Trial Court Gives Corporation Commission Unprecedented Power in Upholding Renewable Energy Surcharges

Phoenix–Arizona consumers will face more than $1.2 billion in utility rate surcharges if an order issued yesterday by Maricopa County Superior Court Judge Joseph B. Heilman stands.
 
The court upheld the Arizona Corporation Commission’s sweeping Renewable Energy Standards and Tariff (REST) Rules, which were challenged as unconstitutional by the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation on behalf of Arizona Public Service ratepayers.

“The court sustained an unprecedented power-grab by a renegade agency,” declared the Institute’s litigation director, Clint Bolick.  “Unfortunately, Arizona utility consumers who are already overburdened will have to pay the enormous price.”

The rules require most of the state’s utility companies to generate minimum amounts of energy from specific renewable energy sources, with the amounts increasing each year for 15 years, regardless of cost. The rules specify that utilities can recover all additional costs through their rates, which the Commission estimates to be at least $1.2 billion, plus the cost of infrastructure, beyond the cost of conventional generation over the lifespan of the rules.

The Commission’s constitutional authority has traditionally been limited to ratemaking and powers delegated to it by the Legislature. The court held that the rules were “reasonably necessary for ratemaking.” The court did not examine the rules individually, but upheld them in their totality despite the fact that they regulate crucial business decisions that never have been considered part of the Commission’s purview. 

“The energy market is extremely dynamic, and utilities need to have the flexibility to respond to changing prices and technology,” Bolick argued. “The Commission greatly exceeded its limited constitutional powers, and needs to be reined in.”

Bolick called upon the Legislature to reassert control over the state’s energy policy that the Corporation Commission has taken from it, and said that the Institute will carefully consider appealing the ruling.
 
For more information on this and other Goldwater Institute litigation, visit https://www.goldwaterinstitute.org/litigation. The Goldwater Institute is an independent government watchdog supported by people who are committed to expanding free enterprise and liberty.