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Renewable energy surcharge bedevils regulators

KINGMAN - The Arizona Corporation Commission is mulling the best way to avoid sticking electric customers with the bill for the state's renewable energy standards.

"We have got to address the climbing cost of the surcharge," said ACC Commissioner Gary Pierce.

The commission passed the Arizona Renewable Energy Standard and Tariff in 2005. The law requires all electricity providers to get at least 15 percent of their energy from renewable resources by 2025.

But as the state gets closer to reaching that goal, the cost to customers has increased, Pierce said. This is because giant industries, such as mines, use so much power that it skews the numbers. Pierce wants to change that.

He's been sounding the warning bell on the problem since 2010 when the renewable energy surcharge for UniSource Energy Services customers nearly reached $9 a month.

UniSource covers a large, rural area in northern Arizona, including Mohave County, and serves at least one large mine, Pierce said. The area doesn't have the population to support the cost of renewable energy with the amount of energy the mine draws.

UniSource Energy Services spokesman Joseph Barrios said the company is aware of the concerns the commission has with the surcharge.

"We really don't have an opinion on it because we haven't had a chance to discuss it with the commission," he said.

Pierce was able to convince the commission to give UniSource a waiver that capped the utility's renewable energy surcharge at less than $5 a month for the year, but that number is slowly creeping up again.

The energy surcharge rate is figured using the total amount of power a sells and dividing it evenly amongst all of the company's ratepayers.

In order to get the discussion rolling again, Pierce introduced and then withdrew an amendment to the law in January, that would have excluded sales of electricity to the state's largest customers - three megawatts or greater - from the calculation of the renewable energy surcharge. Those large companies would still have to pay the surcharge.

"This was a wake-up call to all of commissioners. We need to think about how to keep this cost under control," he said. "How high will we let these charges climb because of legacy costs (such as mines)?"

UniSource is more than willing to discuss the situation with the commission, Barrios said.

Another solution Pierce suggested was to extend the deadline for state's renewable energy standards.

"We're already well beyond our goals for this year," he said.

Barrios confirmed that UniSource exceed its 2011 goal for renewable energy sources for both commercial and residential power and is on track to exceed its 2012 goal.

Pierce said he doesn't want to get rid of renewable energy standards.

"I think renewable energy has its place. All sources of energy have their place. Solar power is an especially good source of peak time power," he said. "But I'm not going to abuse the ratepayers."


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