Arizona regulators have repealed renewable energy requirements for the state’s utilities, erasing rules first passed two decades ago.

The all-Republican Arizona Corporation Commission voted unanimously on Wednesday to repeal the Renewable Energy Standard and Tariff, or REST, rules that required regulated utilities like Arizona Public Service and Tucson Electric Power to obtain at least 15% of their electricity from renewable sources, with 30% of that coming from sources like residential rooftop solar panels.

The vote did not come as a surprise as the commissioners have, for months, taken steps to pull back the rules, which were first adopted by a different all-GOP commission back in 2006. Democratic Attorney General Kris Mayes, then a Republican, voted to install the rules.

Commissioner Kevin Thompson, who led the charge to repeal the rules, has long argued they amount to a subsidy for the renewable energy industry on the backs of Arizona ratepayers.

“We have one of the highest solar potentials in the country,” Thompson said. “But if the industry can’t find a way to capitalize on that potential without heavy subsidization, then…there’s a problem with your business model.”

Benefit or burden?

Critics of the decision argued the regulators relied on faulty evidence to justify the move.

The commissioners cited data showing three of the state’s largest utilities – APS, TEP and UNS Electric – have all met the 15% threshold established by the rules.

At the same time, their customers have paid $2.3 billion in REST surcharges since the rules went into effect, commissioners claimed.

“We’re trying to ensure that cost of service is just and that it’s reasonable and that the utility can operate and stay healthy,” Commissioner Rachel Walden said. “It’s not about picking winners and losers. It’s not about saying this is our favorite source of energy.”

But Alex Routhier with Western Resource Advocates, a nonprofit that advocates for clean energy policies, said the costs cited by commissioners don’t account for the benefits provided by the program, such as reducing pollution and promoting the development of domestic wind and solar energy sources that aren’t subject to cost spikes driven by fossil fuel market volatility.

“It is very likely that over the history of the REST rules, the benefits have far outweighed the costs, but we’ll never know that because the rule fails to provide any meaningful evaluation of benefits versus the costs,” Routhier said.

The commissioners argued that renewable options have also saddled customers with above-market energy costs, though.

They’ve repeatedly pointed to the Solana Generating Station in Gila Bend.

APS representatives told regulators that, under a long-term contract with Solana signed in 2013, the utility paid around 15 cents per kilowatt hour, above the 2.5 cent per kilowatt hour average cost for utility-scale solar energy.

But, again, critics say that is too narrow a view, arguing that renewables offer a more affordable alternative to fossil fuels.

In its 2025 energy cost report, financial firm Lazard found that unsubsidized utility-scale solar and off-shore wind have provided the most affordable energy over the past 10 years.

Critics also argued the REST rules were a broad policy supporting the adoption of renewable energy options but do not dictate the prices utilities pay for that energy.

Autumn Johnson, executive director of the Arizona Solar Energy Industries Association, pointed out that the contracts laying out the price utility companies pay for energy, including APS’s 30-year contract with Solana, were still subject to review by regulators when they consider a utility’s request to change customer rates.

The impact

The commissioners bristled at accusations that their vote will hurt solar adoption in Arizona, the sunniest state in the nation.

Thompson argued the industry will continue to exist and should simply be forced to stand on its own two feet.

“The market and the power demands in our state have changed dramatically since the mandate was adopted,” Thompson said. “And there comes a time in everyone’s life cycle where mom and dad have to stop helping pay your bills and you have to make it on your own.”

Thompson pointed out the commission has not stopped approved solar projects brought before regulators. Just last month, they advanced the Cactus Flower Solar Project in Pinal County, which could eventually generate enough energy to power 46,000 homes.

But advocates argue the commission’s own reports suggest the vote could undermine the renewable growth the REST rules helped establish over the past 20 years.

That’s not just bad for the environment, it’s bad for ratepayers, they argue.

“Deleting these rules is likely to slow the development of renewable energy in Arizona, discouraging clean energy investment and jobs, and will likely result in higher utility bills for ratepayers,” said Sandy Bahr with the Sierra Club’s Grand Canyon Chapter.

Bahr and other critics pointed to an economic impact report commissioned by regulators last year that found removing the rules could result in less investment in renewables.

The report by Elliott D. Pollack & Company found that eliminating the rules could make residential options, like rooftop solar, less affordable for customers and have small short-term effects on bills, reducing residential customer bills by $1 to $2 per month.

At the same time, the decision could cause utilities to rely on more fossil fuels, like natural gas, “increasing consumer exposure to fuel price volatility and potential rate spikes over time.”

“Without mandated targets, some utilities — especially smaller or less proactive ones – may reduce, delay, or deprioritize RE investments,” according to the report. “The absence of annual implementation plans would reduce transparency and limit public oversight. Additionally, the loss of a clear regulatory framework could introduce uncertainty, potentially discouraging long-term investment in clean energy infrastructure.”

Still, the Pollack report concluded that renewable energy development is likely to continue in Arizona, with or without the rules, due to consumer demand.

APS, the state’s largest utility, told researchers it would maintain its existing renewable energy investments.

“The feedback reinforces the view that renewable energy development would continue even in the absence of REST mandates,” according to the report.

But critics worry that, without the rules, utilities’ commitments to renewables could erode over time.

After the Corporation Commission began the rule repeal process last year, APS also rolled back its own voluntary commitment to reach 100% clean energy by 2050.