As 2022 begins, Commissioner Lea Márquez Peterson of the Arizona Corporation Commission proudly reflects on her first year as Chair in 2021, noting many important achievements the Commission made last year.

“It has been an honor to serve as Chair over the past year as we made many monumental decisions such as establishing a COVID-19 policy, and taking actions related to hydrogen and electric vehicles, while focusing on the cost and reliability of utilities for Arizona’s families and small businesses. I look forward to continuing my work as Chairwoman into the new year and striving for the best possible outcomes for Arizona.”

“As the body that regulates utility services across Arizona, including electricity, gas, water, and wastewater, we have seen major improvements in each of these sectors, as well as improvements in our own internal administrative functions.”

Below is a summary of some of the Commission’s accomplishments in 2021.

Electric

In January 2021, the Commission approved a special agreement between Arizona Public Service Company (APS) and Nikola Corporation (Nikola), which pairs the production of clean hydrogen with the supply and demand curves of the grid. The special contract will help Nikola accelerate the development of hydrogen in Arizona while helping APS to balance the grid and reduce the cost of operating the grid for all other customers. (Nikola Announcement)

Additionally in January 2021, the Commission voted to have APS develop a first-of-its-kind proposal that will allow the synchronization of potentially millions of smart devices on the grid (such as smart thermostats, smart water heaters, and smart pool pumps), which can save money for customers and serve as a “virtual power plant” for utilities when resources are scarce. (Press Release) Additional progress on this was seen in October, when APS provided a progress report on the preliminary results of one of the first-ever all-source requests for proposals issued in Arizona. (Status Update)

In August 2021, the Commission received the results of an independent cost analysis, which estimates the cost impacts of two clean energy proposals: 100 percent zero-emission energy by 2050 and 80 percent zero-emission energy by 2050. (Announcement). Receipt of the analysis was necessary to comply with Arizona law, and some commissioners had been waiting nearly three years for such an analysis to be completed. The cost analysis demonstrates which of the above two alternatives would, if adopted, result in the least burden and cost to persons who would be affected by the new clean energy policies. Following the report, the Commission, for the first time held a series of town halls, asking customers to opine on whether they believed cost impacts were reasonable in light of the alleged benefits.

In November 2021, the Commission passed the first rate decrease for APS since 1996. The decision resulted in customers collectively paying approximately $119 million less each year until APS’s next rate case. The decision also reduced the company’s “on-peak” time-of-use hours to 4-7 p.m., making it easier for customers to shift their energy usage and save money during the times of day when energy costs are most expensive. It also awarded $10 million in ratepayer funds to communities impacted by the early retirement of coal-fired power plants, such as the Cholla Power Plant near St. Johns in Arizona, and the Navajo Generating Station and Four Corners power plants on the Navajo Nation. In addition, APS committed to providing $25 million of its own shareholder funds which does not require Commission approval.

In December 2021, the Commission approved the first state-wide transportation electrification plan and roadmap which is designed to promote the adoption of electric vehicles in Arizona and lessen greenhouse gasses. The roadmap forecasts the development of the electric charging infrastructure needed for the growing electric vehicle sector while also incentivizing commercial consumers to charge during the day (such as at work) when solar energy is most abundant.

Water

In July 2021, the Commission voted to establish a Water Task Force to address serious concerns by regulated water utilities related to drought in response to shortages on the Colorado River. Once assembled, the mission of the Water Task Force will be to provide policy recommendations to the Commission and prepare regulated utilities for challenges ahead regarding water shortages and drought.

In September 2021, the Commission established and held the first annual Water Preparedness Meeting to ensure regulated water utilities are prepared for drought and shortages in ground and surface water supplies.

In November 2021, the Commission identified key issues in the regulation of very small water utilities, which result in barriers to acquisitions by capable water service providers. A newly designed process will help clarify the value of sometimes struggling companies as they seek investment opportunities or acquisition by larger providers.

In December 2021, the Commission adopted changes to the rate application requirements for small water companies, which make it easier for owners and operators to safely and reliably maintain and repair their aging water infrastructure without necessitating dramatic rate hikes for customers. The decision follows-through with Chairwoman Márquez Peterson’s commitment to reform and streamline the rate case process for small water companies.

Administration

While the utility work of the Commission is vital, Chairwoman  Márquez Peterson knows that the public trust of its Commission is of utmost importance. To help improve public trust in 2021 the Commission strictly adhered to its strengthened Code of Ethics and enforced rules prohibiting ex parte communications.

In April 2021, the Commission readopted, strengthened, and improved its Code of Ethics, ensuring that its provisions would apply to all persons and entities that lobby the Commission and have a financial interest in the outcome of its decisions. The changes, which were proposed by Chairwoman Márquez Peterson, ensure that all interested parties and commissioners will play by the same rules, and that undue influence can be monitored and prevented from all sides of Commission issues, regardless of stakeholder affiliation.

In August 2021, the Commission saved taxpayer and ratepayer dollars by using zero-balance budgeting to structure the Commission’s proposed budget and salaries. This required each Commission division to demonstrate administrative efficiency and productivity before making requests for budget increases to the Legislature. 

Finally, as a part of the Chairwoman’s commitment to making it easier for the public to engage with the Commission, improvements were made throughout the year to the organizational website and other services to improve the user experience. In January 2021, the Commission reinforced the need for spanish interpreters for public meetings and began providing spanish translation of press releases. In December 2021, the Commission requested that the individual voting records for each Commissioner be placed on the Commission website for greater public transparency. 

“Reflecting on this busy year has reinforced for me what important work we do at the Arizona Corporation Commission,” said Chairwoman Márquez Peterson. “Last year we made huge improvements both to our internal processes and procedures, as well as major policy decisions that will help the future of Arizona and its economy. I plan to continue to work alongside my fellow commissioners to keep modernizing the way Arizona utilities are regulated.”