It is the hottest, most expensive campaign in Arizona this year — and it’s not the one for the U.S. Senate.
The battle — which has already cost nearly $54.7 million, or about $11.50 for every eligible voter — is over solar power. A ballot initiative would amend the Arizona constitution to require electric utilities to use renewable energy for 50 percent of their power generation by 2035.
With its abundance of sunshine, that should be an easy reach for Arizona. Yet the state gets only 6 percent of its energy from the sun.
The fiercest foe of the measure? Arizona’s biggest utility. Arizona Public Service, or APS, has poured $30.3 million into a political action committee called Arizonans for Affordable Electricity. In an aggressive ad campaign, the group asserts the measure would cost households an additional $1,000 a year.
On the other side is Clean Energy for a Healthy Arizona, an alliance of about 50 organizations. In its corner is Tom Steyer, the billionaire investor and political activist from California who donated virtually all of the $23.6 million raised through the end of September. Only two Senate races this year, Texas and Florida, will feature more spending.
The battle has been ugly, replete with allegations of fraud, corruption and phony economic analyses.
Beneath the noise, the fight is over two fundamental questions: Are advocates of more solar going to deliver too much of a good thing? Or is a recalcitrant utility standing in the way of economic competitiveness and sensible climate policy?
The ballot measure “ is really a question about which energy future we’re going to have,” said D.J. Quinlan, an Arizona political consultant who is communications director for Clean Energy for a Healthy Arizona.
Arizona has a modest requirement, established in 2006, that utilities rely on renewable energy for 15 percent of supplies by 2025. That target has been met.
“Even at that time the utilities were claiming the sky was going to fall, that they would not able to meet it and the costs were too high,” said Kristin Mayes, a Republican, law professor and former chairman of the Arizona Corporation Commission, the state’s utility regulatory body. “None of that came to pass.”
The effort to boost solar is also tied to the state’s economic competitiveness, Mayes said.
“Many of the very corporations we want to attract to Arizona — like Google, Amazon, Microsoft, L’Oréal, Apple — have their own 100 percent renewable standards,” she said. “How can Arizona possibly compete for them when we have a utility that says no new renewable energy. That’s impossible.”
The political temperatures have been rising since early summer.
Mayes, who helped write the new measure, said that “unfortunately we are now in a situation where the state’s largest utility has decided to fight solar energy, something overwhelmingly popular in Arizona.”
The APS-backed Arizonans for Affordable Electricity has savaged the “California liberal and activist” Steyer, calling him a “hypocrite” who is “spending millions of dollars to trick Arizonans into voting for a clean energy scheme that will benefit guess who? Tom Steyer.” It also noted that Steyer lives “in a San Francisco mansion.”
Steyer rejects that description. After making money as a hedge fund manager, he has devoted huge amounts of money on promoting climate measures around the country. He has launched an organization, NextGenAmerica, to register young voters. And he has led a campaign to impeach President Trump. He is widely expected to run for president himself.
“Their whole approach is to beat up on Tom,” Aleigha Cavalier, a spokeswoman for Steyer, said. “None of it is true. We’re there because Arizona has the biggest potential for solar and to create energy jobs.”
Quinlan rejects the notion that the proposition is the work of people from outside the state. “This is a ballot measure that’s been run by Arizonans and written by Arizonans,” Quinlan said. Among the groups pushing for the plan is Chispa Arizona, an affiliate of a League of Conservation Voters.
Steyer has fired back with his own ads, charging the Arizona political establishment with corruption. He has seized on sizable contributions — at least $4.2 million in 2016 alone — that APS and its parent, Pinnacle West Capital, made to a political action committee that promoted members of the Arizona Corporation Commission who are sympathetic to their view. Since the ACC regulates utilities, many observers say such contributions are inappropriate.
Earlier APS and supporters of the ballot initiative clashed over the signatures required to put the measure known as Proposition 127 up for a vote. The coalition collected 437,000 signatures — twice the number needed.
The measure’s supporters said that Arizonans for Affordable Electricity interfered with people gathering signatures, alleging that it tried to pay people to stop doing so.
In July, the utility challenged the signatures in court, alleging fraud and arguing that people had been tricked into signing the petitions. But the Clean Energy for a Healthy Arizona coalition brought 900 people who had gathered signatures to the court to defend their efforts. Maricopa County Superior Court Judge Daniel Kiley rejected the utility’s argument in a 33-page ruling.
“I’m not interested in re-litigating the petition gathering process,” said Matt Benson, a consultant acting as spokesman of Arizonans for Affordable Electricity. “They’re on the ballot.”
The accusations didn’t stop there.
The proposition supporters have also cried foul over Arizona Attorney General Mark Brnovich’s revision of the language that appears on the ballot. He replaced nearly half the language, inserting the idea that the renewable mandate would take effect “irrespective of cost to consumers.”
The new language “is certainly eyebrow-raising because it cites information exogenous to the ballot measure itself,” Eric H. Spencer, state election director, wrote in an email obtained by Clean Energy for a Healthy Arizona, in a Freedom of Information Act request. “But I’m sure you’ve calculated the legal and political risks of adding that.”
