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Energy policy in Arizona

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Energy policy in Arizona
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Quick facts
Energy department:
Arizona Governor's Office of Energy Policy[1]
State population:
6.6 million
Per capita income:
Energy consumption
Total energy consumption:
1,431 trillion BTU[2][3]
Per capita energy consumption:
221 million BTU
Energy spending
Total state energy spending:
$22,465 million
Per capita energy spending:
Residential natural gas price:
$17.67 per thousand cubic foot
Residential electricity price:
12.02 cents/kWh
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Energy PolicyEnergy policy in the United StatesFracking in ArizonaEnergy and environmental news

Energy policy in Arizona depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in Arizona and many other states, focuses on decreasing emissions and dependence on fossil fuels by increasing energy efficiency and the use of renewable energy. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable and their effects are difficult to measure.

Energy policy involves trade-offs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy policy in the United States for more information on energy policy.

Energy overview

State facts

Below are quick facts about Arizona’s energy climate.


  • is a net electricity importer.
  • has traditional energy resources including coal and minor production of petroleum and natural gas.
  • is strong in the sector of renewable energy in the form of hydroelectric power and increasing the solar energy area.
  • requires that 15 percent of electricity sold in the state must come from renewable sources by 2025.
  • has among the best solar energy resources of any state.
  • is third in the nation for solar photovoltaic installations.
  • has the largest nuclear power plant in the United States.
  • supplies excess electricity to consumers from El Paso, Texas to Los Angeles, California.[4]

In Arizona

  • the industrial sector consumes the least energy and transportation consumes the most.
  • five of every six barrels of petroleum is used in motor gasoline and diesel fuel.
  • two-fifths of the electricity consumed comes from coal.
  • 25 percent of consumed energy is for air conditioning, which is more than four times the national average.
  • about one-third of the citizens use natural gas as their primary home heating fuel, but overall per capita consumption of natural gas is in the lowest one-third nationally.[4]

Available energy resources

Arizona produces traditional energy resources in the form of coal with lower levels of production from petroleum and natural gas.Two-fifths of Arizona’s electricity comes from coal. The state's only coal is mined from Kayenta, the only operating plant in the state and among the 20 largest U.S. coal mines. Additional coal is received by rail mostly from New Mexico, Wyoming, Colorado and Montana to supply Arizona’s other electricity generating stations. Less than 24 legacy wells supply petroleum to the state. Because of this, Arizona mostly relies on Southern California and Texas for oil and gas. Potential petroleum resources can be found in the southwest area of the state. Although nearly one-third of Arizona citizens use natural gas as their primary home heating fuel, only a tiny fraction of U.S. natural gas is produced in Arizona. New Mexico supplies Arizona with natural gas through a pipeline to makeup for the demand.[5]

Hydroelectric power dominates Arizona’s renewable electricity generation through the Glen Canyon and Hoover dams. Increasing interest in solar, wind and geothermal energy has added to the state's renewable energy generation. Arizona leads the nation in installing new solar facilities and has the largest solar energy resources of any state. The state's highest potential for wind power lies along the Mogollon Rim, an escarpment through the midsection of Arizona. Currently there is only one plant, but plans are underway to increase generation of electricity from wind power. Southern Arizona has over 1,250 thermal wells and springs that generate geothermal power.[6][7]

Consumption and prices

Energy consumption in Arizona
AZ energy consumption chart.png

     Transportation       Residential     Industrial       Commercial
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As shown on the pie chart to the right, in 2011 nearly one-third of Arizona’s energy use was for transportation, more than one quarter for residential, one quarter for commercial and the remaining for industrial use. Most of the energy used in the state is in the form of coal, followed by nuclear power, ethanol and natural gas. Arizona is not an industrial state but it does attract people who enjoy year-round warm weather. Nine out of every ten homes has air conditioning, and this affects the state's energy consumption. Residential energy consumption is greater than commercial or industrial use.[9]

Petroleum is used primarily in the form of gasoline and diesel fuel in Arizona, and prices of both track slightly below the national average.[10] According to the EIA's February 2014 report, the federal excise tax is 18.40 cents/gallon of gasoline and 24.40 cents/gallon of diesel fuel. In addition to that, Arizona collects a total tax of 19.00 cents on every gallon of gasoline, diesel and gasohol fuel, which ranks 42nd, with a state tax lower than most states in the United States.[11][12] To control air pollution associated with gas emissions, Arizona Clean Burning Gasoline (CBG) is mandatory in the Phoenix area year-round and in Tucson during the winter.[13]

