With strong support from the state’s business community, the Arizona Corporation Commission on Tuesday voted 4-1 to adopt the recommendations of an administrative law judge in a rate case for Southwest Gas. 

In testimony before the Commission, Arizona Manufacturers Council Executive Director Grace Appelbe called the judge’s recommended order, “a responsible one that will not only keep customer rates affordable but will also help encourage future economic growth and meet the demands of a growing state.” 

The Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry entered into the record a recent opinion column by Â鶹´«Ă˝Ół»­ President and CEO Danny Seiden that urged commissioners to adopt the judge’s recommendation and to reject the arguments by environmental activists. 

“The importance of natural gas to the Arizona economy is a fact that Southwest Gas’ critics either ignore or deny,” Seiden wrote. “There’s a predictable narrative that comes from out-of-state activist groups that are more interested in advancing an agenda untethered from the realities of today’s economy than they are in ensuring affordable energy rates for Arizona consumers.” 

The Â鶹´«Ă˝Ół»­ also joined economic development groups Greater Phoenix Economic Council, Pinal Partnership, Sun Corridor, Inc., East Valley Partnership, and Greater Yuma Economic Development Corporation in supporting the judge’s recommendations. 

The Southwest Energy Efficiency Project, known by its acronym SWEEP, led opposition to the Southwest Gas case, saying expanded electrification offers consumers cheaper alternatives and that the company already has modern infrastructure that requires few upgrades. 

But JosĂ© Perez of Hispanics In Energy pushed back against SWEEPS arguments, saying the group’s proposals would lead to higher energy rates. 

“If adopted by the Arizona Corporation Commission, these policies would impose new costs on families, hurt jobs and foreclose on American ingenuity,” Perez wrote to commissioners, and he cited statistics that households that use natural gas for cooking, space and water heating and clothes drying save on average $1,041 per year compared to homes using electricity for those applications. 

Perez said Arizona businesses’ ability to access natural gas is important to the state’s economic development. 

“Celebrations like the one led by President Biden at TSMC just last month would not be possible if corporations could not secure necessary energy infrastructure,” he said. 

Appelbe agreed, saying, “The adoption of SWEEP’s proposals would blunt future growth and create uncertainty. Arizona’s economy depends on a diverse energy portfolio – including natural gas – to prosper, whether it’s advanced manufacturing, health care, tourism, or agribusiness.” 

Commissioner Nick Myers, who was elected to his first term in November, also said natural gas is an essential part of the Arizona economy. 

“We can’t hinder not just our economic growth but our electric grids and water grids — everything is dependent on natural gas,” Myers said. 

Two state senators, Sine Kerr, R-Buckeye, and Gail Griffin, R-Hereford, raised concerns over the effect SWEEP’s proposals would have on energy reliability.

“We only have to look to California to see firsthand the damaging effects that bad energy policy can have on a state,” the lawmakers wrote in a letter to commissioners. “Anti-natural gas policies that have originated in California, from phasing out natural gas power plants to eliminating new natural gas hookups, have only put greater demand on the state’s electric grid leading to higher electricity prices and a less reliable system. As a result, consumers have been faced with rolling blackouts and requests to avoid charging vehicles and using electric appliances to protect the strained grid.”

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Companion bills introduced by state legislative leaders to safeguard businesses’ and homeowners’ access to natural gas are receiving strong support from Arizona’s restaurant industry, business community, manufacturers, and organizations that assist low-income residents.

Both Arizona House and Senate leaders are sponsoring bills to prevent communities from banning the use of gas in housing and commercial development projects. 

The legislation will “reinforce” Arizona’s ability to regulate its own energy policy, said House Speaker Rusty Bowers, who testified in support of HB 2686 last week before the House Natural Resources, Energy, and Water Committee.

The legislation is in response to a growing number of cities in states like California that are banning natural gas, Bowers said at the hearing. A sister bill in the Senate, , is sponsored by Senate President Karen Fann. Both bills have passed their respective committees.

Choice, reliability, affordability 

Supporters of the bill who testified at the hearing said it would protect business owners’ and homeowners’ ability to determine what mix of energy sources work best for them. 

