Arizona regulators have voted to begin the process to repeal the mandates that required at least 15% of utility energy supplies to come from eligible renewable energy by 2025.
The Arizona Corporation Commission (ACC) voted unanimously (5-0) during the August 14, 2025 open meeting to direct Staff to take the next step to repeal of the Renewable Energy Standard and Tariff (REST) Rules (A.A.C. Title 14, Chapter 2, Article 18). The rules were established by the Commission in 2006 and require electric utilities to generate a certain percentage of their electricity from renewable resources, eventually reaching 15% by 2025. Of the total renewable energy requirement, 30% must come from distributed energy renewable resources by 2025, again with smaller amounts required in earlier years. The REST rules allows public utilities to charge customers a tariff (fee) for the costs of implementing the RES Tariff.
“The idea that the deployment of renewables in Arizona will come to a halt if REST is repealed is doom and gloom fear-mongering at its worst,” said ACC Chair Kevin Thompson. “If renewables are truly the most affordable and reliable option, as we are frequently reminded by advocates, the generational technology should be able to prevail on its own without the need for mandates that have added millions of dollars in extra costs for ratepayers each year.”
Arizona’s two largest regulated electric utilities have already met or exceeded the REST rules requirement, ACC noted. Arizona Public Service Company (APS) reports about 19% of its energy portfolio contains renewable energy sources in 2024, in 2023 that number was 13%. Tucson Electric Power Company (TEP)- reports that about 29% its energy portfolio included renewable sources in 2024, up from 27% in 2023.
“As the Commission starts to evaluate rescinding the REST rules, we will be treating all forms of power generation equally and now renewable sources will be able to stand on their own,” said Commissioner René Lopez. “I am a strong believer that all power generation options should remain and continue to be considered in utilities’ portfolios. As demonstrated by projects such as the Solana Generating Station, renewable energy mandates unduly burden ratepayers with artificially inflated costs and restricts utilities’ ability to seek the most economical electrical generation while maintaining reliable and affordable service. I continue to believe that even without the REST Rules, renewable energy is and will continue to be an integral part of Arizona’s diverse energy portfolio going forward.”
The Commission pointed to the case of the Solana Generating Station near Gila Bend, which went online after the REST rules were put in place. APS told the Commission it entered a 30-year contract with the facility in 2008, which went online in 2012, and at the time agreed to pay about $0.15 per kWh for energy. Currently, APS says the average market price for energy purchased through all-source Requests for Proposals (RFPs) is between $0.02 – $0.03 per kWh. The ACC argues the REST rules have resulted in approximately $2.3 billion in surcharges on Arizona ratepayers’ bills since 2006.
On the other hand, the Sierra Club, an environmental organization, stresses that the REST has been a “huge success.” Arizona utilities have steadily increased their share of renewable generation since 2007. From 2007 to 2020, the REST catalyzed nearly $12 billion in clean-energy investment in Arizona and generated approximately $2 billion in public benefits, the organization argued. These benefits include “more affordable electricity and reduced use of higher-cost generation like coal and gas, increased investment in Arizona businesses and jobs, technology cost reductions, water savings, and reduced air pollution.”
“The Commission’s misguided and short-sighted efforts to repeal the Renewable Energy Standard and Tariff rules will harm our air, our water, and our health,” said Sandy Bahr, Sierra Club Grand Canyon (Arizona) Chapter Director. “These rules have helped to support significant development of clean, affordable energy sources like solar and wind, which are now among the lowest-cost power sources in Arizona. Clean energy provides thousands of jobs and huge economic and health benefits for our communities. As Arizona Public Service’s recent abandonment of its clean-energy commitments makes clear, we cannot count on monopoly utilities to keep their word and meet their voluntary commitments related to clean energy – we need a Commission that is willing to hold them accountable to ratepayers and Arizona families.”
“Today’s vote is the first step in the repeal of the REST rules that have artificially inflated the cost of energy in Arizona since 2006,” said Commissioner Lea Márquez Peterson. “I’ve heard firsthand from ratepayers across the state about the importance of reliable energy at the most affordable rates. That’s why I support an ‘all of the above approach’ to our energy generation and the use of an all-source RFP. Our state is seeing an onslaught of data centers and large manufacturing and tech companies who are interested in building in Arizona. Most of them, like Google, Microsoft and Amazon, have their own ambitious clean energy goals and are requesting clean energy generation sources which influence the energy portfolio of the future for our regulated utilities. Based upon market demands and the low cost of solar, I believe that renewable energy will continue to thrive in Arizona without a renewable energy mandate.”
The ACC must file a Notice of Rulemaking Docket Opening with the Office of Secretary of State by September 19, 2025, and the Commission will hold three public comment sessions regarding the repeal of the REST Rules.
Originally published in Factor This Power Engineering.
