Photo Courtesy The Alliance for Solar Choice

Arizona Corporation Commission Imposes “Compromise” Solar Fee

By Roy L Hales

Screen-shot-2014-03-18-at-3.43.47-PM1They started gathering outside of the Arizona Corporation Commission (ACC) building, in Phoenix, at 6 am, on Wednesday morning. There were reputedly close to 1,000 and by noon 107 had testified to the Commission. Some wore the green shirts that marked them out as employees of SolarCity, America’s leading rooftop solar company. Others were connected to The Alliance for Solar Choice (TASC), which helped organize the rally. Most were rooftop solar owners. They were each given three minutes and it was not surprising that 95 spoke against the Arizona Public Service Co (APS) proposal to raise rates for new solar rooftop customers. A recent Arizona poll found that 81% of the respondents were opposed to the proposed rate increase. Dozens of would-be speakers were turned away due to time constraints. It is a National issue , but the battle has been especially ugly in Arizona.

The two days allotted for the ACC hearings were clearly not enough. Nor was APS’s assertion that the Commission had to act swiftly because there has been a “cost shift” was proven. Few assertions made by either side were actually proven. One of the solar experts was not even permitted to testify. Many asked that the matter be deferred until it could be examined more fully at a rate case. Ultimately, it appears that this hearing took place because APS willed it.

The Arizona utility company spent $3.7 million on attack adds meant to discredit the state’s rooftop solar industry and Edison Electric Institute, an umbrella organization representing all U.S. investor-owned electric companies, put in another $520,000. One of the first speakers at the hearing was ACC Commissioner Robert L Burns, who read out a letter in which he accused APS of conducting this publicity campaign to intimidate the Commission. Despite his protest, they appear to have succeeded.

The Arizona Corporation Commission decided to impose a compromise fee  that did not satisfy either side. The subsequent rooftop solar declaration of victory rests upon the fact they survived. Companies like SolarCity and Sunrun have been leasing solar systems out for an average of $5 to $10 less than what the utilities charge non-solar users for electricity. Had the Commission complied with APS’s request that they be allowed to impose what would work out to be an addition fee of  $50 to $100 per month fee, it may have crippled the solar business. The compromise fee that the commission settled upon – $0.70 per kilowat,  which works out to $4.90 a month for the average 7 kilowat system – will most likely do serious damage. The utilities declaration of victory rests upon the fact they will be able to charge an additional fee.

 “The commission recognized that current net-metering policies unfairly shift costs from solar homes to non-solar homes and approved changes to begin reducing this growing cost shift,” said Tom Kuhn, President of Edison Electric Institute (EEI, which represents all U.S. investor-owned electric companies).

“While APS and its national trade association EEI spent many millions attacking rooftop solar, the Arizona Corporation Commission made no changes to net metering,” said Barry Goldwater Jr., Chairman of T.U.S.K. (Tell Utilities Solar won’t be Killed). “The utilities and EEI showed just how far they are willing to go at any cost, and that is the legacy of the Arizona net metering battle–a major loss for APS and its allies.”

“APS launched an unprecedented multimillion dollar campaign to destroy the Arizona rooftop solar industry and failed,” said TASC President, and Sunrun VP of Public Policy, Bryan Miller.

While commending the Commission for “determining that a problem exists,” APS President/CEO Don Brandt said, the decision “falls well short of protecting the interests of the one million residential customers who do not have solar panels. We will continue to advocate forcefully for the best interests of our customers and for a sustainable solar policy for Arizona.”

A series of articles published in the Republic, in the weeks leading up to the hearing, revealed that APS’ parent organization, Pinnacle West, had spent $9 million  opposing net metering and other opposition to deregulation of the utility industry. Rate payers are said to have received a 5.7% increase on their bill because of “money APS has spent on ‘communications’ regarding the solar issue and energy deregulation, another regulatory issue addressed earlier this year.”

This revelation had already prompted ACC Commissioner Robert L Burns to request an investigation as to whether rate payer dollars were being used. During the hearing, he  added  that APS’s duty was to provide electricity to its customers at the lowest possible cost, not spend massive amounts of rate payer dollars on publicity campaigns.

