Phoenix, Ariz.— At the Arizona Corporation Commission’s December 3, 2025, regular open meeting, the Commission adopted by a vote of 5-0 Arizona Public Service Company’s (APS) Second Amended 2024 Demand Side Management Implementation (DSM) Plan  (E-01345A-23-0088). The plan’s budget was reduced from $91 million to $40 million by an amendment from Chairman Kevin Thompson and was further refined by an amendment from Vice Chair Nick Myers which eliminated additional subsidies.

During the open meeting, Vice Chair Myers questioned the alleged value of energy efficiency (EE) products and advocated for a more robust Virtual Power Plant strategy.  

Myers Questions Value of EE

“If EE products are so beneficial to customers, why do they need to be mandated and subsidized by other customers?” stated Vice Chair Myers. “If these EE products are so valuable, customers should want to voluntarily adopt these EE measures at their own cost to reduce their own energy bills. These expenses should not be shifted to other customers.”

During the open meeting, the Vice Chair expressed concerns with the overall cost of these EE and DSM programs. “For example, residential EE programs save about 60 MW/year but cost $26.489 million, or about $441,000 per MW/year. Likewise, non-residential EE programs cost about $493,000 per MW/year. DSM comes to about $92,000 per MW/year,” stated Vice Chair Myers. “To offer a comparison, I did some quick research and looked at recent costs for natural gas generation builds, and depending on many factors, the cost over 30 years, which is the expected life of the asset, including yearly O&M expenses, appears to be around $45,000-88,000 per MW/year.”

Myers Champions a More Robust Virtual Power Plant Strategy

Although skeptical about the value of many EE measures, Vice Chair Myers expressed full support for a more robust Virtual Power Plant program. “Specifically, I want to see APS (and ultimately the other utilities) bring forward a more cohesive Virtual Power Plant strategy—one that possibly consolidates the individual programs we’ve been treating as separate silos,” said Vice Chair Myers. “Right now, we have a Cool Rewards program, a Commercial & Industrial demand response program, storage pilots, and managed EV-charging. Each has value, but they are not functioning as a unified grid resource. They can be and should be.”

“A VPP should not be treated as a niche pilot or a scattered set of incentives. It should operate as a true grid asset—one capable of delivering firm capacity, supporting reliability events, and reducing the pressure on ratepayers to build traditional generation or wires solutions prematurely,” added the Vice Chair. “We have the technology, we have the customer interest, and Arizona’s load profile makes this increasingly necessary.  Importantly, I think if we have a better, more cohesive, and less scattered approach, I think a robust VPP could be a huge asset with regards to reserve margins, peak shavings, and reliability at a cost that is less than building new infrastructure.”

Vice Chair Myers’s adopted amendment directs APS to “evaluate and propose in its next Demand Side Management Implementation Plan ways to expand and maximize the benefits of their VPP programs and initiatives, including an analysis of customer compensation.”  

In concluding his vote explanation, Vice Chair Myers stated, “So my vote today reflects both my support for the improvements we’ve made to the current DSM plan and my clear expectation that the next filing must take a meaningful step forward. In the coming year, I will be looking for a DSM plan that modernizes these programs, unifies them under a VPP structure, and positions APS to use these distributed assets with fewer artificial limitations and greater operational value to the grid.”

For more information, please contact Vice Chair Myers at myers-web@azcc.gov.