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( R Pm wO 41; e .4 x\Q, l 4 llllllllllllllllll llllllllll Qlgllll IIIIII mll T fa'w;,4,;3 ORIGINAL Lu 0 I lI s I 8 o r - . I if . 3 I W"3'" ~ s AZ CORP LL. r.<'8_j§ o " , 0, EPf'l(CT f"" " 4 , D I T A T o n u s u v l u . l v v u l n u . s.1912n* 2918 FEB -`l p 3: 29 M e m o r a n d u m From the office of Commissioner Andy Tobin Arizona Corporation Commission l 1200 w. WASHINGTON Ari2ona Corporation Commission l PHOENIX, ARIZONA DOCKETED (602) 542-3625 FEB 7 2018 TO: Docket Control DOCKE B DATE: February 7, 2018 FROM: Commissioner Andy Tobin's Office SUBJECT: Doc. No. E-00000Q-16-0289 Commissioner Tobin is docketing a fact sheet and question & answer information relating to the Arizona Energy Modernization Plan in order to help answer questions and provide as much information regarding the policy as possible. ANDY TOBIN c0x1mIssloxi;Rs COMMISSIONER T()M FORESE Chairman 4.¢' .'wx BOB BURNS $7 JUSTIN OLSON 24 Direct Line: (602) 5423625 ANDY TOBIN 3 . \ I fa Email: Tobin-Web(aazcc.gov BOYD w DUNN ; 9 ARIZONA CORPORATION COMMISSION Energy Modernization Plan Fact Sheet and Q&A 1. Objective of the Arizona EMP: Arizona has been a national leader in development of clean energy resources to power our state's rapidly growing economy, from the development of hydropower on the Salt and Verde rivers and the construction of Palo Verde Nuclear Generating Station. As the rise of new technologies changes the way we use our energy grid, our state must once again take the lead and pave a path to a modernized grid, while providing affordable energy for consumers. 11. The Scope of the AZ EMP is a comprehensive update to Arizona's energy policies to accomplish lowers prices for consumers, cleaner energy, and greater grid security. The plan revolves around the following policy areas: a. Clean Energy - A focus on moving to generating resources that operate with zero net emissions beyond that of steam and including energy efficiency. This will be accomplished by modifying the current Renewable Energy Standards and Tariff (REST) and using its policy framework to develop the Clean Resources Energy Standard and Tariff (CREST). The targets and goals set in the REST, such as the renewable targets, will remain unchanged under the CREST. However, the CREST will now include other measures such as: i. The new clean energy target that would ser the target of80% clean resources in l the stale 's energy portfolio by 2050. i l ii. This clean energy target would include solar, hydro, wind, nuclear energy i l efficiency, and other measures such as energy storage. b. Energy Storage - The policy supports all forms of energy storage within the pursuit of a 3,000 MW energy storage target by 2030 in Arizona. i. This includes electrochemical like lithium ion, mechanical systems similar to compressed air, thermal such as molten salt applications at Solana, and gravitational storage like pumped hydro applications. c. Forest Management and Biomass Related Energy - This policy supports the state's efforts to thin Arizona's overgrown forests by requiring utilities to help fund the efforts through the purchase of biomass derived energy. The total amount needed to clean Arizona's forests is 90 MWs, which equates to roughly 50,000 acres per year, over a 20- year period. However, the Commission only regulates electricity provided to approximately 66% of the State's electric customers, therefore, the amount Arizona's regulated utilities must procure will be 60 MWs. i. Regulated utilities currently procure roughly 13 MWsfrom a bioenergy generating station in Arizona. SRP an Arizona non-regulated electricity utility, procures roughly 14MWsfrom the same facility. Page 2 d. Dispatchable Clean Energy - Many of Arizona's existing energy policies do not encourage the adoption of new clean energy resources, nor protect the ones we already have. The state's consumer advocate office recommended a plan to fix this through a policy we are titling the Clean Peak Target. i. The Clean Peak Target (CPT) uses clean energy in a way that benefits all ratepayers by harnessing clean energy fo reduce peak demand when our electricity demand is the highest during the day and year. ii. Based on the state 's consumer advocate 's recommendations (R UCO) and gathering extensive information from experts and stakeholder, each regulated utility .shall set a Clean Peak Target that incorporates existing and new clean energy sources. To set this target, utilities will calculate the existing levels of clean energy sources used during peak times ro establish their baseline for setting their clean peak target. Each utility will be responsible for increasing this baseline by 1.5%per year on average until 2030. e. Energy Efficiency (EE) is critical to the state meeting its 80% clean energy target. The current EE Standards will be sun setting in 2020. This policy