Comparisons tables

The table below compares Arizona’s consumption and spending for energy, as well as prices for gas and electricity and carbon emissions to those of New Mexico, which has similar population, resources and consumption needs because of climate and geography. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • Arizona’s rank of 28th in electricity price means that electricity prices are similar but slightly higher in New Mexico, which has a ranking of 27th.
  • Likewise, per capita income in Arizona is lower than the national average. Per capita income is similar in New Mexico, which at 44th ranks two places behind Arizona’s ranking of 42nd.

These two states are very similarly placed when it comes to both per capita income and electricity prices, but the two states rank differently when it comes to per capita spending. In New Mexico per capita energy spending is significantly higher because it ranks 33rd to Arizona’s ranking of 50th. This is somewhat surprising because electricity prices are similar in the two states. On the other hand, natural gas prices are significantly higher in Arizona, ranking fifth highest in the nation and New Mexico ranking 31st.

The higher price of natural gas in Arizona may result from the fact that most natural gas in Arizona is imported from interstate pipelines.[14][15]

Consumption and Expenditures Comparisons Summary
Type ArizonaNew MexicoU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population6.6 million152.1 million36313.9 million
Per Capita Income Average$35,97942$35,07944$42,693
Total Consumption1,431 trillion BTU26688 trillion BTU3797,301 quadrillion BTU
Per Capita Energy Consumption221 million BTU44331 million BTU23312 million BTU
Total Spending on Energy$22,465 million24$8,846 million38$1,394,088 million
Per Capita Spending on Energy$3,47450$4,25633$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet$15.01/thousand cu ft59.45 cents/kWh31$12.48
Price of Electricity, cents per kWh11.06 cents/kWh2811.09 cents/kWh2712.31
Total Carbon Dioxide Emissions, million metric tons (2010)95.9 million metric tons2354.8 million metric tons355,631
*Rank is from highest to lowest.

Of the total energy consumed in Arizona, 25 percent goes to air conditioning, which is more than four times the U.S. average. Even with the above average use of air conditioning, the state has relatively low per capita spending on energy. This can be attributed to the fact that Arizona has a small industrial sector. In many other states, like Louisiana, industrial usage makes up a much larger portion of the state's energy consumption.[16][17]

See also: State Energy Rankings to compare all 50 states
Consumption of energy for heating homes in Arizona
Source Arizona 2011 U.S. average 2011
Natural gas 34.5% 49.5%
Fuel oil 0.0% 6.5%
Electricity 59.1% 35.4%
Liquid Petroleum Gases (LPG) 3% 5%
Other/none 3.3% 3.6%

Production and transmission

Electricity produced and consumed in Arizona is primarily from coal, which makes up two-fifths of the total electricity produced in the state. Although some of Arizona's coal comes from the state's Kayenta mine, most of the coal used in electricity generation is brought by rail into Arizona from New Mexico, Wyoming, Colorado and Montana. About two-thirds of Arizona’s net electric generation comes from coal and nuclear power plants. Second only to the Grand Coulee Dam in total generating capacity, Palo Verde is the nation’s largest nuclear power plant. It is operated by the Arizona Public Service Company, located about 55 miles west of Phoenix.The plant has a generation capacity of 4,000 megawatts and serves about 4 million customers. Mining for uranium resources in the state has diminished. Recently, permits have been issued with the goal of reactivating several mines.[18][19]

Arizona produces only a tiny fraction of U.S. natural gas and significant new drilling activity is not occurring or planned. One-third of residents use natural gas as their primary home heating fuel and so the state must import natural gas to meet demand. An interstate pipeline from New Mexico helps supply the state's demands. Pipeline companies that move the gas from the production area to local utilities and through to other states include: El Paso Natural Gas Co., Questar Pipeline Co., Southwest Gas Corp. and Transwestern Pipeline Co. The Federal Energy Regulatory Commission (FERC) regulates the rates these companies charge, the services they provide to the local distribution centers (LDCs) and the construction of new pipelines.[20][21]

