Arizona utility regulators voted to initiate a repeal of the state's renewable energy standard, a move that could have long-term ramifications for the power grid and customers' bills.

The decision starts a rulemaking process that would strike requirements for electric utilities to get 15% of their power from renewable sources like solar and wind — and 30% of that from so-called "distributed generation," such as rooftop solar.

It comes as the nation grapples with what its transition to cleaner energy sources should look like, or if it should migrate to renewables at all. The news arrives on the heels of a federal spending bill that sharply rolled back tax credits for renewables, a move by several electric utilities to back a new natural gas pipeline, and a decision from Arizona Public Service Co. to walk back its clean energy commitments.

Regulators unanimously said the mandate — officially known as the Renewable Energy Standard and Tariff, or REST — conflicts with free-market principles. They expressed concerns that it could be artificially inflating energy prices in the state, and framed a repeal of the rules as a key step toward an "all-of-the-above" approach to energy generation.

They also said the rules are no longer necessary. Most of the state's utilities have met or exceeded the standard, which was established in 2006.

If the standard were ultimately set aside, Arizona would be one of only a few Western states without a renewable energy mandate.

California, Colorado, Nevada, New Mexico, Oregon and Washington all have such standards, and Utah has a voluntary target on its books, according to the National Conference of State Legislatures. Idaho, Montana and Wyoming have no clean energy portfolio requirements.

'Plenty of sunshine': Repeal looms as energy demand grows

The debate over the renewables standard comes as power demand skyrockets.

The trend is a national one, but is being driven locally by continued population growth, hotter summers, power-hungry data centers and the rise of advanced manufacturing.

"We need to look at a diverse array of energy sources to power Arizona for years to come," Alizadeh said. "Demand is growing daily, weekly, monthly."

Utilities project they will need to generate thousands more megawatts of power to keep up with future demand. That's led most to invest heavily in new infrastructure. But there's a question around exactly what types of energy generation they should be prioritizing.

Some believe solar and wind power have a pivotal role to play in meeting growth. Michael Barrio of Advanced Energy United, a trade association representing the broader clean energy industry, said in a statement that policies like the renewables standard reduce costs from increased demand, support jobs and keep the state's economy ticking.

What's next for the repeal process?

The recent vote starts a lengthy rulemaking process to repeal the renewable standard.

Regulators will be required to hold public comment sessions and hearings on the proposal. Ultimately, they will take a final vote on whether to strike the rules. Nicole Garcia, a spokesperson for the Corporation Commission, said that is tentatively expected by mid-2026.