Corporation Commissioner Kevin Thompson amended several provisions in a recent proposal for UniSource Energy’s (“UNS”) Demand Side Management (“DSM”) Energy Efficiency (“EE”) program. Thompson shepherded ratepayer-friendly amendments that eliminated or revised several proposals. Thompson’s amendments reigned in ratepayer-funded incentives to contractors and sales consultants and focused on prioritizing programs that provide greater value to residential customers and target low-income customers.

“Before increasing ratepayer surcharges to blindly expand energy efficiency programs, it’s important to address inefficiencies in existing programs, eliminate financial rewards for private entities, and ensure residential and low-income customers receive adequate representation in approved programs,” said Commissioner Thompson. 

DSM is a ratepayer-funded surcharge that finances Commission-approved EE programs, which are implemented by UNS and other utilities, with the goal of reducing energy load and promoting energy efficiency. During 2022, the utility spent just over $2.7 million in ratepayer funds on DSM EE programs. 

These programs can provide a valuable role in managing peak load, but they come at a cost to the ratepayer. The proposal called to vastly expand the existing UNS EE budget, with nearly $5.8 million in ratepayer-funded programs up for consideration. An increase in the current ratepayer monthly surcharge would require future authorization from the Commission. 

Commissioner Thompson tackled ratepayer funded incentives weaved throughout the DSM EE programs, noting that many of the proposed programs provided incentives and rebates to third parties with financial stakes in the adoption of certain measures or the installation of certain products. Several incentives and payment reward programs were eliminated from the proposal, including: 

• Incentives to homebuilders to install energy efficient devices in certain new homes
• Bonus incentives to sales consultants
• Marketing stipends for third parties to promote certain programs
• Project incentives to contractors
  

The majority of new programs proposed by the utility targeted commercial and industrial users. While those segments also pay utility bills, Commissioner Thompson expressed concerns that the majority of UNS’s customers are residential and the proposals were of limited value to the public.

“Commissioners must look out for the ratepayer and we can’t haphazardly spend millions of dollars in ratepayer funds when there are concerns with the way current programs are being deployed,” said Thompson. “Residential customers shouldn’t be subsidizing purchases for hotel room HVAC units, electric forklifts, appliances for new homes, and truck refrigeration units.”

For more information about these amendments, please contact Ryan Anderson at thompson-web@azcc.gov