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Arizona’s Renewable Power Mandate Cost the Average Household $304 in 2017

September 7, 2018

The average Arizona household will likely pay over $1,000 per year in additional costs if voters approve a renewable power ballot initiative this November.

According to data from the U.S. Energy Information Administration (EIA), Arizona’s 7 percent renewable power mandate cost the average Grand Canyon State household $304 in higher electricity costs in 2017, including $131 in higher direct household electricity bills. The data suggest Arizona households will pony up at least hundreds—and likely thousands—of additional dollars each year in electricity costs if voters approve a November ballot initiative that aims to hike the state’s renewable power mandate to 50 percent.

The Arizona Public Utilities Commission (PUC) in 2006 adopted new rules imposing gradually increasing renewable power mandates on Arizona electricity consumers. In 2006, Arizona generated 1 percent of its electricity from renewable sources. Under the 2006 rules, electricity providers were required to generate 7 percent of their power from renewable sources in 2017. The current rules top out at a 15 percent renewable power mandate in 2025.

Since 2006, when the state PUC imposed the current renewable power mandates, Arizona electricity prices have risen by 30 percent. However, in the entire United States, electricity prices have increased by only 19 percent. Arizona electricity prices were 7 percent below the national average in 2006, but they are now higher than the national average. A ballot initiative sponsored by California billionaire Tom Steyer and proposed for this November’s election would dramatically hike the renewable power mandate to 50 percent by 2030.

Nearly half the states do not have renewable power mandates. Of those that do, only California and Hawaii have mandates that are more aggressive than what is being proposed in Arizona.

Renewable power is significantly more expensive to produce than conventional power, which is why wind and solar power advocates aggressively promote and receive massive taxpayer subsidies and renewable power mandates. The EIA reports wind and solar power receive nine times more federal taxpayer dollars in subsidies than all other power sources combined. Even with these generous subsidies, the high costs of generating wind and solar power mean renewable power would comprise very little, if any, electricity sales without renewable power mandates. A study by the left-of-center Brookings Institution, for example, found replacing conventional power with wind power raises electricity prices 50 percent, and replacing conventional power with solar power triples electricity costs.

Not only did the average Arizona household pay an additional $131 in 2017 in higher direct electricity bills, Arizona’s commercial and industrial sectors were also socked with higher electricity rates. After these higher bills were passed down to Arizona households, the average household paid $304 in electricity prices above what would have occurred had prices risen at the same rate as the national average. And it’s important to remember the extra $304 in household electricity costs resulted from a renewable power mandate increase of merely 6 percent. At that pace, ramping up the mandate to 50 percent would cost the average household an additional $2,179 per year compared to present electricity costs, or $2,483 per year versus a scenario without a renewable power mandate.

Liberal San Francisco billionaire Tom Steyer is bankrolling the Arizona ballot initiative, as well as a similar ballot initiative in Nevada. After seeing people, businesses, and jobs flee the Golden State as a result of higher taxes and skyrocketing energy costs, this November’s ballot initiative gives Steyer a chance to make Arizona’s energy costs more like California’s.

Article Tags
Energy
Author
James Taylor is a senior fellow for environment and energy policy at The Heartland Institute.
jtaylor@heartland.org

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