Renewable energy initiative will drain nearly $700M from schools

Every major utility and nearly every electric cooperative in Arizona has warned that electric bills will rise for ratepayers – including schools – if voters approve a renewable energy initiative, Prop. 127, in the general election Nov. 6.

Once it is engraved in the constitution, schools and colleges would have to decide where to make up the difference: teacher salaries, employee benefits, classroom supplies, repairs, maintenance?

The estimates from the local utilities between now and 2030 are staggering. The increased costs for K-12 public school districts within the APS territory alone is at least $300 million. In addition, community colleges in the same service territory, can expect costs to increase by more than $35 million. As for the state’s public universities, estimates show more than a $350 million impact.  Grand total, nearly $700 million in additional expenses.

The constitutional change would require utilities to provide half their annual retail sales from renewable energy sources by 2030. The cost of transforming their operations requires massive investment, utilities said.  Most of the costs would have to be passed on to ratepayers.

Schools and colleges already spend a sizeable portion of their maintenance and operations (M&O) budgets on utilities. Many cannot afford accelerated rate increases or pricey solar panels or miles of wind turbines, school advocates said.

Those most hurt would be schools that can least afford it, said Ron Tenney, superintendent of the Heber-Overgaard Unified School District that has three schools in northeast Arizona atop the Mogollon Rim.

“Every school district operates on a pretty tight budget,” said Tenney, who grew up in Heber. “When you’re going through your budget and you realize you’re going to have to spend thousands more on utilities, that equates to fewer dollars to provide teachers with decent salaries and provide supplies, and books and computers.”

Many families in his district also would suffer if rates increase, he said.

“We have right around 55 percent of our students that qualify for free and reduced lunches. For the economics of those families that already are struggling, it could be devastating.”

The state agency that advocates for residents, the Residential Utility Consumer Office, estimates rates will increase by at least $450 a year in Tucson and $630 a year in Phoenix by 2030 under Prop. 127.

Eileen Sigmund, president of the Arizona Charter Schools Association, said that once higher rates kick in for public schools, there is nowhere to turn but their M&O budgets. The uncertainty of not knowing what the costs might be is daunting, she said. “We absolutely need to make sure our public charter school leaders are able to adjust their funding to make sure that the lights are on, the air conditioning is running, and that there is an environment where students can learn,” Sigmund said. “Our utilities are an aspect of their learning.”

Arizona already is near the top in the nation when it comes to schools with solar panels. But even those can expect to feel negative financial impacts under Prop. 127, research indicates.

In response, an unprecedented bipartisan coalition of community leaders, lawmakers, businesses, agencies, trade associations and chambers of commerce in Arizona oppose the initiative, saying it will hurt schools, businesses and communities.

Dick Foreman, president and CEO of the non-profit Arizona Business and Education Coalition that advocates for schools, said the group has worked successfully with schools, utilities and the Arizona Corporation Commission in the past to help districts create more energy efficient systems through a “public and collaborative process.”

“Those were marvellous efforts and they had real documented results,” Foreman said. “It was all done through the open public process, open public meetings, and hearings of the commission. The public was involved, the school districts were involved, utilities were involved.”

“That seems like a really good model to me.”

Foreman said he cannot take a position on the initiative because school districts are not allowed to affiliate with any organizations that take a political stance, but he radically opposes “any” initiative that removes fact finding and an open public process for all stakeholders.

That’s why the state has a corporation commission, to represent ratepayers, not special interests, he said.

“Everybody would like renewable resources but we’ve got to understand the cost factors,” said Foreman, adding that there is “no magic money tree” for schools.

“You can make your house more energy efficient by doing a lot of different investments but some of them will never pay off. Maybe you do them anyways because you like supporting the environment. But would you impose that upon everyone down the street whether they can afford it or not? That’s the balancing act that the commission is there for.”