
VI. PUBLIC OUTREACH AND EDUCATION

I. POLICY

Date Enacted
September 1, 1999

Date Effective
May 2001

Time Period
May 2001 - 2012

Applicable Laws, Orders, and Regulations
Environmental Portfolio Standard (EPS)
ACC Decision 62506 (May 4, 2000)
http://www.cc.state.az.us/utility/electric/62506.pdf


Final Rulemaking for the Environmental Portfolio Standard
http://www.cc.state.az.us/utility/electric/R14-2-1618.htm


Environmental Portfolio Standard Developments
(Rules and Procedures)
http://www.cc.state.az.us/utility/electric/environmental.htm


Description
Arizona uses a combination of a renewable portfolio standard (RPS) and a systems benefit charge  (SBC) to promote renewable energy in the state. While the RPS sets the minimum renewable requirement, electricity provider costs of meeting this standard are recovered both from any existing systems benefit charge, as well as an additional portfolio standard charge. In May 2000 the Arizona Corporation Commission (ACC) approved an Environmental Portfolio Standard (EPS) Surcharge tariff to fund renewable energy programs under the RPS, as well as a number of other programs including low-income, demand-side management (DSM), consumer education, environmental, long-term R&D, nuclear fuel disposal, and nuclear decommissioning. Much of the low income programs are funded by a separate systems benefit charge.

The EPS requires a minimum of 0.2% of retail energy sold be new solar resources and environmentally-friendly renewable electricity technologies in 2001, increasing according to the schedule shown below.

Year	% retail sales from renewable sources
2001	0.2%
2002	0.4%
2003	0.6%
2004	0.8%
2005	1.0%
2006	1.05%
2007–2012	1.1%

The Commission will continue the annual increase in the portfolio percentage after December 31, 2004, only if the cost of environmental portfolio electricity has declined to a Commission-approved cost/benefit point.

Specific requirements for the phase-in of renewable technologies are:

a. In 2001, the Portfolio kWh makeup shall be at least 50 percent solar electric and no more than 10 percent on R&D.

b. In 2002 and 2003, the Portfolio kWh makeup shall be at least 50 percent solar electric and no more than 5 percent on R&D.

c. In 2004, through 2012, the portfolio kWh makeup shall be at least 60 percent solar electric.

In addition:
A Load-Serving Entity is entitled to meet up to 20% of the portfolio requirement with solar water heating systems or solar air conditioning systems purchased by the Load-Serving Entity for use by its customers, or purchased by its customers and paid for by the Load-Serving Entity through bill credits or other similar mechanisms.

Eligibility Date
New solar resources and environmentally-friendly renewable electricity technologies are those installed on or after January 1, 1997.

Eligible Technologies
· solar photovoltaic
· solar thermal electric
· solar water heating systems
· solar air conditioning systems
· in-state landfill gas generators
· in-state wind generators
· in-state biomass generators
· small hydro-electric generation
· waste generation


II. ADMINISTRATION

Administering Entities
APS/PinnacleWest
http://www.aps.com

Tucson Electric Power/UniSource
http://www.tucsonelectric.com

Type of Entity
Utility

Administrative Contacts
APS - Jim Conner / Energy Analyst 602-371-6035
TEP - Denise Smith / Pricing Analyst 520-745-3431
III. FINANCING

Funding Level
$15–$20+ million is expected to be collected annually

Funding Source
Utility Distribution Companies recover part of the costs of the portfolio standard through current System Benefits Charges, if they exist, including a re-allocation of demand side management funding to portfolio uses. Additional portfolio standard costs are recovered by the Environmental Portfolio Surcharge on each customers' monthly bill.

Cost Cap
The Commission will continue the annual increase in the portfolio percentage after December 31, 2004, only if the cost of environmental portfolio electricity has declined to a Commission-approved cost/benefit point.

Charge
The Environmental Portfolio Surcharge shall be assessed monthly to every metered and/or non-metered retail electric service.