directs Commission staff to start a process to implement new EE initiatives, within 120 days of the adoption of this policy and shall be contained within the CREST. f. Electric Vehicle Preparation - As the world moves into the future, the electronification of the transportation sector is happening before our eyes. Currently, there are no roads in Arizona that are shown on the Federal Highway Administration's Electric Vehicle Highway map showing the possibility of electric vehicle travel across the state. Additionally, parts of Arizona are close to being considered in 'severe' nonattainment with the EPA clean air standards. To help support the Governor's commitment to developing an Electric Vehicle Corridor in Arizona and provide relief from the onerous requirements that come from being in 'severe' nonattainment, this policy will start the process to modernize Arizona's EV infrastructure. i. Regulated utilities shall propose EV infrastructure plans infuture CREST Implementation Plansfor Commission approval which will include the following spegfffg infrastructure: 1. in new home construction programs 2. in existing home renovation programs 3. on strategic commercial and industrial / largefleet owners 4. on major highways and interstates ii. The objective is to provide citizens with all the necessary charging options needed./or widespreadadoption ofelectric vehicles. 1200 WEST WASHINGTON STREET; PHOENIX ARIZONA 850072927 /400 WEST CONGRESS STREET: TUCSON ARIZONA 8570 l www.azcc.gov Page 3 Questions and Answers regarding the AZ EMP and where Arizona's energy sector currently is, would go without AZ EMP, and where AZ EMP would lead Arizona. l. Why is this policy necessary for Arizona" In the last five years, there have been significant changes to Arizona's energy grid due to consumer demand, environmental needs, consumer protections, cost efficiencies in renewables, and more. Additionally, the pending closure of the Navajo Generating Station and the changes to net metering are other significant recent changes. These changes have resulted in Arizona's current policies becoming outdated. The AZ EMP is a modernization of Arizona's energy policy to guide Arizona towards an affordable clean energy future. 2. What is the Renewable Energy Standard and tariff (REST) and what is its purpose" The REST is the Commission's rule under Title 14 Article 18 of the Arizona Administrative Code that requires utilities to distribute a specific percentage of renewable electricity to their customers. In 2006, this percentage started at 1.25% meaning that of the total amount of electricity an energy utility delivers to their customers must come from a renewable source. Per the rule, utilities must have 15% of their electricity delivered coming from renewables after 2024. Under these rules, utilities are allowed to build up REST credits and buy or trade these credits to meet their percentage requirements. The purpose of this rule is to diversify our state's energy mix and improve Arizona's energy diversity. 3. How will the REST change and what inside the policy will be affected? The REST will now become the Clean Resource Energy Standard and Tariff or (CREST) which will contain and KEEP all the above described requirements and rules. The REST will, in simple terms, be improved and added to so that the mle has the wider scope of including a pathway for Arizona to a clean energy mix. The 15% renewable requirement and renewables credits will still be contained in the mle, but with the additional goals outlined in the AZ EMP. 4. Why does the plan have a clean resource target of 80%? What is the purpose of targeting 2050? The target of 80% is a well-studied calculation based studies such as the "Renewable Electricity l Futures Study" completed by the National Renewable Energy Laboratory and expert testimony from related cases. Studies show that technologies in renewables plus more flexible infrastructure are "more than adequate to supply 80% of total electricity generation in 2050." In many l l technologies, their efficiency and development will exponentially improve resulting in greater l reductions in emissions, water use, and costs. *Notes "RE Futures funded by the U.S. Department ofEnergy's Ojiee ofEnergy Efficiency and Renewable Energy, is a collaboration with more than 110 contributors from 35 organizations including i national laboratories, industry universities, and non-governmental organizations. (LINK: https://www.nrel.gov/analvsislre-futures.html) i i 5. Why does the plan specifically target 3000 megawatts of energy storage" What is the l l purpose of targeting 2030" l I As energy storage solutions have decreased in cost and become more efficient, the Commission I l has seen multiple energy storage projects come before the commissioners for approval due to these efficiencies in the technology.
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