Home Solar in Arizona Takes Hit After Vote by Corporation Commission to Add Surcharge

Categories: Solar Energy

Images: Ray Stern
Susan Bitter Smith, Arizona Corporation Commissioner
Arizona home solar users will save less money on electric bills in the future following a move by the Corporation Commission that's also likely to impact rooftop-solar sales.

In a 3-2 vote on Thursday, the five-member, all-Republican panel decided to allow Arizona Public Service to impose a fee on their roughly 18,000 home solar users. Those users currently reap lucrative payments from APS for the excess power they generate through a process known as net metering.

Small for now, the fee will likely grow in the next few years if commissioners continue to accept the idea pushed by APS and public utility advocates that solar users aren't paying enough for their use of the electrical grid.

See also:
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A packed house at Thursday's Arizona Corporation Commission meeting.

The vote followed two days of contentious hearings and an accompanying demonstration by hundreds of solar supporters on Wednesday at the Corporation Commission's headquarters at 12th Avenue and Washington Street. It also comes after months of posturing, fighting and sparring TV ads by the utility and "dark money" supporters on one side, and solar companies and a group led by public relations specialist Jason Rose on the other.

As our July feature article detailed, utilities like APS claim that for every residential solar unit connected to the grid, non-solar APS customers face a slight increase in their rates. The "cost-shift" problem will grow to nightmare proportions in the next few years at the current pace of home-solar installations in Arizona, APS contends, requiring action to be taken now.

The commissioners agreed, their understanding of the problem grounded partly in their staff members' report last month that the cost-shift effect is real and likely to get bigger.

Solar advocates, however, claim that home-solar power generation allows utilities to put off building expensive, new power plants, and therefore save money for all ratepayers. Some advocates, like SolarCity director of government affairs Meghan Nutting, argue strongly that net metering is not really a "subsidy," but rather fair compensation for power generated by home users and sold by the utility.

Nationally, advocates on both sides of the fight are following the Arizona situation closely, concerned that utility regulators in the 43 other states with net-metering schemes may eventually follow Arizona's lead and tamper with the savings offered to home-solar customers.

Commissioners Susan Bitter Smith, Bob Burns and commission chairman Bob Stump agreed to allow APS to impose the fee of 70 cents per installed kilowatt of solar power, per month, for new home solar customers starting on January 1. Commissioners Brenda Burns and Gary Pierce vote no on the proposal; Burns wanted a much higher fee imposed and Pierce preferred to replace the current net-metering process with a new round of up-front incentives that would address APS' concerns.

Court Rich, Scottsdale attorney, represented the rooftop solar companies
The change amounts to a few bucks extra per month for solar users. For what SolarCity calls a "medium sized 4kw unit," the fee would amount to $2.80 a month.

However, in popular lease deals offered by companies such as SolarCity, the customer might only be saving about $5 or $10 a month -- the difference between the cost of their solar lease and what they save on their electric bills. Most solar installations these days involve a lease deal or power-purchase agreement with the solar company in which the homeowner doesn't own the solar equipment.

Solar advocates worry that's going to mean at least a slight slowdown in the growth of new installations in Arizona next year.

While APS didn't get what they wanted -- fees that would erase most or all the savings for solar lease customers -- the new plan sets a negative precedent for the home solar industry.

Last night's move "deeply troubled" Rhone Resch, president and CEO of the national Solar Energy Industries Association, according to a written statement emailed to the press.

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There is a really cool solar program in the states right now that allows folks to have a system installed for no out of pocket cost - home owners pay the solar company for the energy the system makes along the way. It's a good program to get for one's home because solar energy is cheaper and cleaner than regular utility energy.

Need to install a solar power system in California, Oregon, Colorado, and Arizona; No hesitation !!!

SolarCity (solar.solarcity.com)

SolarCity can install a solar power system on your home for free and sell you the energy it produces for less than you currently pay. This is your chance to save for years to come. 

for more information about solar for your home click here:



If you are a private utility operating as a regulated monopoly (e.g., APS in Arizona) the trick is to keep your customers from generating their own electricity since there is no money to be made doing that - that would be just crazy!

Since your company President/CEO and Executive Vice President are pulling down compensation packages of $11.5 million and $9.3 million per year each (in a good year) you need to keep the revenue sources operating. Instead, build your own photovoltaic (solar) generating array in say, Chino, Arizona, and sell its production to your customers at the retail rate at five times the cost.