This monthly assessment will be the lesser of $0.000875 per kWh or:
   a. Residential Customers: $.35 per service,
   b. Non-Residential Customers: $13 per service,
   c. Non-Residential Customers whose metered demand is 3,000 kW or more for 3 consecutive months: $39.00 per service.

In the case of unmetered services, the Load-Serving Entity shall use the lesser of (i) the load profile or otherwise estimated kWh required to provide the service in question; or (ii) the service's contract kWh, subject to the caps set forth above.

IV. CRITICAL ELEMENTS

Trading
Trading is allowed. Any eligible kWh produced may be sold or traded to any
Load-Serving Entity that is subject to the RPS.

Green Pricing
Electric generators located in Arizona that are included in any Load-Serving Entity's Green Pricing program may be eligible. All Green Pricing programs must be reviewed and approved by the Director, Utilities Division.

Certification
No specific provisions exist to create renewable energy certificates.

Out-of-State
Only solar energy suppliers providing electricity reaching Arizona customers from out-of-state are eligible under this legislation.

Self-generation
Photovoltaic or solar thermal electric resources that are located on the consumer's premises shall count toward the Environmental Portfolio Standard applicable to the current Load-Serving Entity serving that consumer unless a different Load-Serving Entity is entitled to receive credit for such resources.

Flexibility
Any Load-Serving Entity that produces or purchases any eligible kWh in excess of its annual portfolio requirements may save or bank those excess kWh for use or sale in future years.

In addition, a number of credit multipliers are available:

1. Early Installation Extra Credit Multiplier: For new solar electric systems installed and operating prior to December 31, 2003, Load-Serving Entities would qualify for multiple extra credits for kWh produced for 5 years following operational start-up of the solar electric system. The 5-year extra credit varies from 0.1 to 0.5 depending upon the year in which the system started up.

2. Solar Economic Development Extra Credit Multipliers: There are 2 equal parts to this
multiplier, an in-state installation credit and an in-state content multiplier.
  a. In-State Power Plant Installation Extra Credit Multiplier
  b. In-State Manufacturing and Installation Content Extra Credit Multiplier

3. Distributed Solar Electric Generator and Solar Incentive Program Extra Credit Multiplier

4. All multipliers are additive, allowing a maximum combined extra credit multiplier of 2.0 in years 1997-2003, for equipment installed and manufactured in Arizona and either installed at customer premises or participating in approved solar incentive programs.

V. POLICY/PROGRAM ASSESSMENT

Reporting Requirement
Each utility must have its EPS surcharge rate reviewed by the ACC every 3 years.

Assessing Entity
Arizona Corporation Commission (ACC)

Report Date
not yet available

Report Name
A new report entitled the Costs, Benefits, and Impact of the Arizona Environmental Portfolio Standard serves as a cost-benefit analysis that will determine the course of future RPS policy measures.
 
  http://www.cc.state.az.us/utility/electric/CostEva1Rpt.pdf

Also, the following utility annual reports may contain relevant information.

  APS Annual report
  http://www.aps.com/my_community/Environmental/Environmental_11.html

  SRP Annual Report
  http://www.srpnet.com/financial/default.asp

  Tucson Electric Power Company (TEP)
  Demand-Side Management and Renewables Data for Mid-Year 2000
  http://www.greenwatts.com/docs/DSMAug2000.pdf

Status
According to Tom Hansen of Tucson Electric Power, the TEP has met 79.5% of its RPS goal in 2002. There is a .4% requirement goal set for 2002.

Cost Information
For the large projects, total installed system costs are now in the $5.00–$5.50 per watt-dc range or at a simple costs premium of $0.120–$0.134 per electrical kWh.

Assessment Contact
Arizona Corporation Commission, Utilities Division
1200 W. Washington St.
Metro Phoenix, AZ 85007
(602) 542-4251


VI. PUBLIC OUTREACH AND EDUCATION
Outreach/Customer Education
"General Information About Retail Electric Competition"
http://www.cc.state.az.us/utility/electric/restructuring-index.htm

Press Releases
APS http://www.aps.com/general_info/newsrelease/default.html


TEP http://www.tucsonelectric.com/Company/News/PressReleases/index.asp