ACC Votes to Initiate Repeal of Electrical Energy Efficiency Mandate

Phoenix, Ariz. - The Arizona Corporation Commission voted during the September 17, 2025 Open Meeting, to direct Staff to take the next step to repeal the Electrical Energy Efficiency Standards Rules - A.A.C. Title 14, Chapter 2, Article 24. The rules were established by the Commission in 2010 and require large electric utilities to achieve energy savings and peak demand reductions through cost-effective energy efficiency (EE), load management, or demand-response (DR) programs and measures. The rules require utilities to achieve annual savings of at least 22% by 2020. The rules expired on December 31, 2020. All existing EE and DR programs will continue, even if the EE rules are formally repealed.

"A repeal of the energy efficiency rules does not require electric energy efficiency (EE) programs to cease... both APS and TEP/UNS have expressed support for a modernized, flexible regulatory framework that would allow EE to be evaluated as a resource through the Integrated Resource Planning process, with Commission review of implementation plans and continued cost recovery for approved programs," said Commissioner Lea Márquez Peterson. "As a Commissioner, I will continue to communicate to utilities my support for effective EE programs in future rate cases. These programs can save ratepayers on their electricity bills and help us ensure we have reliable energy during peak times of the day."

Arizona's two largest regulated electric utilities have exceeded the EE rules requirement. "The current standard required the accumulated savings of 22% of retail sales by 2020. We've had reconfirmed that as of 2024, APS is at 26.2% and TEP is currently at 28.52%. Both utilities have exceeded the standard which is out of date," said Commissioner Márquez Peterson.

"These were written over a decade ago. We've had a lot of changes in technology, and a lot of changes in demand are coming," said Commissioner Rene Lopez. "It served its purpose, everyone has met the requirements, now it's time for them to go away."

The ACC estimates the EE mandates have cost Arizona ratepayers more than $1 billion in additional surcharges. "Customers should not be forced to foot the bill for utility slush funds and "free" money revenue streams for special interest groups," said Chair Thompson. "The energy efficiency mandate reached its goals years ago and has done very little to delay the need to construct new generation. You can't use a cup to fill a generation gap that demands buckets."

"I fully support the use of energy efficiency and demand-side management programs which have demonstrated energy savings, especially during peak summer heating days when our energy demand has stressed our electric grid," said Commissioner Rachel Walden. "What I do not support is the cost-shift these mandated programs have created-laying the costs across all ratepayers, which includes those that can least afford it like our low- and fixed income ratepayers, and our hardworking Arizona families. Repealing these rules does not mean we will no longer have energy saving programs available. The Commission will evaluate these programs on a case-by-case basis, and the opportunity to submit qualifying programs for consideration is wide-open."

The Commission Staff must file a Notice of Rulemaking Docket Opening with the Office of Secretary of State by October 10, 2025. The Commission will hold two public comment sessions regarding the repeal of the EE Rules on December 2, 2025 and December 4, 2025 in Phoenix. Interested persons may file written comments with the Commission's Docket Control or attend one of the public comment proceedings

All documents related to this case can be found in the ACC's eDocket system at https://edocket.azcc.gov/, Docket No. RE-00000A-24-0025.