Arizona Corporation Commission's Mayes gives state's perspective on Senate negotiations

How will the Senate's climate bill handle allocation of allowances to utilities? During today's OnPoint, Kristin Mayes, chairwoman of the Arizona Corporation Commission, the state's utility regulator, explains how states and utilities will be affected by a federal climate law. She gives her take on the prospects for a federal renewable electricity standard and increased energy efficiency measures. Mayes also discusses concerns over the use of water in carbon capture and storage facilities.


Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Kristin Mayes, chair of the Arizona Corporation Commission, the state's utility regulator. Chairman Mayes, thanks for coming on the show.

Kristin Mayes: Thanks for having me. It's good to be here.

Monica Trauzzi: The big news here in Washington is, of course, the climate and energy bill that we're expecting out of the Senate, the Kerry-Graham-Lieberman bill. It's set to be released next week. From the state's perspective, what are the key issues that you think absolutely need to be addressed this year by whatever package that comes out of the Senate?

Kristin Mayes: Well, I think from the state's perspective one of the biggest issues is how those carbon credits get assigned, whether or not they are passed through the utilities to ratepayers or if they are assigned directly to citizens or to residents. And we're really concerned that we want to make sure that public utilities commissions, like mine, are able to stabilize rates by being able to take some of those carbon credits and use them and pass them on to consumers. We just don't think it makes much sense to have them directly dividended to citizens, because then different regions get impacted differently. So, that's one of the big issues. I think we'd like to see energy efficiency and renewables addressed and some of us, like me, are not big fans of federal pre-emption of power line siting and so I'm actually hopeful that stays out of any sort of climate bill. But we're hearing that all of that could get lumped into the same bill.

Monica Trauzzi: Right and on the energy piece, the renewable electricity standard will have huge impacts on the states and there are states that already have an RES in place. So, talk a bit about the relationship between a state and federal standard and how you think that should be handled.

Kristin Mayes: Yeah and I think you're absolutely right. States in the West, by and large, will be completely unaffected by the Federal renewable energy standard because we already have an RPS and in Arizona we have a 15 percent RPS. California, as you know, basically has 33 percent. Colorado governor just signed a 30 percent RPS. So we won't be affected. The Southern states, I think, should be asked to do more and they will be impacted by the 15 percent. So, at a minimum, it probably should be set at 15 percent. It shouldn't be any lower than that and it should allow states, like mine, that want to go beyond that to go beyond that. And so that should be a minimum. I'm not really blown away by the energy efficiency piece that they are talking about. I think it's really small, in the 5 percent range, maybe even less. My state just adopted a 22 percent energy efficiency resource standard, so that's pretty ambitious relative to what the feds are talking about. I think they should go beyond 5 percent.

Monica Trauzzi: In terms of certainty, if a cap and trade does not pass this year, what does that mean for the day-to-day operations of utilities?

Kristin Mayes: Well, you know, I think it kind of puts them in a little bit of limbo, especially the ones that operate in states that don't have an RPS and don't have an energy efficiency standard. I think it leaves them wondering, it leaves the rest of us kind of wondering what's going to happen on carbon. I think it leaves the carbon issue open to a state-by-state decisionmaking process, which maybe that's good, maybe it's not good, I don't know. But I don't think it's necessarily good to just leave this thing hanging out there. If it happens, I mean if it doesn't happen we're going to be okay in terms of states continuing to advance the ball on renewable energy and energy efficiency. You now have 31 states with an RPS and 21 states with an energy efficiency standard, so states will continue to lead the way.

Monica Trauzzi: So, how is this prominence of renewable energy production that we're seeing in your state impacting jobs numbers?

Kristin Mayes: I think increasingly well. I mean I'm here to talk to the American Gas Association later today and I'm going to say to them, look, you know, you all need to get on board with this new world order that we're seeing or you're going to get wiped away by it, washed away by it. States are competing on an economic development level for renewable energy projects and manufacturers, because they see that as the only driver right now of jobs. The only driver of jobs right now, by and large, in many of our states is related to renewable energy. And to give you a sense of that, we have had a 100 percent increase in one year alone in the number of solar installations in Arizona and an increase from probably five to ten companies to 100 to 120 companies now in Arizona that employ people and are designed to install solar systems. And then you've got the utility scale stuff as well.

Monica Trauzzi: So, you don't see natural gas playing a major role moving forward?

Kristin Mayes: I do actually, I do. I think we will continue to use gas, we'll continue to build some gas-fired electricity plants, combined cycle plants. But what I'm going to say to the AGA is you need to think about getting involved in energy efficiency, getting involved in renewables. You need to think about becoming an energy services provider, not just an end-use gas provider, because the future of energy is in being a customer satisfying entity. We are seeing an increasingly distributed, increasingly energy-efficiency oriented, energy provisioning system in the gas companies need to get on board with that and think about what their place in that future is.

Monica Trauzzi: Carbon capture and storage continues to be pushed as a key element of our overall energy policy puzzle. Water use though that's used for carbon capture and storage projects is coming into question, because some people say it could take nearly double the amount of water that a traditional power plant would use. How do you see this issue coming up in the future? I mean is it going to be really prominent? Is it going to stop CCS from being -- I mean how is this going to play out?

Kristin Mayes: I don't think it will stop CCS, but it might stop it in states like mine. It would be a huge and will be a huge issue in Arizona. The energy wider nexus is becoming an enormous focus for our state. You know, water usage for concentrating solar plants is a big issue because they can use upwards of 900 to 1,000 gallons per megawatt of water. So I think the same issue would be there for carbon capture and storage, but probably on a regional basis.

Monica Trauzzi: All right, well thank you for coming on the show.

Kristin Mayes: You bet, great to be here. Thanks for having me.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]



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