Where electricity comes from in Arizona[22]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 7,000 0.1% 0.02%
Natural gas-fired 1,303,000 17.98% 0.13%
Coal-fired 3,392,000 46.82% 0.2%
Nuclear 1,977,000 27.29% 0.25%
Hydroelectric 374,000 5.16% 0.12%
Other renewables 200,000 2.76% 0.1%
Total net electricity generation 7,245,000 100% 0.18%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In Arizona there are currently 17 electric utilities and six gas utilities listed under the regulated companies on Arizona Corporation Commission’s website.[23][24]

Approximately 40 percent of coal used in electricity generation is shipped into Arizona by rail from New Mexico, Wyoming, Colorado and Montana. Seven to eight million tons is burned annually from the Kayenta mine. The electric transmission system in Arizona is owned, built and operated by primarily two utilities: UNS Gas, Inc. is responsible for northern Arizona and Southwest Gas Corporation supplies Phoenix and the southern region.[25][26]

Energy policy

Policy Issues

Arizona's Renewable Portfolio Standards (RPS) require electric utilities to produce a minimum of 15 percent of energy from specified renewables sources by 2025. So far, major findings show an increased cost of millions of dollars by electricity consumers and a 3.7 to 9.7 percent increase in the price of electricity.[27]

See also Fracking in Arizona

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Each state’s energy policy involves trade-offs in which energy production and prices are weighed against environmental concerns and efficiency.

Arizona has been relatively aggressive when it comes to the development of policies favorable to renewable energy resources. Arizona's RPS requires that an increasing percentage of electricity sold in the state must come from renewable sources. The current requirement is that 15 percent of electricity must come from renewable resources by 2025. Of the required renewable energy, 30 percent must come from non-utility distributed generation annually. The 30 percent is be split between residential and non-residential sources. The utility companies within the state and the energy requirements are regulated by the Arizona Corporation Commission (ACC). Arizona's largest utility companies operate demand-side management (DSM) programs and offer other efficiency programs to their customers.[28][29][30]

Arizona ranked 12th on the Energy Efficiency Scorecard produced by the American Council for an Energy-Efficient Economy.[31][32] There are differing estimates about the economic impact of these mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. There are many new studies looking at what is called the "rebound effect", or the fact that "some of the theoretically estimated gain in energy efficiency will be eroded as consumers consume additional goods and services."[33][34][35]

Major legislation

  • A.R.S. § 33-439, (1979) Arizona’s solar rights law, has been enforced since 1979, giving homeowners the freedom and right to install solar energy. Homeowners' Associations (HOAs) place restrictions on private homes and the installation of solar energy devices (SEDs). This statute imposes a general ban on HOA restrictions which prohibit SED installation.[36]
  • Tucson Ordinance 10597, (2008) mandates commercial developers in desert, water-limited areas to include a rainwater harvesting plan and to provide landscaping water budgets in the business permit outline. This infrastructure requirement aims at the economic development of commercial business in a sustainable and efficient way.[37]
  • "'Arizona Revised Stat. 41-803, (2010)'" addresses state vehicle acquisition and fuel use requirements. With a goal of more energy efficient vehicles, Arizona requires that all state agencies, boards and commissions must purchase vehicles that are hybrid electric vehicles (HEVs), alternative fuel vehicles (AFVs), use alternative fuels, vehicles that meet set greenhouse gas emissions stands, or meet low emission standards. In populous areas of more than 1.2 million people, those vehicles must satisfy U.S. Environmental Protection Agency's' emissions requirements for Low Emission Vehicles, or meet AFV acquisition requirements through alternative fuel or biodiesel. Alternative fuels include propane, natural gas, electricity, hydrogen, qualified diesel fuel substitutes, E85 and a blend of hydrogen with natural gas or propane.[38]
  • AAC R14-2 1801, (2006) The Arizona Renewable Energy Standard is similar to renewable portfolio standards in other states. Arizona's Corporation Commission (ACC) regulates the utility companies and their required production of renewable energy. The minimum standard has been raised to 15 percent by 2025, using energy efficient technologies to satisfy 30 percent of the renewable energy. Each year compliance to the standard increases. Currently, 4.5 percent of total retail sales must come from renewable energy. Incentives for customers who install solar energy technologies for businesses and homes are included in the document. Investor-owned utilities, rural electric cooperatives and retail supplies are encouraged to use utilities to generate “clean” resources through solar, wind, biomass, biogas and geothermal energy.[39]
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State energy policy

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State environmental policy

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Energy policy ballot measures

Voting on Energy
Energy policy
Ballot Measures
By state
By year
Not on ballot
See also: Energy on the ballot and List of Arizona ballot measures

Ballotpedia has tracked 2 ballot measures relating to state and local energy policy in Arizona.