Now, that's the ticket! BTW, you will need to revoke that pesky net-metering arrangement.


Ray Stern, I've learned from this article that you are not very bright. 


The fact that this is being decided by the corporations commission is laughable. APS is a private corporation but they're also providing utilities to the public and have a monopoly on said public. This should be handled by the board of supervisors. The outcome may have been no different by why use a body dedicated to private sector business activities, not public energy consumption. 


APS puts forth the nonsense that net metering means solar customers use the grid without paying for it.

Put most simply, net metering means my excess power flows 50' to my neighbor's house and my neighbor pays me for that power instead of APS.  That's it.

Everything else is just a smoke screen designed to cover up the real problem APS has, more consumers with solar means less capital investments by APS and less capital invested by APS means less profit they can demand.  

That APS has to shrink is a good thing for consumers, and people investing in their stock should price it accordingly.



Your opening line should read "Home solar users tied into the grid will save less money...."

People with off grid systems will not be affected.  My system is not tied into the grid or leased.


I have lived here for 55 years and have paid a lot to the pinnacle corp in the way of the highest rates in the nation to build their nuke plant,while California pays way less for the juice from the plant we paid to build!


This Is again what Arizona gets when it blindly votes for the retread Republican legislators running for the corporation commission. Two major solar advocates were voted off the Commission, and this type of anti-solar, anti renewables action was to be expected. APS has a damn monopoly then that idiot Pearce says he is for the free market. THERE IS NO FREE MARKET IN THE REGULATED UTILITIES SERVICE AREAS, whether APS, or TEP, unless you detach from the system completely. This action stunk to high heaven. Fairness my ass, APS. Solar development needs to be encouraged in this State. And when the sun ain't shining, the meter used IS paying to "support the grid,". An incredibly overblown cost.


"One reason we agree with this argument: Imagine if 100 percent of APS' residential customers had rooftop solar under the current net metering scheme, which requires APS to pay retail rates for the semi-wholesale power. That's a ridiculous business model that would cause the utility to go broke, meaning it would be unable to provide the power those same customers need during part of the day and at night. (The utility's argument, of course, is that it would have gone broke long before all customers had solar.)"

LOL. What an asinine argument. The fact that the private company that has the monopoly over entire portions of the state is relying on increasingly outdated resources and refuses to get with the times is NOT the public's problem. They can jump on the solar bandwagon and build new infrastructure to support it but apparently they can't be bothered with such piddly nonsense.

Let's also not forget that non-solar customers were paying an average of about $1.40 a month (by APS' own studies) to "subsidize" solar customers. Less than 5 cents a day. 


When APS buys peaking power from one of those gas fired plants out near Palo Verde NGS in the summer to meet load demands, do you think Duke energy (or whoever owns the plant) has to pay APS for the privilege of using the transmission lines? If so, How much?

Please keep in mind that any idiot can run a monopoly and make money. If APS management is not smart enough to make money with the current rate structure, maybe they should pull the ripcords on their golden parachutes.

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I will be voting for the democrat next corporation commission election cycle. thus is a sad state of affairs.


Bitter Smith reminds me of Horne, always on the ballot for something. She's a corrupt, dumb as they come pos. peace


 "the five-member, all-Republican panel"

No need to read any further, just know they did the wrong thing for the wrong reasons, as usual.

ray.stern moderator

@FUQSRPANDAPS Thanks, Mr. Fuq. Although I see no need to change the sentence, (it doesn't say "every single one of all arizona home solar users," after all), your nod to the exceptions out there is duly noted.  


@Reggievv You do have a point.  The fixed costs are collected through the monthly service charge, generation, transmission, distribution, meters.  Take or Pay purchase contracts are a management decision.  They contract for capacity and supposedly pass-on variable kwh cost.  The fixed investment has been made.  Adding a rider is fill-in magic to make capacity and consumption appear efficient.  Therefore, conservation, DSM, Solar based on ROI is all spin.  The programs erode revenue.  The commissioners and APS know this.  So they try to spin "paper or plastic."  It's a feel good concept.  You throw recycle material in you recycle bin and you feel good when that truck you pay for comes by and picks it up.  You get no monetary benefit for your contribution.  The other stuff the garbage truck picks up you pay for anyway.  I throw all that crap in the trash.  That's all it is.

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