The Arizona Corporate Commission (ACC) has delivered a major blow to the Salt River Project Agricultural Improvement and Power District’s (SRP’s) urgent plans to expand the 575-MW gas-fired Coolidge Generating Station with 820 MW of fast-start capacity.
The ACC in a 4–1 vote on April 12 denied approval of the public power utility’s Certificate of Environmental Compatibility (CEC) for the gas power plant’s expansion, though approval had been recommended by the commission’s Arizona Power Plant and Line Siting Committee. ACC commissioners cited several concerns about SRP’s application, evidence on the record, and its process to garner enough public participation from residents in the nearby historically Black community of Randolph.
While it is not a public service corporation subject to regulation by the ACC, SRP requires a CEC from the ACC to proceed with the expansion. The entity could still request a reconsideration if it files an appeal within 30 days, and as a last resort, appeal to the Arizona Superior Court. In a statement on Tuesday, SRP said it would continue to evaluate “what generation and market options to pursue in the near-term to address the resource challenge this decision creates for serving our customers with reliable, affordable, sustainable energy.”
A Blow to SRP’s Fast-Track Effort to Provide Summer Reliability
SRP, a not-for-profit, community-based utility that is the largest provider of power and water in the greater Phoenix metropolitan area, first unveiled the massive expansion in August 2021. The entity has argued adding 16 fast-ramping single-cycle aeroderivative turbines to the 2011-completed Coolidge Station’s 12 single-cycle turbines will be necessary to reliably support soaring regional demand.
The expansion, approved as a “significant need” by the entity’s elected board of directors, was slated to provide at least 400 MW of firm and flexible capacity for the summer of 2024, and an additional 400 MW in 2025. SRP has said the expansion presented the least-cost option that would support SRP’s carbon reduction goals with urgency, in the face of what it deems “extraordinary load growth.”
“The Phoenix metropolitan area is experiencing population growth more than three times the national average and SRP is projecting significantly increased, near-term residential and commercial energy needs. This demand is rising especially as large industrial customers develop new and existing local operations,” the company said as it unveiled the expansion.
SRP’s CEO and General Manager Mike Hummel said the expansion is a critical step in creating a “reliability backbone” for SRP customers, which include at-risk populations that rely on air conditioning during extreme heat events. “The added, rapid-start capacity at Coolidge will keep the lights on during times of peak electricity demand in the Valley and help support the variable output from SRP’s growing portfolio of renewable resources,” he said. SRP’s development of its own resources is also especially critical given power capacity constraints in the West during peak energy usage periods, he noted.
SRP noted the Coolidge Station expansion is just one facet of SRP’s efforts to transition toward a cleaner portfolio. The public power company has pledged to reduce its carbon intensity by more than 65% in 2035 and by 90% in 2050 from 2005 levels. While the utility is slated to shutter several coal facilities starting in 2027, it has said it will need 1,000 MW of additional capacity to meet demand by 2025. It has so far received Board approval to add 2,025 MW of solar by 2025 as well as 1,600 MWh (400 MW) of battery storage by 2023—a notably high battery storage capacity target.
It has also garnered the Board’s approval to source additional output from the Palo Verde Nuclear Generating Station and set up demand response programs. Along with increasing its natural gas capacity and upgrading existing plants, SRP is planning to ramp up its wind capacity with an additional 161 MW by 2024.
As SRP underscored in its brief filed with the ACC, however, the expansion’s purpose is to provide near-term reliability and flexibility. While it considered batteries to fill the gap, SRP testified that battery technology is still in its infancy, and the industry “is still learning how best to use them reliably and safely.”
SRP also pointed out it was not choosing the expansion instead of developing batteries, but rather, it is in addition to adding energy storage. “To meet that obligation to serve its customers, SRP relies on comprehensive and diversified ‘AND’ strategy when evaluating future resource investments,” it argued.
“Investments in batteries should be made prudently and in a measured fashion, as the industry gains more experience, battery technology becomes more reliable, and costs go down. Spending an additional $637 million dollars of customer money on an emerging technology for a 1% decrease in carbon emissions is not a smart investment,” it said.
The Issue: Ensuring Reliability While Balancing Environmental, Justice Priorities
After an eight-day evidentiary hearing with 23 witnesses, ACC’s power plant and line siting committee—a legislature–established independent forum that evaluates applications to build power plants of more than 100 MW or large transmission projects in the state—on Feb. 22 determined the project aids the state and Southwest in meeting “the need for an adequate, economical, and reliable supply” of power. The committee also found the project, which would use existing electrical, natural gas, and physical infrastructure onsite at the Coolidge Station, was also “environmentally” compatible.
Prominent opposition was presented by residents of Randolph, Arizona, a community founded in the 1920s. “This is a case of first impression for Arizona and should be thoroughly and carefully considered because the ramifications will echo from the past into the future,” their brief reads. The residents argued that the statutory requirements for consideration by the line-siting committee were not met. Along with becoming a noise and light nuisance, it would increase the negative impacts of pollution and stress. “The salt in the wound is that SRP does not even supply electricity to Randolph—it all goes to other, mostly white, people,” they argued.
In its brief, SRP acknowledged the Randolph intervenors’ claims. “There is no dispute that, historically, Randolph and its residents have in many instances not been treated well or fairly and have not prospered like other areas in Arizona,” it said. “While the expansion is neither a cause nor contributor to that past mistreatment and the Committee correctly found that environmental effects of the expansion will be minimal, SRP is committed to assisting Randolph and supporting improvements in the community of Randolph that are based on the community’s input, consistent with SRP’s long history of community support,” it said.
“To that end, the conditions adopted in the [certificate of environmental compatibility] will give the Randolph community a meaningful voice, a platform, and resources for the community to make improvements and engage in the decision-making regarding its future so that it can thrive and build the future it desires,” it said. SRP proposed conditions such as vegetative screening to reduce visual and noise impacts, paving to reduce air emissions from dust, job training, scholarship opportunities, and a community working group to address longer-term community needs.
Environmental Groups Urged Economic Justification
But opposition to the project also came from environmental groups, including the Sierra Club. Ceres, a nonprofit dedicated to building equitable market-based solutions, notably asked the ACC to explore why SRP did not issue a competitive solicitation to explore the full suite of options to address its resource needs. “lt should be a default requirement to issue competitive RFPs [request for proposals] to ensure that new generation resources are acquired at lowest ratepayer cost; to minimize ratepayer exposure to fossil fuel price volatility; and to reduce environmental impacts, including water consumption. Competitive processes are especially important when the investment decision in question is as substantial—as it is in this instance.”
Ceres also suggested SRP’s decision-making process was “rushed” and failed to consider the bigger picture. “Ultimately, given business preferences for clean and affordable energy resources, we have significant concerns that SRP did not adequately explore resource portfolio options that considered these economic considerations. Meanwhile. we have serious concerns that energy pathways that prioritize gas will increase the likelihood of future stranded assets,” it said.
ACC commissioners on Tuesday appeared to be persuaded by these arguments. Chairwoman Lea Marquez Peterson pointed to the SRP’s failure to issue an all-source RFP. “I believe the application and evidence on the record is incomplete and insufficient for us to make an informed decision as a commission,” she said. Commissioner Sandra Kennedy said SRP’s project “was pushed through with an unconscionable lack of public participation prior to the SRP board vote.”