Arizona’s Big Utility Power Grab Revealed

Rooftop solar is on the rise in Arizona – helping families, schools and businesses take charge of their power supply and their electricity bills like never before. It’s great news for Arizonans, but monopoly utilities increasingly view this competition from solar as a threat to their old way of doing business.

On Friday July 12th, Arizona’s largest utility APS filed a proposal at the Arizona Corporation Commission (ACC) to slap costly new rate changes on customers who go solar – a move that would effectively squash continued solar adoption.

Our economy thrives on innovation, competition and choice. We cannot let Arizona’s utilities stand in the way of all that by killing rooftop solar. If you live in Arizona, please take action here to let your elected energy officials know that this extreme anti-solar move from APS is an unacceptable approach to the conversation about net metering. If your elected officials at the ACC approve this proposal, it could be rolled out statewide — so speak up even if APS isn’t your utility, because this extreme anti-solar proposal could affect you.

The proposal is the grand finale of the fairly bad theater that was a series of APS-led workshops to assess the costs and benefits of distributed generation solar (rooftop solar). We reported on that flawed process earlier in April.  APS convened the workshops to provide cover for this new proposal to dismantle net metering altogether.

Net metering, in place in 43 states, ensures that energy customers who generate their own power get full credit for the excess electricity they deliver to the grid for others to use. This simple crediting arrangement lowers solar customers’ utility bills and makes a significant impact on the economic viability of a solar energy system. It’s fair. It’s working. And now it’s at risk in Arizona.

Here are the basics of what APS brought forward to the ACC to radically change this policy:

1. New residential customers would not be able to participate in net metering as we know it.

APS presented two options to the ACC to decide between as the path forward for these unlucky future solar customers. The first option is a mandatory switch to the ECT-2 rate tariff. The second option is to move customers to a ‘buy-all sell-all’ approach, which APS is calling a ‘bill credit’ approach.

2. Residential customers that already have rooftop solar installed would be grandfathered into the current net metering policy.

Residential customers would also continue to receive a retail-to-retail credit under net metering. However, and this is an important caveat in a market where the majority of systems are now installed under a lease arrangement, net metering is non-transferable to the next home owner if the residential customer sells their house. The policy exists for the homeowner, not for the system.

3. Commercial customers would be able to continue to participate in net metering.

Business and industrial customers wouldn’t be touched and would continue to receive a retail-to-retail credit offering. Since commercial customers already pay a demand charge that covers fixed cost recovery, APS decided not to worry about these customers. At least for the time being.

Here’s the problem with APS’ proposal:

Dramatic loss in energy bill savings for solar customers

On the ETC-2 rate, which has hefty demand charges embedded in it, the residential customer would (depending on a set of assumptions) be credited at about 5.4 c/kWh instead of retail rate, representing a 50% or more decrease in the value of net metering credits[1].

Under the ‘bill credit’ option the bill credit would be offered at 4 c/kWh, which represents a 60-73% decrease from the current retail-to-retail bill credits.

Instead of a fair credit for the valuable power that solar energy systems produce, APS’s proposals are inferring that rooftop solar is worth about as much to them as dirty fossil fuels purchased in bulk at wholesale prices.

Both options are non-starters as far as we are concerned; since they are based on a flawed claim that rooftop solar delivers very little value to the gird. In fact, a recent study found that because of net metering, APS customers alone will receive $34 million in grid benefits each year starting in 2015. These benefits include saving on expensive conventional power generation and grid infrastructure as well as reducing electricity lost during long-distance transportation over power lines. Rooftop solar power also delivers tremendous economic, energy independence and public health benefits.

Customers would lose control over their ability to reduce their energy usage


However, the  ‘bill credit’ suggestion is particularly offensive. The option would essentially make solar users mini-solar wholesale generators that must sell all their resources to the utility. Essentially, it takes from Arizonans the right to reduce their electricity bill by installing solar energy on their roofs. Think about that for a second. Try as hard as you want, you MUST buy your energy from the utility. You would not even be able to reduce your use by a small amount with a small system!

Second, the price that APS is offering to pay these new mini-wholesale generators is far less than what the solar generation is worth.

We are urging the ACC to reject these proposals outright and stand strong for rooftop solar choice.

[1] Assuming a residential customer on average pays 10 c/kWh or 15 c/kWh. Actual price per kilowatt-hour will vary depending on how much energy a customer uses. See APS residential tariff here.