Legal papers filed by the Goldwater Institute contend that the Arizona Corporation Commission, which enacted the mandate, exceeded its constitutional authority. The lawsuit asks the high court to void not only the commission rules but also the surcharge already being paid by utility customers.
Commissioner Kris Mayes, the architect of much of the package, said she believes the five-member panel acted within its authority.
Mayes specifically said the commission is keeping a watch on rates with its requirement for companies to move away from its traditional sources, especially natural gas.
She said prices on that are expected to skyrocket. And Mayes said only by forcing utilities to diversify will consumers be protected.
Clint Bolick, director of the Center for Constitutional Litigation at the Goldwater Institute, said Mayes' assumptions about sharply increasing costs of fossil fuels may be true. But he said decisions on how to avoid higher costs should be left to the utilities.
"We think the market is better than the commission in forecasting the needs of the marketplace," he said. And Bolick said if anyone is entitled to mandate how utilities have to generate power, it is the state Legislature.
Mayes said Bolick is ignoring the commission's constitutional requirement to act in the public interest.
"It's not in the public interest to allow the utilities to continue down a suicidal path of relying on fossil fuels and foreign sources of energy," she said. "To do so would be to abdicate our duty."
Mayes said the Arizona Attorney General's Office reviewed the rules before they took effect last year and concluded they were legal.
The rules were the result of years of hearings and study and the conclusion by a majority of the commission that alternate sources of energy should become part of each utility's "portfolio." That includes not just solar but also wind, geothermal and biomass.
Recognizing the higher costs - at least now - the commission agreed to let the utilities charge higher rates. For example, Arizona Public Service residential bills contain an extra $1.85 a month. Businesses can be charged an additional $68.78 a month, with that figure increasing to $206.33 for the largest customers.
All that, Bolick said, exceeds the authority the commission was granted, either by the state constitution or the Legislature. He said the panel is supposed to be regulating the rates of monopoly utilities.
"Regulating the sources from which utilities may provide energy is not rate making or reasonably necessary for rate making," he said in the pleadings to the Supreme Court. Bolick said the fact that there are surcharges is not rate making but simply a consequence of what he believes is the commission's illegal act.