Tuesday, September 22, 2009

Goldwater Institute: Renewable energy rules: Defying the market, technology, and the constitution

Whenever I describe the Goldwater Institute's legal challenge to the Arizona Corporation Commission's renewable energy rules, a question often arises: why are you against renewable energy?

solar panelsThe answer is easy: we're not. Renewable energy fosters energy independence, and the government should not interfere with the rapid development of energy alternatives. Indeed, we recently argued in favor of allowing firms to facilitate installation of commercial solar panels without the Commission's regulatory oversight.

But nor should it act as if technology and cost obstacles do not exist. Wind power, for instance, faces huge distribution challenges. Solar power heavily uses water, which presents a bit of a problem in the desert, and cannot yet be efficiently delivered without heavy subsidies.

For the Commission, cost and technology are no object. It has decreed that the state's utilities under its jurisdiction must provide 15 percent of their energy from specified renewable sources--not including hydro or nuclear--by 2025. Its sweeping rules purport to govern almost every facet of the utilities' business decisions regarding renewable energy.

The rules far exceed the Commission's limited constitutional authority to set rates. When the Maricopa County Superior Court ruled otherwise in the opening round of our legal challenge, Commission chair Kris Mayes said the decision would "keep electricity rates as low as possible." To the contrary, the Commission's own staff projected the rules would cost consumers--who will pick up the entire tab--at least $2.4 billion above the cost of conventional energy. The burden falls most heavily on small businesses, which already are paying up to $118 more per month in surcharges alone. Mayes wants to increase the renewable energy requirements to 25 percent, which could end up costing small businesses more than $1,000 per month in extra utility charges.

The Commission's misguided regulations will persist until a higher court reins it in or until the Legislature reclaims the authority over energy policy that the renegade Commission has stolen from it. Until then, ordinary Arizonans will pick up the tab for this utopian scheme.

Clint Bolick is director of the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

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