“Let me set the record straight, APS is one of the strongest proponents of solar energy in Arizona and we have the record to prove it,” Brandt told a reporter earlier this month. “We have the most power per capita from solar in the nation.”

Though the company can not make a return on rooftop solar, it does have a program to develop industrial scale solar-plants, called “AZ-Sun,” that is allowed to make a 10% return on investments. They have a total of seven projects underway, at least two of which are online.

APS explains its current opposition to rooftop solar in terms of an unfair cost burden, “Today’s rooftop solar customers benefit from a reliable electricity grid that ensures they have the power they need, whenever they need it – at night, in the rain, or when it is so hot they need additional power to run their air conditioners. These customers also use the grid to sell power back into the system when they have more than they can use.

“Under current rules, rooftop solar customers are allowed to use the grid essentially for free. As a result, customers who can’t afford solar panels, don’t have a suitable place to put them, or simply don’t want rooftop solar end up paying higher rates. As the number of customers installing solar goes up, it drives rates even higher for non-solar customers, making the problem more difficult to solve.”

APS claims that the average non-solar customer is paying about $1.40 a month and had asked that regulators add $50 to $100 to the monthly bills of new solar users.

The allegation that rooftop solar owners use the grid for free was  one of the few proven false. APS statistics were cited as proof that  the  average solar owner pays more than $70 a month.

A solar owner named Jeff Osler asked why APS is allowed to shift the lost potential income, from homeowners who now draw most of their energy from solar, to the rest of their customers? He claimed APS is simply trying to preserve its monopoly and guaranteed 10% profit margin.

Chris Chatwick, a mechanical engineer with a 5.88 kw PV solar plant on his roof, said that his system generates an excess of around 1,100 kw a year. He claims that APS pays him 2.9 cents a kw for this energy, then charges his neighbour  – 30 feet away – 29 cents a kw to receive it. That is a ten fold increase with very little cost involved and an assertion that APS denies. There was no time to examine facts, unless one regards the APS representative’s testimony as the final authority.

APS representative explaining why an agreement that his company said was fair and just in 2011, suddenly had to be changed in 2013 - ACC video changed
Mr Goldner, an APS representative, explaining why an agreement that his company said was fair and just in 2011, suddenly had to be changed in 2013 – ACC video

Just prior to the Commission’s decision, an  Arizona owner, posted the following message on a news site, “We have solar panels on our roof. We are paying the same fees as non-solar users for infrastructure, transmission and generation of electricity that we use on a monthly basis. We pay for the electricity that we use. We paid for the installation of electric lines when we built our house. Our last bill showed an approximate savings of $50. If the proposed fee structure $50-$100 per month for solar users is imposed, then we would be paying more than non-solar customers. What is fair is fair, but this is not.”

Kenneth Muir said he had invested $23,000 in a rooftop solar array. If there are significant changes to net metering charges, he will opt for an integrated battery system and go off the grid. His question to APS, “Can you remain viable if 100,000 consumers go off your grid?”

These solar owners were among the +138,000 existing households that will not be effected by the rate change, yet this new charge will hurt the industry.

“Imposing punitive fees on Arizona consumers — without first proving the need and demonstrating the fairness of these charges through a comprehensive, transparent rate case where due process is afforded — is patently unfair, jeopardizing future solar growth and job creation statewide,”said Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA). “Despite having some of the best solar resources in the nation, Arizona now has one of the shakiest policies for encouraging its development.”

“The changes the ACC adopted completely ignores the benefits that rooftop solar brings to our state. Their decision stands to raise major roadblocks that will threaten the growth of our clean energy economy – and its nearly 10,000 direct jobs,” said Will Greene, the Sierra Club’s Organizing Representative for its Arizona clean energy campaign. “Instead of trying to obstruct the growth of rooftop solar, APS — and the ACC — should try to encourage its expansion, so that everyone enjoys the energy savings and economic prosperity that rooftop solar generates.”

The fight is not over. The ACC intends to hold the rate case, that solar advocates called for, in 2015. Meanwhile the APS is free in spend millions of ratepayer dollars on negative PR campaigns like that which preceded this hearing.

 

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