UNS Electric: An Arizona Test Case In Demand Charges
Vote Solar is in the last day of a hearing process in Arizona where the local utility has proposed unprecedented rate design changes that would reduce the economics for distributed solar generation and result in unavoidable bill increases for the majority of their customers. The utility in the case is Unisource Electric, Inc. a small investor-owned utility with less than 100,000 customers and service areas in Santa Cruz and Mohave counties.
However, this story is not just about UNS Electric, which has less than 100,000 customers in rural Arizona. Tucson Electric Power (TEP) also has an open rate case where there is expected to be a similar proposal and Arizona Public Service Company (APS) has made it clear that they want to see something similar in their own territory when they file for new rates in June.
The charge under consideration is called a “demand charge.” With a demand charge you pay when you use more electricity all at once but a lot of the highest consuming appliances in a customer’s home like air conditioners and water heaters cycle on and off automatically making it really hard to keep your bill down with a demand charge. Because of the way the charge works you can also be penalized with a really high bill for one mistake in the entire month. You could install energy efficient windows, turn off all the lights whenever you leave the room, etc. but if one day in the month you take a shower then blow dry your hair while your AC is running and dinner is in the oven you could see a huge bill increase. It’s a “gotcha” kind of charge.
Demand charges are not good for residential customers and they are not good for solar. Rooftop solar does a great job of helping customers offset their energy usage but does not help customers respond to demand charges.
In addition to the proposed demand charge, Unisource has proposed to end retail rate net metering in its service territory and to cut the compensation that rooftop solar customers receive for exported generation in half. Retail rate net metering has been a foundational policy for providing access to solar for Arizonans and if the program is slashed it could put solar out of reach for many in the state.
Most troublingly, there have been proposals in the case to follow the example set by Nevada and to force existing rooftop solar customers, some of whom were encouraged to invest in rooftop solar through state incentive programs, onto the proposed rate plan. Witnesses in the hearing have raised the question over whether it would be a moral choice to change the game on these customers in such a dramatic and unexpected way. The people of Nevada would contend that the answer to that question is a resounding “no”.
This is a complicated case with a lot of moving parts but Vote Solar is hopeful that the Arizona Corporation Commission will rule based on reason and not rhetoric. The facts in the case are clear and the facts do not support the extreme experiment in unprecedented rate design change that would not be in the interest of Arizona ratepayers.