SRP’s Solar Rate Hike: A Cautionary Tale from an Unregulated Utility

On February 9th, more than 800 concerned citizens showed up to the Salt River Project’s (SRP) Board of Directors meeting at the utility’s private country club in Tempe. The room was packed with Arizonans wearing yellow shirts to show their opposition to the utility’s proposed rate hike for residential solar customers.  Despite this impressive display from the customers that SRP is meant to serve, the board went ahead and approved one of the nation’s highest charges on residential solar users.

SRP rally for rooftop solar

SRP’s proposal threatened new solar customers and its 15,000 existing solar customers with rate hikes of $50 per month (for the “average” solar customer). As proposed, these new rooftop solar rates included a hugely increased monthly customer charge calculated based on a demand charge, which typically only applies to industrial energy users.

SRP is an unregulated monopoly meaning Vote Solar and our partners could only appeal directly to the board and management rather than state regulators as is usually the case. Thanks to impressive public engagement and the diligent work of our advocacy community, the board ultimately voted to protect existing solar customers from the rate increase in the near term. All solar customers that signed up before Dec. 8, 2014 will remain under the previous rate structure for up to 20 years. Customers that signed a contract must have the solar system installed by Feb. 26, 2016 in order to qualify. The board also allowed for unlimited transfers of the grandfathered solar systems to new owners under the old rate design.

That’s where the good news ends: the board approved the rate hike for all SRP customers who go solar after this year’s deadline. The board also voted to increase rates for all SRP customers by 3.9 percent. Stephen Williams and Keith Woods were the only board members to vote against the proposal.

In four hearings over the past month it has become increasingly clear that SRP views competition from the solar leasing industry as a thorn in its side – and this rate hike is its highly flawed solution. Well, the industry is not sittling idly by. Last week’s vote was followed in short order by legal action from one major solar company – SolarCity – which filed an antitrust suit accusing SRP of “anticompetitive and tortious conduct designed to eliminate solar competition.”

Time will tell whether energy choice ultimately wins the day in SRP territory, but it’s wreaking havoc on local solar investment in the meantime. If there is any question as to the damage done by this SRP rate discussion, it’s the numbers. Already in January and February combined, SRP received only 20 applications for solar installations. Compare this to the hundreds, sometimes thousands, of applications in prior months.

SRP serves as a cautionary tale. A monopoly enterprise will eliminate competition if it has the means – at the expense of customer choice, energy innovation and healthier, more resilient communities. Solar has a bright future, but it requires steadfast and deliberate stewardship from all of us to bring that future to light.

JOIN THE MOVEMENT Sign up for updates from Vote Solar on solar progress and energy justice across the U.S.