Arizona state regulators voted this week to strip $50 million from the state’s largest utility for energy efficiency programs, with one official comparing the budget to a “bloated Christmas tree of incentives.”
The move is the latest in a Republican shift on energy efficiency spending. The Trump administration has eliminated or scaled back a number of programs designed to help homes and businesses use less energy — including, this week, “zero emissions” building standards — while congressional Republicans are moving to nix state and federal efficiency rules for appliances.
Arizona Public Service had requested nearly $91 million in annual surcharges on utility bills for programs that help ratepayers buy more efficient appliances, weatherize homes or take other steps that would reduce demand on the grid.
The five members of the Arizona Corporation Commission — all Republicans — cut the requested budget to just $40 million, about half of what the company currently spends on demand-side management.
ACC Chair Kevin Thompson, who authored the amendment that cut the efficiency funding, said in a statement that while he supported energy efficiency, the budget “had become a bloated Christmas tree of incentives and rebates for special interests and customers who should be paying for these upgrades on their own.”
“This reduces energy costs for all ratepayers, not just the select few who can afford to take advantage of the incentives,” Thompson added.
That echoes assertions from the Trump administration, which is taking aim at energy efficiency, even as the cost of electricity rises and the grid faces increasing stress from artificial intelligence and data centers.
In recent months, the administration has rolled back manufacturer mandates requiring household products and industrial equipment to be more efficient, proposed abolishing Energy Star certification for appliances and accelerated the expiration of tax credits for residential energy efficiency upgrades.
On Wednesday, the Department of Energy tossed a standard for “zero emissions” buildings that the Biden administration had established to bring consistency to green building codes. Republicans on the House Energy and Commerce Committee moved forward bills on the same day that would scale back or nix efficiency measures for appliances and even showerheads.
Advocates for efficiency say federal programs are crucial to helping consumers save money, especially as electricity prices increase. Not only do more efficient homes save residents on power bills, but they also mean that utilities have to build less generation.
“Politically, this is almost inexplicable,” said Jesse Lee, senior adviser at Climate Power. “The fact is that you have efficiency tax credits expiring at the end of the year, in an atmosphere where people are really worried about keeping on top of their energy bills and winter heating bills are set to spike.”
That’s not how Energy Secretary Chris Wright — avatar of Trump’s “energy dominance” agenda — sees it.
“Energy addition is the only way we’ll have enough electricity to lower prices and power AI in the U.S.,” he said last weekend on Fox News.
A network of conservative groups, including the Heartland Institute and the Energy and Environment Legal Institute, this week touted the efficiency cuts and removal of carbon-reduction grants as a “shift away from politicized spending toward cost-effective energy innovation,” part of a broader commendation of the administration’s energy agenda.
Save now, spend later?
The trade-off with efficiency is that though it can save money in the long run, it costs more now. That was on display this week as the administration rolled back fuel economy standards for cars and trucks.
The White House said the move would make the average new car $1,000 cheaper and save drivers $109 billion in the next five years.
But think tank Energy Innovation has said that driving up demand for gasoline would raise prices, forcing Americans to spend $310 billion more over 25 years.
The debate in Arizona also highlights that tension. Thompson said that stripping money from the APS budget could address affordability by taking the shared cost off the bills of the utility’s 1.4 million customers. The commission has also voted to roll back energy efficiency requirements for utilities.
But green groups and consumer advocates say the relatively small budget for efficiency could avert major investments in new power plants in a state where hot summers and a booming tech industry are driving major new generation projects.
Dan Pozefsky, chief counsel for the state’s Residential Utility Consumer Office, said at Wednesday’s vote that efficiency incentives represent “one of the few, if the only, tools that customers can use by themselves to reduce their energy and have control over.”
The commission did leave in place a few of APS’s existing demand-side management programs, including bill credits for customers who reduce their air conditioning when the grid is most stressed and a separate virtual power plant program that combines customer-owned energy devices for use on the grid.
Ann Porter, a spokesperson for APS, said in an email that the company “will follow the direction set by the Arizona Corporation Commission” and appreciated the support for existing programs. “These programs, along with others approved by the ACC, enable APS to maintain reliability and cost savings for customers,” she said.
But Will Greene, Arizona representative for the Southwest Energy Efficiency Project (SWEEP), said the cuts are “disconnected from what is best for ratepayers” and could leave customers with no aid in reducing their spending.
“It is a dark day for Arizona’s economy and for customers who depend on energy efficiency to mitigate high electric bills,” Greene said in a statement. “APS used to lead the way on energy efficiency, and … the Commission chose a different path.”
