Lea Márquez Peterson

Arizona Corporation Commission Leads in Energy Policy

From the Office of Chairwoman Márquez Peterson

For Immediate Release | 01-26-2021

Media Contact | Nick Debus

Direct |  602-542-0728

E-Mail | NDebus@azcc.gov

Arizona Corporation Commission Leads in Energy Policy: Adopts First-of-Its-Kind Proposal from Chairwoman Lea Márquez Peterson to Save Consumers Money, Enhance the Electric Grid, and Increase the Use of “Smart” Technologies

REMOTELY FROM TUCSON - The Arizona Corporation Commission in December 2020 voted unanimously to adopt a proposal from Chairwoman Lea Márquez Peterson to direct the state’s largest investor-owned electric utility, Arizona Public Service Company (APS), to develop a tariff that will allow for the aggregation of distributed demand-side resources, such as smart thermostats, connected hot water heaters, and energy storage systems.

Stakeholders such as technology companies, consumer product manufacturers, and third-party aggregators that are involved in providing energy services or devices for the grid (such as battery storage, energy efficiency, smart devices, smart appliances, internet of things, home energy monitoring devices, and ancillary services) are encouraged to contact the Commission and APS to work collaboratively on the development of the tariff.

Once fully developed and approved by the Commission in a subsequent vote, this tariff will compensate aggregators of any/all distributed demand-side devices for the value each resource provides to the grid. This includes compensation for the value of energy, capacity, demand reduction, load shifting, voltage support, and other ancillary services, to name a few. As a result of the compensation, a portion of the benefits should flow to Arizona consumers who adopt new technologies, and a portion should stay with the aggregators for the value they provide for synchronizing otherwise isolated resources.

The benefits of this amendment are numerous. Namely, it will mean a proliferation of cost-effective energy efficiency programs and grant APS customers better access to demand response technologies that can decrease demand on the electrical grid during high-use periods. This will all translate into lower cost systems and lower energy costs throughout the state.

“Smart devices such as smart thermostats, smart water heaters, and others are referred to as demand-side resources because they allow customers and utilities to team together to use the least cost energy most of the time,” said Chairwoman Márquez Peterson. “Demand-side resources not only give customers more tools to control their utility bills, but it also creates a more efficient grid for utility services providers, setting an example that other jurisdictions can follow, if Arizona gets this right. A more efficient grid means better pricing for customers. So, it truly is a win-win scenario, which could be applied nationwide.”

“Moreover, the proposal allows aggregators of all kinds and technologies to participate in APS’s tariff, opening the door to potentially untapped market opportunities and economic development,” said Márquez Peterson. “Previously, rooftop solar was the only tool in the distributed energy toolbox. But now, we have so much more. Air conditioners, appliances, devices, and batteries, even entire homes, as long as they are connected to the internet, can now be called upon to shift and respond to the grid. That’s extremely valuable.”

“The State of Arizona also represents one of the most ideal jurisdictions to launch an all-encompassing demand-side resource tariff,” said Márquez Peterson. “Arizona Public Service Company is one of the first, if not the first, electric utility in the nation to achieve nearly 100% deployment of Advanced Meter Infrastructure (AMI) in its service territory.”

According to the company, APS achieved approximately 99% penetration AMI for residential customers in 2014 and 98.5% penetration for commercial customers.

“Our smart infrastructure, combined with Arizona’s digital connectivity and demand curve, which is unique to the Western United States, makes the Desert Southwest, and Arizona specifically, the perfect place to study demand-side optimization and lead on cutting-edge energy innovations and regulatory policies,” said Márquez Peterson. “Our accomplishments could serve as a model that provides unbound potential and efficiency on the grid like we’ve never seen before.”

According to APS, “An aggregation tariff incorporating values for a comprehensive set of operating characteristics like this has not been established elsewhere in the country. This tariff will make the state of Arizona the leader in aggregating these new and evolving demand-side technologies.”

According to the Southwest Energy Efficiency Project (SWEEP), experts in the industry are calling the concept “incredibly innovative and groundbreaking” and are “excited to see what Arizona brings forwards in terms of a new tariff and mechanism to enable customer side technologies to help diversify and bring flexibility to the grid.”

SWEEP commended Chairwoman Márquez Peterson’s proposal saying it, “supports a more comprehensive approach to serving customers and meeting the needs of the energy system at lowest cost.” A copy of SWEEP’s letter in support of Chairwoman Márquez Peterson’s proposal  can be found here.

Stakeholders are encouraged to participate in the development of the tariff by contacting Chairwoman Márquez Peterson's Office here.

The Commission has requested the tariff be developed and filed for final Commission review and approval by April 1, 2021.

A copy of Chairwoman Márquez Peterson’s proposal can be found here.

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