Renewable energy bills piling up

March 27, 2009

Jeremy Duda

Advocates in the Legislature are making a push to lower residents’ utility rates, attract businesses to Arizona and ease the burden on the state’s power grid with a series of bills aimed at promoting renewable energy.

Peoria Republican Rep. Tom Boone wants to cap municipal fees that he feels make solar energy systems prohibitively expensive for many homeowners. Sen. Barbara Leff, a Paradise Valley Republican, wants to encourage renewable energy industries to set up shop in Arizona. And Rep. Lucy Mason, a Prescott Republican, has nearly a dozen bills related to renewable or alternative energy.

In addition, Mason has a bill that would require state agencies, universities and school districts to use renewable and nonpolluting sources for 10 percent of their energy needs by July 2015. The bill also requires all state buildings constructed after July 1, 2010, to conform to green building rating standards.

Other bills are aimed at the individual instead of the community. One of Boone’s measures would limit the fees that cities charge residents for installing solar energy systems on their homes. The capped fees range from $100 to $375, depending on the type of system installed and the type of inspection that is required.

“Most cities are within that now, and counties, some are actually less,” Boone said of the $375 limit. “But there are several in some of the high growth areas, unfortunately, that are way above that. Some actually approach, I think, upward of $1,000.”

Michael Neary, central regional director for the Arizona Solar Energy Association, said some cities, such as Mesa and Bisbee, don’t require permits for solar systems, while others, such as Gilbert and Queen Creek, are “overdoing it.”

“Peoria now, for example, is requiring a structural analysis by an engineer on all homes that put solar on. That’s a deal killer. If you find an engineer who is cheap, you may get by with $600, more likely $1,000, for every system. In a sense, Peoria is saying they don’t want solar on their homes,” Neary said. “It’s generally a deal-breaker.”

Boone has also introduced a bill that would allow school districts to establish savings accounts for money to fund energy and water-saving projects.

Leff’s bill would provide up to $70 million a year in income and property tax credits from 2010 to 2014 for local renewable energy businesses that want to expand or new businesses that want to locate in Arizona. The bill seeks to attract high-wage jobs to the state, and in order to qualify for the tax credits a business would have to pay a majority of its workers a salary that is at least 125 percent of Arizona’s median annual wage. Any business that does not stay in Arizona would be subject to a callback of its tax credits.

Income tax credits, which would be capped at 10 percent, would require that companies create at least 1.5 jobs for each $500,000 invested in manufacturing facilities, or at least one job for each $200,000 of capital investment in a headquarters facility. Companies that meet those provisions can also be reclassified to a 5 percent property tax for 10 years, but that timeframe can be increased to 15 years if companies pay at least 51 percent of their employees 200 percent or more of the state’s median wage.

Leff said the bill also includes a provision that companies must show that they will bring in more tax revenue to Arizona than the state will pay out in incentives.

With the plethora of other benefits Arizona provides to solar manufacturing companies — such as a high number of sunny days, a skilled technical workforce from its semiconductor industries, and the state’s right-to-work laws — Leff feels that the incentives her bill would create are enough to make Arizona a national leader in solar technology.

“Some incentives could close the deal for us. No incentives is not doing it. They’re not coming here,” Leff said. “I’ve met with a couple of CEOs who have said that they are extraordinarily interested in moving here. They’re bottom line requires an incentive package, yes. And if we pass this, they’re ready to come.”

Neary agrees that companies have been shunning Arizona due to a lack of incentives that are offered routinely in competitor states.

“That’s been one thing where we’ve been losing out on is the potential for manufacturing jobs because of the fact that so many other states are much more attractive than we are and have tax-incentive programs,” Neary said.

Among the handful of energy-related bills Mason has introduced in the 2009 session are two that would allow residents of counties and municipalities to petition their counties or municipalities to form improvement districts for renewable energy projects. Unlike most improvement districts, which require a majority vote by people in the proposed district area, these districts would be created by petition, and only those who wanted to be part of the district would benefit from the new energy source or pay the new taxes.

The participating residents in a district would have to show their financial viability and prove that they would be able to pay for the bonding for the renewable energy projects by taxing themselves. The projects that would be created could be generating stations powered by wind, solar or other renewable energy sources, or they could be solar panels on the homes of those who are taking part in the district.

Mason said the renewable energy projects would allow residents to provide electricity for high-growth areas at a cheaper rate without overburdening the state’s power grids. By reducing electricity rates and demand on the power grid, Mason said the improvement districts would be a win-win situation for Arizona residents and utility companies.

Mason said she is also emphasizing the use of natural gas as an alternate energy source with a bill that would ease cumbersome restrictions on storage tanks. The bill would exempt natural gas storage tanks from some water aquifer protection regulations.

“There’s a lot of natural gas that is producing electricity for our plants. We need to have natural gas storage in the state. We’ve never had it. Well, now we have an opportunity with one of the bills that I’m doing to allow natural gas storage in the state,” Mason said.

Much of the legislation — including Mason’s bills on improvement districts and natural gas storage, and both of Boone’s bills — has cleared committee. But Gov. Jan Brewer has asked lawmakers to refrain from sending her any non-emergency bills until a 2010 budget deal is reached, and both House Speaker Kirk Adams and Senate President Bob Burns agreed before the session to make the budget their top priority, with Burns declining to even assign bills to committees until the budget deficit is resolved.

The resulting backlog of proposed legislation is expected to leave many bills unheard when the session comes to a close, but Mason and Boone are hopeful that their bills, some of which have been introduced in past sessions, will get past the bottleneck.

“It’s always a concern. I certainly hope that members over there by now understand the reasons and understand it’s good policy for the state of Arizona, and for economic recovery,” Mason said.

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