Arizona Public Service will expand its renewable energy efforts next year under a program approved late Tuesday by the Arizona Corporation Commission.

But APS customers also will be paying higher monthly bills for the green power.

The plan was narrowly approved by a 3-2 margin, with commissioners dividing along lines of more renewable energy versus higher costs.

The action was part of the commission's program approved two year ago that requires regulated utilities to generate 15 percent of their energy from renewable sources, such as solar and wind by 2025. As part of those rules, the utilities are required to file annual implementation plans describing how they will comply with those rules and providing the funding to do so.

Under the 2009 program for APS approved by the commission the Phoenix-based utility will be able to impose an maximum surcharge of $3.17 a month on the bills of residential customers beginning Jan. 1, up from $1.32 this year. The surcharge is expected to generate an additional $78.4 million for APS's renewable programs next year.

With that amount, APS will increase its purchases of wind energy produced in New Mexico, said APS spokesman Steven Gotfried. Also the utility will expand its rebate program for customers who install hot water and photovoltaic solar systems on their homes and businesses, he said.

APS is expecting a jump in interest in those technologies, so-called distributed energy, because of an increase in federal tax credits available for those installations beginning in January, he said.

The commission's program sets a goal of 2 percent renewable power generated by Arizona utilities this year, a percentage that APS already meets, Gotfried. However, the utility needs to expand its distributed energy program to meet a sub-goal set for it of 15 percent of the total renewable resources, he said.

The commission also approved the 2009 renewable programs for Tucson Electric Power, UNS Electric and the Arizona Electric Power Cooperative. Salt River Project was not included because it is not regulated by the commission. However, SRP has its own renewable energy effort under way.

The APS program was supported by commissioners Kris Mayes, Jeff Hatch-Miller and Bill Mundell.

"These plans will help us solarize thousand of homes in Arizona," Mayes said.

But Chairman Mike Gleason said the plans "are very unkind to ratepayers."

Also in opposition was Commissioner Gary Pierce who called the decisions "examples of government efficiency at its worst."

He said the utilities would be able to obtain more green energy for less money if the commission's rules were more flexible, allowing the utilities to adjust to market conditions.

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