Impact to Rural Customers

Lower income families, seniors on fixed incomes and small businesses will be hit the hardest.

Increased Utility Bills

The Arizona Generation & Transmission Cooperatives estimate that Prop 127 will significantly increase the cost of electricity; Arizonans would see their electric bills go up by roughly 40%. Lower income families, seniors on fixed incomes and small businesses will be hit the hardest.

This ballot initiative is nearly identical to the same one passed in California that has led to that state’s electric rates increasing 5 times more than the rest of the nation over the last 6 years. Since the measure was instituted in California, their retail electric rates are now 47% higher than Arizona. Due to Arizona’s severe weather conditions in the summer, the impact would likely be greater here. On average, states with similar mandates have retail electric rates that are 55% higher than the national average.

A large portion of those served by rural electric cooperatives live at or below the poverty level. Economic Research Service puts the average per capita income for Arizonans in 2016 at $40,415. However, rural per capita income is far behind at $31,645. Census data have the poverty rate in rural Arizona at 26.2%, while it is only 15.8% in urban areas of the state. Suffice it to say, if utility bills increase by 40%, those in rural Arizona will be hard-pressed to make ends meet.

Since the 1960’s rural electric cooperative members have invested close to a $1 billion in assets, which they will no longer be able to use to their advantage. These investments will be stranded assets (with remaining debt still owed to the bank) and another $1.2 – $1.5 billion of investments will be added to the existing ledger to comply with the requirements under Prop 127.

Curious how Prop 127 would impact you and your family? Use our bill calculator here.

 

Decreased Reliability

California, a state where a measure identical to Prop 127 has been instituted, is 50% more likely to have power outages

Over dependence on an intermittent energy source will result in similar rolling brownout conditions currently being experienced in California.

Relying more heavily on sources of energy that are intermittent (when the sun sets, there’s cloud cover or the wind stops blowing) creates a dangerous situation. If a power supply is not readily available to continue essential delivery, services will be disrupted.

Although Proposition 127 attempts to address this concern by requiring battery storage, this technology is not yet proven and deployed at the scale that the grid will require.

The addition of substantial levels of wind and solar resources to an electric energy grid raises significant reliability concerns at the transmission system level, because these resources operate intermittently and, unlike other generating resources, they do not spin in synchronism with the grid.

Arizona utilities have significantly invested in solar energy for many years. Since 2012, Arizona has ranked in the top three in the country for U.S. solar energy production. Over the last 2 years, our electric cooperatives have connected 36 MW of grid solar fields after their self-governing boards approved the projects. So, we are NOT opposed to renewables. What we are opposed to is an unreasonable mandate that would disproportionately impact cooperative members on fixed incomes and small business owners.

 

Impact to Rural Customers

Arizona’s rural electric cooperatives are the only non-profit utilities included, which will put us at a disadvantage. Rural small businesses, ranchers, and farmers in cooperative service territories will be stymied with more expensive electricity and will find it harder to compete because of the arbitrary mandates in Prop 127.

A 40% increase in electric rates is felt harder in rural Arizona when you consider that per census data, the poverty rate in rural Arizona is 26.2%, while it is only 15.8% in urban areas of the state. Any increase to the electric bills of low-income customers is akin to a regressive tax, a tax on the people that can least afford it.

An increase in monthly electric bills, will force thousands of rural Arizona families to choose between cooling their home or paying for other basic necessities. According to the Energy Information Administration (EIA) nearly one-third of U.S. households (31%) reported facing a challenge in paying energy bills or sustaining adequate heating and cooling in their home. According to the most recent results from EIA’s Residential Energy Consumption Survey (RECS), about one in five households reported reducing or forgoing basic necessities like food and medicine to pay an energy bill and 14% reported receiving a disconnection notice for energy service.

Building electric infrastructure in rural Arizona is more expensive per mile and services less customers per mile. This in turn results in less operating revenue and tighter margins. We don’t get a return on investment, every dollar we make goes directly to our member-owners not shareholders.

 

Loss of Jobs

 
If Prop 127 passes, it will also result in the average annual loss of nearly 13,000 Arizona jobs over the next four decades. 

Mandating a dramatic change in our energy portfolio increases the risk of plant closures, negatively impacting the economy. For example, should the Palo Verde Nuclear Generating Station close, that would cost 3,000 Arizonans their jobs.

$1 billion in less disposable personal income every year. People on fixed incomes and small businesses will be hit the hardest.

A 40% increase in electric rates will impact rural businesses and industry. This will have a cascading effect by increasing the price on goods and services, which compounds the negative impact on our wallets.

 

Bad for Schools

 
An average of $39 million in lost property taxes every year, of which $20 million will directly impact school districts.

A 40% increase in electric rates means that schools are not only hit with decreased revenues, but also increased costs.