Home Solar in Arizona Takes Hit After Vote by Corporation Commission to Add Surcharge
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.
Images: Ray Stern Susan Bitter Smith, Arizona Corporation Commissioner
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.
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.
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.
Court Rich, Scottsdale attorney, represented the rooftop solar companies
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.