A Massive Win and Five Slides From Our Report on Arizona Public Service's Push For Net Zero

ES-Geeeeeee wiz.

The EBB’s Are #Winning

Before we dig into the billion-dollar boondoggle that Arizona Public Service (APS) has in store for its customers, we’d like to take a moment to share with our Energy Bad Boys family that we scored a massive win last week.

Writing on Twitter, Congressman Josh Brecheen stated that Mitch’s graph of the wind Production Tax Credit (PTC) extensions was shown to countless people in the Republican conference and helped turn the tide on sunsetting the phaseouts sooner than Congress had initially planned.

Such a straight line can rarely be drawn from any article or graph showing how it helped influence a policy decision, especially one as consequential as ending the grid-eroding subsidies for wind and solar, which makes this situation both rewarding and surreal.

We are incredibly thankful to Alex Epstein for promoting our work, and we’re still somewhat in disbelief that our graph with our big, beautiful logo helped slay the Goliath of wind and solar special interest group lobbying.

There’s probably no better time to point to the tip jar than after a win like this, so if you’d like to save America by supporting our work at Always On Energy Research, you can click here.

Raising Arizona’s Electricity Costs

We recently partnered with the Arizona Free Enterprise Club to analyze the Integrated Resource Plan (IRP) of APS, the largest investor-owned utility in the state.

Our findings were published in a March report detailing how APS’s self-imposed Environmental and Social Governance (ESG) goals of reaching 100 percent Net Zero by 2050 are going to cost its ratepayers billions of dollars in unnecessary costs and undermine grid reliability.

APS is pursuing these emissions reduction goals even though there is no mandate from the state to transition its grid or decarbonize, showcasing the perverse incentives of monopoly utilities to shut down their depreciated assets in favor of Greenplating™ their grids with massive investments in wind, solar, and battery storage technologies.

The APS “Preferred Plan”

Like all utility companies filing an IRP, APS analyzed several different generation portfolios to evaluate which mix of resources the company will pursue. After examining over a dozen scenarios, APS devised its “Preferred Plan.”

The Preferred Plan retires the existing Cholla Power Plant in April of 2025—although the Trump administration is working to bring this coal plant back online—and shuts down the remaining units at the Four Corners Power Plant in 2031, removing 1,357 megawatts (MW) of reliable, affordable coal capacity from the APS system.

Replacing Coal and Meeting Load Growth With Wind, Solar, Batteries, and Demand Management

The plan consists of building nearly 20,000 MW of new capacity to meet electricity demand growth and APS’s greenhouse gas reduction and renewable energy goals, leaning heavily on solar, battery storage, wind, and “energy efficiency” and “demand-side management” resources (See Figure 1).

Figure 1. Coal is phased out of the APS system by 2032 and the company makes large investments in wind, solar, and battery storage facilities. Electricity demand growth increases 62 percent from 2023 to 2038.

The Preferred Plan would nearly triple the size of the current APS portfolio, as shown below, despite electricity demand growing by 62 percent.

Figure 2. Capacity would nearly triple from 2023 to 2038 if the APS Preferred Plan is implemented.

As a result, the APS system would rely on wind, solar, and storage for 39 percent of its electricity generation in 2038, compared to just 14 percent today (See Figure 2).

APS intends to continue running the nuclear-powered Palo Verde plant, but the plant’s share of generation is set to fall moving forward as overall electricity demand rises.

Figure 3. Overall energy generation by source over time.

The Cost of the Preferred Plan

As a result of nearly tripling existing capacity on the current APS system, the Preferred Plan would cost APS ratepayers $42.7 billion (See Figure 4). You’ll notice that $30.7 billion of the Preferred Plan costs are either capital expenses or utility returns on those capital expenditures.

Figure 4. APS would make $16.7 billion on utility profits in the Preferred Plan compared to just $4.7 in the TLC scenario.

The Preferred Plan does see some savings in fuel expenses, but these savings are far dwarfed by the additional cost of building and maintaining new wind, solar, and battery storage facilities.

A Better Way (with Natural Gas)

We also analyzed the cost of meeting the same demand growth with natural gas, instead of wind, solar, and battery storage. This scenario, the “True Least Cost” or TLC scenario, would cost less than half of the Preferred Plan at $20.8 billion through 2038, as shown in Figure 4.

A major reason for this is because the TLC scenario requires APS to build far less capacity than the company’s Preferred Plan—18 GW compared to 27 GW—because it relies on reliable, dispatchable power plants to meet load growth.

Figure 5. The TLC requires far less capacity to ensure reliability.

The Always On, All-In System Costs of Energy

As part of our modeling the APS system, we also calculated the Always on, All-In system cost of energy for wind, solar, and solar plus battery storage.

The Always On value calculates the total cost of maintaining reliability with intermittent resources like wind and solar, attributing to them the additional cost of the need for backup energy (such as gas or battery storage) and overbuilding and curtailing wind and solar production. These values are system-specific and increase as the energy share of wind and solar grows.

For the APS “Preferred Plan,” we found that the Always On cost of wind is $156 per megawatt hour (MWh), solar is $148 per MWh, and solar plus storage is $181 per MWh, after utility returns (green), curtailment (grey), battery storage (purple), and natural gas back up (brown on top) are accounted for (See Figure 6).

Figure 6. The Always On cost of wind and solar exceeds existing dispatchable resources.

These costs dwarf the cost of the existing power plants on the system, like the coal plants that APS is unwisely seeking to shutter. The lowest-cost power plant on the APS system is the Pale Verde plant, which should warm the hearts of our Nuke Brethren readers.

Rate Increases

Spending nearly $43 billion on wind, solar, and battery storage facilities will increase costs substantially for APS ratepayers. Figure 7 shows residential electric bills increasing from $155 per month in 2023 to $251 per month in 2038.

Figure 7. The APS Preferred Plan will cost its customers nearly $100 per month.

Adding insult to injury, APS ratepayers will be paying a much higher price for less reliable service, but you’ll have to tune in to a later edition of Energy Bad Boys to learn about that, because the shenanigans played by the company to make its grid seem reliable merit its own separate flogging.

Conclusion

Even in states without mandates for unreliable energy sources, monopoly utilities are rushing in to close down their reliable power plants to replace them with billions of dollars in new capital expenditures in the form of solar panels, battery facilities, and wind turbines. Remember, the fact that these resources aren’t very productive actually helps the utility’s bottom line.

At this point, this tale is as old as time itself.

Thankfully for Arizona residents, groups like the Free Enterprise Club understand the economic and grid reliability threats posed by utility ESG goals and are fighting them at the legislature and the Arizona Corporation Commission. If you’re interested in supporting their work, you can click here.

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