  1. Arizona Colorado River Energy and Irrigation Investigation, Proposition 6 (1924)
  2. Arizona Electric Poles Initiative, Questions 322 and 323 (1914)

Utility policy ballot measures

See also: Local utility tax and fees on the ballot

Ballotpedia has tracked no ballot measures relating to local utility tax and fees in Arizona.

Government agencies and committees

  • The Governor’s Office of Energy Policy (GOEP) of Arizona was established by Governor Jan Brewer in 2011. The office provides a variety of information on energy-related statistics, energy-saving strategies, projects, policy and programs. Arizona is focused on renewable energy and has created 23 adaptive incentive programs for individuals and organizations found at federal, state, local government, or utility programs. Since 2010, 12 renewable energy companies have relocated or expanded in the state bringing in more than 1,900 jobs and more than one billion in capital investments.[41]
  • Within the Arizona Governor’s Office of Energy Policy there are four participating groups that deal with energy issues: the Governor’s Solar Energy Task Force, the Arizona-Mexico Commission Energy Committee, the State Energy Advisory Board (Executive Order) and the Bi-National Electricity Transmission Task Force. The Arizona Governor’s Office of Energy Policy webpage contains detailed explanations of the state's energy policies and goals.[42][43]
  • The Utilities Division of Arizona Corporation Commission is an independent regulatory group that ensures utility companies are charging a fair and reasonable price to consumers. The group also helps ensure that utility services are safe, reliable and high-quality. Types of utilities regulated include electric, natural gas, water, combined water and sewer utilities and certain aspects of local telephone service. The mission of the Utilities Division of Arizona Corporation Commission is to recommend reasonable regulatory policy and rate recommendations to the commissioners, based on a sound analysis of the benefits and costs on all stakeholders and consistent with the public interest.[44]
  • The Arizona State Lands Department manages state trust lands. These lands can be sold or leased to mineral and oil and gas companies, with revenue collected going to fund public education in the state. This department can also sell recreation permits for these lands. The Commissioner of Lands oversees this department.[45]

Major organizations

  • The University of Arizona Renewable Energy Network (REN) is a university-wide group designed to support the use of economical, clean, renewable energy in the expanded regional, national and global industry. The organization connects the community and industry to the University of Arizona's research and educational programs. By creating partnerships with government leaders, business, students and researchers, REN aims to reduce the reliance on carbon-emitting energy sources, open opportunities to energy services and economic development potential, successfully apply renewable energy into detailed electric grid systems, find and promote innovative energy pathways, better understand access to water and energy services and to provide sustainable energy delivery system approaches for urban and rural areas.[46]
  • AzRISE was more recently created in 2007 as a global institute at the University of Arizona. It leads in strategic directions for research, development and analysis and development through directed activities that will increase the adoption rate and activeness of solar energy in the state, nation and world. The organization seeks to maintain the current level of hydroelectric energy and nuclear power while tapering out fossil fuels as an electrical power source. In doing so, they aim to provide energy independence for Arizona.[47]
  • Arizona’s Global Institute of Sustainability is housed on the campus of Arizona State University. The institute educates and prepares their students to become sustainability practitioners, entrepreneurs and leaders. The group focuses on global environment issues and finding solutions to more sustainable urban cities.[48]

In the news

This section displays the most recent stories in a Google news search for the term "Arizona+Energy+Policy"

All stories may not be relevant to this page due to the nature of the search engine.