In the restaurant industry, gas is a critical, said Ric Serrano, president and CEO of Serrano’s Mexican Restaurants, whose family opened a clothing store in Chandler more than a century ago and later began opening its popular restaurants in the southeast Valley. Today, it owns and operates five restaurants with 200 employees. 

“Natural gas provides 100 percent of our heat source throughout our kitchens and is a consistent, reliable and more controllable source for our culinary needs. It is by far the preferred method in restaurants and by my kitchen staff,” Serrano said. 

A ban on natural gas would also be extremely costly for restaurants that often operate on slim profit margins, he said. 

“While electric alternatives do exist for some of our equipment, in order to get the level of control that natural gas provides, we must look at induction technology, which is far more expensive,” Serrano said. “With many other cost drivers such as minimum wage and higher food costs squeezing restaurants from all directions, removing natural gas would compound all of the problems.”   

Berkeley and other cities banning use of natural gas 

Last year, Berkeley, Calif. became the first city in the United States to ban natural gas in new low-rise residential buildings to reduce emissions. Other cities in California, Washington, Massachusetts, and other states have passed or proposed similar bans. 

Some, like Bellingham, Washington, are talking about banning natural gas heat not only in new construction but also in existing homes and businesses.

Proponents for banning natural gas stated that it would lower harmful emissions. Opponents said a ban on natural gas, which is much cleaner than other fossil fuels like coal and oil, would damage Arizona’s robust economy and competitive standing.    

Not only would replacing infrastructure be cost prohibitive, the loss of natural gas would raise energy prices for industries and residents, they said.  

Serrano said that if his restaurants were forced to go electric, his energy bills would almost double.

“In 2019, we spent $15,800 on natural gas. If we were to be forced to use electricity, it would nearly double our cost to $30,800. The cost differential is untenable in the restaurant industry.”

Poor residents would be hardest hit 

Cynthia Zwick, executive director of the non-profit Wildfire — formerly the Arizona Community Action Association — whose mission is to end poverty in the state, also testified in support of HB 2686 at the hearing, saying it is needed to protect financially vulnerable citizens. 

A ban on gas would result in higher energy bills to customers, and higher home prices due to costs placed on homebuilders to bring construction up to new standards. That would make it difficult or impossible to afford for “far too many customers,” Zwick said. 

“Rates, policies and programs must include solutions for those most likely to be harmed.”

Manufacturing, home builders, healthcare support bill 

Garrick Taylor, executive vice president of the Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry, also spoke at the House and Senate hearings to voice support for the bill on behalf of a coalition of businesses, industries, and fixed-income organizations that seek “balanced energy” solutions.

last month found that 92 percent of Arizona residents prefer to have the choice of using natural gas in their home, Taylor said. 

In Arizona, gas utilities Southwest Gas and UniSource Energy Services serve more than 1.2 million customers.

“This legislation before you today preserves that choice by reinforcing the state’s authority to set energy policy in Arizona, and more importantly, ensure Arizonans are able to use the services of utility providers that are authorized to serve them. 

“It preserves the status quo. If an establishment wants to go full electric, they can. If they want to rely solely on renewables, they can.”

Arizona Manufacturers Council Chair Dawn Grove said her organization supports the legislation.

“Natural gas fuels manufacturing and helps to create jobs,” Grove said. “The natural gas industry is a major contributor in expanding our local and national economy in a clean and sustainable way.”

The coalition represents a wide array of industries and advocates for the senior community and those on fixed incomes: chambers of commerce like the Greater Phoenix and Chandler chambers; economic development groups including the Yuma Economic Development Council;  homebuilders and the Arizona Multifamily Association; and other industries including tourism and lodging, manufacturing and biotech, he said.  

A ban could hurt industries like these that are critical to the state, and the employees who work for them, Taylor said. 

“Prohibiting the use of natural gas in Arizona would eliminate many high-wage jobs associated with the natural gas industry and harm our ability to compete for out-of-state economic development and other opportunities.”

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