Shortly after the wording was set, Arizonans for Affordable Electricity started running ads attributing the new language to the measure’s authors. Brunn Roysden, a litigation official in the attorney general’s office, defended the action, saying it was “an attempt to provide necessary and appropriate information to the voting public.”
The narrative about the cost to consumers has proven effective. An Arizona Republic and Suffolk University poll released Oct. 4 showed Proposition 127 trailing 13 percentage points behind the ‘no’ vote drive with a substantial portion of the electorate undecided. The Arizona Republic editorial page opposed the measure, citing the inflexible nature of a constitutional amendment.
The political uproar around the measure threatens to drown out discussion of a serious question: Can you get too much of a good thing like solar?
Many experts say the adoption of a 50 percent solar target would require five more gigawatts of solar and could create a glut of electricity supplies around midday. Yet solar would not provide enough electricity in the late afternoon and early evening — peak consumption times when people return home from work. In the winter, solar could provide all the electricity needed for an hour or two.
That would make it tricky to ramp other energy sources up and down. The Palo Verde nuclear plant, for example, can’t be switched on and off that quickly.
The utility could try to increase midday demand by expanding electric vehicle recharging stations and offering cheap midday prices, but that might not be enough.
Some solar advocates say excess could be sold, but neighboring states are already planning to amp up their own production of solar power. Nevada is the only state in the country with more solar energy potential than Arizona.
The solution could be storage, which is rapidly getting cheaper. It could spread out solar’s generation for use two to four hours until later in the day. Arizona’s storage needs would be massive by today’s standards and costly at today’s prices. But Wood Mackenzie and GTM Research forecast a ninefold increase in storage installed by 2023, with prices tumbling as much as 80 percent by 2040.
Jeff Burke, APS director of resource planning, argues that the imbalances would force the closure of the 32-year-old Palo Verde nuclear plant, the nation’s largest power plant, which provides about 25 percent of the power APS supplies to customers. Closing it would end revenue from the plant and incur decommissioning costs that would otherwise come much later. That’s a major reason the utility’s cost estimates for consumers is so high.
Tuscon Electric’s estimate is half as large. The Natural Resources Defense Council, working with the consulting firm ICF, says ramping up solar would actually save money.
“We can quibble about how much rates are going to go up, but the broad consensus is that Prop 127 will increase utility costs,” Benson said. “That is the crux of this campaign.”
Quinlan argues the nuclear plant will stay open. For one thing, APS owns only 29 percent of the nuclear plant and other partners might want to keep its three units running.
“Even if you’re not able to sell the excess power, you’d have a lot of options before turning off the nuclear plant, which you just don’t do,” Quinlan said.
Recently APS told regulators that it wants to build a 5,400 megawatt fleet of natural gas plants over 13 years, which would be more flexible than nuclear but which would add to greenhouse gas emissions. Burke said no decisions had been made on those.
Solar supporters say it would be cheaper to shut down the utility’s carbon-emitting coal operations, which supply about 20 percent of APS’s power. Some of them are scheduled to close in coming years.
The political mayhem has drawn attention not just in Arizona but also on Wall Street, where analysts and investors are trying to figure out how this will play out. Normally analysts rely heavily on what company’s executives say about their businesses. However, Credit Suisse utility analyst Michael Weinstein recently hosted a conference call with Quinlan and another supporter of the solar ballot initiative.
Weinstein has done a model in which he shuts down coal plants and ramps up solar to 50 percent. “We think the need for storage has been underestimated,” he said, because “significant amounts are required to preserve inflexible nuclear generation during midday peak solar production.”
He estimates that APS would need to install six gigawatts of two- to four-hour storage at a cost of $6 billion to $7.5 billion over 17 years. The utility estimates $10 billion in costs, including new natural gas plants to deal with consumption surges.
Even if the proposition is defeated, there is a chance that the utility regulators will demand changes. Andrew M. Tobin, one of the five commissioners, has proposed requiring a combination of renewable energy and nuclear power for 80 percent of the state’s power sources by 2050, a very long time frame.
Renewables are “good for investors if done properly,” Weinstein says. “And it may be done rapidly because I think costs are coming down faster than anyone expected.”
While seeking to block solar, APS is also promoting its own small investments in it. It signed a deal to buy 65 megawatts of solar power and a 50 megawatt storage facility that could deliver power for more than three hours. A company video shows a toddler walking into the sunlight; a father and two daughters reading a tablet; and solar panels stretching across a desert.
But the power output from that purchase is a fraction of what’s needed from a climate perspective — just 1.2 percent of the proposed natural gas generators. APS has long opposed solar, for a time imposing a metering charge for homeowners who install rooftop solar.
Mayes says solar and storage is competitive already.
“What makes the APS claim so patently absurd is what’s happening on the ground,” she said. Utility requests for proposals have “surfaced solar and wind costs that beat coal and natural gas hands down.”
Tucson Electric recently received a bid of 4.5 cents per kilowatt hour for solar plus storage.
“These are record low prices for renewables that by their very nature mean that this will save Arizona ratepayers money,” Mayes said. “The great story of today is that renewables have become the least cost option.”