Arizona utility asks regulators to reconsider gas plant expansion

Dive Brief:

  • Salt River Project on Monday asked Arizona regulators to reconsider their April rejection of a proposed 820-MW expansion at the gas-fired Coolidge Generation Station, citing “legal and factual errors” in the decision. Without the new capacity, the utility says system reliability could worsen within two years.
  • The Arizona Corporation Commission concluded there was insufficient evidence to approve the project, and that the expansion would harm the nearby, historically-Black community of Randolph. Regulators denied the project in a 4-1 vote.
  • SRP’s appeal proposes new mitigation measures for the community, including road paving, home repairs and efficiency measures. But advocates say the utility has still failed to address questions of cost and resource mix, and the ACC should stand by its original decision.

Dive Insight:

SRP faces a “serious risk of insufficient resources necessary to meet customer demand in 2024” unless Arizona regulators reverse their denial of the Coolidge expansion, the utility said in a statement issued Friday.

The rejection will also “undermine SRP’s ability to integrate additional renewable resources, as the utility will lack critical quick-start, flexible generation in times of peak demand,” it said.

SRP has plans to reduce carbon intensity more than 65% by 2035 and 90% by 2050, relative to 2005 levels. “However, in today’s volatile market, which is challenged by supply chain shortages and delays, SRP must develop proven, reliable solutions to ensure a clean energy future,” the utility said in its request for rehearing.

But opponents of the gas plant expansion say the utility did not consider other resource options or provide analysis of potential power bill impacts for customers.

SRP’s rehearing request does little to address the reasons the ACC rejected the gas plant expansion proposal in the first place, including providing regulators with enough information to verify if expanding Coolidge would be an economically sound option for Arizona ratepayers,” Advanced Energy Economy Policy Principal Shelby Stults said in a statement.

SRP says it has proposed an additional $18 million in community support, including additional road paving, home repairs and energy efficiency improvements, and up to $2 million for a new community center. But beyond greater community concessions, “SRP’s plan still falls short,” Stults said.

According SRP’s rehearing request, Arizona regulators relied on faulty legal and factual conclusions in their decision, incorrectly deemed the project application incomplete, and should not have made conclusions regarding anticipated environmental impacts on Randolph.

“The record does not show any material adverse environmental impact and SRP committed to providing appropriate air emission, noise, and visibility mitigation actions,” the utility said.

SRP also argued the denial was arbitrary, unreasonable and unlawful because the ACC “has no jurisdiction over SRP’s resource planning process.”

The ACC does not regulate SRP rates, but because of the size of the proposed gas plant expansion, the commission’s approval was required. The utility wants to install 16 new gas turbines but faced pushback from consumer advocates and local residents over charges of energy racism, environmental injustice and the lack of a competitive bidding process for the nearly $1 billion project.

The need for new generation resources is complicated by the U.S. Department of Commerce’s investigation into potential solar tariff circumvention, SRP noted in its request.

“Solar panel supply chains have been significantly disrupted, and all of the solar projects that SRP has under contract to begin operation in 2023 and 2024 are at risk of significant delays and cost increases,” the utility said. The supply chain issues are expected to continue “for the foreseeable future.”

SRP said it has 1,350 MW of solar and battery storage projects contracted to be online by summer 2024 “and is counting on these projects — in addition to the Coolidge Expansion Project — to ensure resource adequacy for its customers.”

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