The State of Arizona needs to implement incentive rate structures that encourage utilities to invest in renewable energy and energy-efficient management policies.

Separating utility revenues from consumption, known as decoupling, would eliminate the incentive to sell ever-larger amounts of power. It also would eliminate the disincentives associated with demandside resources, such as distributed generation and energy efficiency.

In addition, assured cost recovery mechanisms would help utilities recover the additional expenditures associated with building renewable energy projects.