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See also

External links


  1. "National Association of State Energy Officials, Arizona," accessed Mar. 9, 2014
  2. These figures come from the U.S. Energy Information Administration State Profiles and Energy Estimates, Arizona Overview. Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013
  3. U.S. Energy Information Administration, "Arizona Overview," accessed February 19, 2014
  4. 4.0 4.1 Energy Information Administration, "Arizona Profile Analysis," updated December 18, 2013, accessed on March 4, 2014
  5. U.S.Energy Information Administration, "Arizona Profile Analysis, "updated December 18, 2013, accessed on March 5, 2014
  6. U.S. Energy Information Administration, "Arizona Profile Analysis," updated December 18, 2013, accessed March 5, 2014
  7. Arizona Experience, "Geothermal Energy," accessed March 4, 2014
  8. This chart depicts the state's energy consumption as reported by the EIA for 2011. Click the image to enlarge.
  9. U.S. Energy Information Administration, "Arizona Profile Overview"," accessed February 19, 2014
  10. [To compare current gasoline prices in Arizona to the U.S averages, go to]
  11. U.S. Energy Information Administration, "Petroleum Marketing Monthly February 2014," accessed February 21, 2014
  12. [The ranking comes from the Tax Foundation website website," accessed February 21, 2014]
  13. U.S. Energy Information Administration, "Arizona State Profile," accessed February 21, 2014
  14. U.S. Energy Information Administration, "New Mexico Profile Analysis," updated December 18, 2013," accessed February 22, 2014
  15. U.S. Energy Information Administration, "Arizona Profile Analysis," updated December 18, 2013," accessed February 22, 2014
  16. U.S. Energy Information Administration, "Arizona Profile Overview," accessed February 21, 2014
  17. U.S. Energy Information Administration, "Louisiana Profile Overview," accessed February 21, 2014
  18. U.S. Energy Information Administration, "Arizona State Energy Profile," accessed February 21, 2014
  19. Maricopa County Department of Emergency Management, "Palo Verde Nuclear Generating Station," accessed March 4, 2014
  20. U.S. Energy Information Administration, "Arizona State Energy Profile," access February 21, 2014
  21. Federal Energy Regulatory Commission, "What FERC Does," accessed March 15, 2014
  22. These figures come from the EIA State Profiles and Energy Estimates U.S. Energy Information Administration, "Arizona Overview," accessed February 19, 2014
  23. Arizona Corporation Commission, Regulated Electric Utilities List, accessed February 19, 2014
  24. Arizona Corporation Commission, Regulated Gas Utilities List, accessed February 19, 2014
  25. Arizona Corporation Commission, Utilities Division, accessed February 21, 2014
  26. U.S. Energy Information Administration, "Arizona State Energy Profile," access February 21, 2014
  27. Beacon Hill, "Arizona’s Renewable Energy Standard and Tariff," April 2013," accessed February 21, 2014
  28. According to a report called "The Status of Renewable Electricity Mandates in the States," by the free-market Institute for Energy Research, the cost of electricity in states with RPS were on average 38 percent higher in 2010 than in states without a RPS.
  29. Institute for Energy Research, "The Status of Renewable Electricity Mandates in the States," accessed March 24, 2014
  30. Manhattan Institute, "The High Cost of Renewable-Energy Mandates," February 2012
  31. American Council for an Energy-Efficient Economy, "State Energy Efficiency Policy Database," accessed February 27, 2014
  32. U.S. Energy Information Administration, "Arizona State Energy Profile," access February 21, 2014
  33. International Risk Governance Council, "The Rebound Effect: "Implications of Consumer Behavior for Robust Energy Policies," accessed February 20, 2014
  34. Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?," May 21, 2013," accessed February 20, 2014
  35. U.S. Energy Information Administration, "Arizona State Energy Profile," accessed March 17, 2014
  36. Arizona State University, "Arizona’s Solar Rights Law," accessed February 21, 2014
  37. Mayor and Council of Tucson, "Tucson Rainwater Harvesting Ordinance, Extended 105987," accessed February 21, 2014
  38. U.S. Department of Energy, "Arizona Laws and Incentives for Biodiesel," accessed February 21, 2014
  39. Database of State Incentives for Renewable Energy (DSIRE), "Arizona," July, 17, 2013, accessed Feb 21, 2014
  40. Arizona State Legislature, "Standing Committees," accessed March 17, 2014
  41. Governor’s Office of Energy Policy, "Renewable Energy," accessed February 21, 2013
  42. Governor’s Office of Energy Policy, "Policy," accessed February 21, 2014 (dead link)
  43. Arizona Governor's Office of Energy Policy, "About Us," accessed February 21, 2014 (dead link)
  44. Arizona Corporation Commission, "Background and Organization," accessed February 21, 2014
  45. Arizona State Land Department, "Arizona's State Land Trust," accessed June 13, 2011
  46. The University of Arizona, "Renewable Energy Network," accessed February 21, 2014
  47. The University of Arizona, "Arizona Research Institute of Sola Energy," accessed February 21, 2014
  48. Arizona State University, "Global Institute of Sustainability," accessed Feb 21, 2014