PHOENIX -- Ignoring a threatened lawsuit, a House panel voted Tuesday to give lawmakers the power to approve -- or veto -- policies of the Arizona Corporation Commission.
HB 2789 is designed to overturn a ruling by the state Court of Appeals which concluded that the five-member panel has exclusive authority to require utilities to produce some of their power from renewable sources. It also would throw into question a separate commission ruling forcing utilities to conserve energy.
The 6-3 party-line vote by the Republican-dominated Government Committee came despite a warning from Paul Newman, one of the commissioners, that the legislation runs afoul of the specific constitutional authority of the commission to not only set rates but deal with related issues like renewable energy.
But Gary Pierce, the commission chairman, said he sees nothing wrong with the regulators sharing authority over setting policies with the Legislature.
Pierce, a Republican, conceded under questioning that the commission's own lawyers believe that the legislation runs afoul of last year's appellate court ruling, a decision that was upheld without comment by the Arizona Supreme Court. And Newman, one of the two Democrats on the commission, predicted that any effort by lawmakers to intrude into what the courts have said is exclusive commission jurisdiction will end up in court.
"This bill is pernicious and, unfortunately, unconstitutional,' he told lawmakers.
Clint Bolick, an attorney for the Goldwater Institute, which mounted the unsuccessful legal challenge to the commission rules, acknowledged the case did not go the way his organization wanted. But he argued that the appellate court got it wrong, suggesting that a new legal challenge might bring a different result.
Central to the fight are regulations first adopted in 2006 that require investor-owned utilities to generate 15 percent of their power from renewable sources by 2025. That includes solar, wind and geothermal.
Commissioners acknowledged that these sources do cost mower than power generated from nuclear energy or coal-fired plants. But they gave utilities permission to impose a surcharge to make up the difference.
While that surcharge is capped below $5 for residential customers, the amount taken from business and industrial customers is much larger. That led to the litigation challenging the authority of the commission to impose the rules -- and the court ruling in favor of the regulators.
Bolick argued that the law restores the proper checks and balances between the commission and the Legislature.
A parade of business owners and lobbyists from companies that manufacture and install solar energy devices urged lawmakers to back off.
John McDonald representing the Solar Energy Industry Association, made his own arguments about why the measure is "a lot unconstitutional.' He told legislators they should not take up this legal battle solely because some people do not like the renewable energy standard and what he called the "small surcharges' on customer bills.
Bolick, however, said they were more interested in protecting a policy that increases their business. And he said it makes sense that the industry would want to keep decisions about those policies in the hands of the commission.
"It wants to be able to advance its agenda by convincing three members of an obscure commission that it should adopt that agenda,' Bolick said. By contrast, he said, this measure would require companies to get the consent of a majority of the 60-member House and a 30-member Senate -- as well as the governor -- for any new renewable energy requirements.
And Rep. Debbie Lesko, R-Glendale, who is sponsoring the measure, said there's nothing small about the charges. She said the recreation centers in Sun City, funded by assessments on homeowners in the unincorporated community, got a $52,000 increase in their 2009 utility bills solely because of the surcharge.
But Michael Neary, executive director of the Arizona Solar Industries Association, said that's telling only half the story. He said the recreation centers will be saving more than $973,000 during the next 15 years with the solar electric system they are installing, funded with surcharge money that has been paid into the fund.
Lesko pointed out that nothing in the bill, which now needs full House approval, voids the existing renewable energy and conservation requirements. Instead, it spells out that any change proposed by the commission beginning next year cannot take effect without legislative and gubernatorial permission.
She said this works both ways, saying it also would preclude a future commission from trimming the mandate for renewable energy without the requisite consent.