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

Categories: Solar Energy

"Despite having some of the best solar resources in the nation, Arizona now has one of the shakiest policies for encouraging its development," Resch says.

One thing made clear at yesterday's day-long Corporation Commission hearing yesterday was that both current and future home solar customers have no guarantee their solar system will save money over the long haul.

The vote sets the stage for increasingly larger fees in the coming years that APS insists are needed to protect non-solar customers. The commissioners said repeatedly that their actions do not prevent a future commission from imposing fees on existing customers, despite their intention that existing customers are grandfathered-in for a 20-year period.

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Commissioner Bob Burns
One ACC staff member noted during Thursday's hearing that some solar users claimed they had a 20-year contract with the utility, but that such a claim was uninformed.

Court Rich, a Scottsdale lawyer and representative of the solar-installation companies, told the commission that contracts between the companies and their customers do not guarantee any net-metering number.

Essentially, that means that companies like SolarCity and SunRun cannot really promise customers will save money over the life of the lease, even if overall electric rates go up over that time, because the amount paid by the utility for the excess electricity generated can change dramatically on the whims of the Corporation Commission.

The possibility that solar customers were over-promised led to a discussion about whether solar customers should have to sign a separate document indicating they understand the possibility of saving money is not set in stone.

Chairman Stump also pressed solar boosters to comment on a statement by SolarCity spokesman Will Craven that "power generated (by home solar users) never touches the grid."

Rich admitted that the power does "touch the grid at times." Stump also read a 2009 statement by SolarCity CEO Lyndon Rives that acknowledged the company's customers typically remain connected to the grid. Stump said he had to conclude that Craven had been "engaging in rhetoric."

The critical questions by Stump, the general skepticism of the solar advocates' claims and the late-evening, pro-cost-shift vote lent a clear anti-solar atmosphere to Thursday's proceeding. With no Democrats or solar believers on the five-member panel, the lack of support by the commission for rooftop solar power was palpable.

Yet the arguments of the solar companies, as we pointed out in our July feature article, have several weak points. As was brought up in the hearing yesterday, APS has simple math on its side.

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Hugh Hallman, attorney and former Tempe mayor
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.)

Rich also claimed that since the average APS bill was $71 a month, math dictates that half of customers therefore pay less than average and aren't paying what APS would call a fair share for grid services, just like APS claims solar users aren't paying a fair share. Rich said that home-solar is identical to taking energy efficiency measures like turning off appliances and planting shade trees.

"Every single customer who pays less than average is getting a free ride," Rich said.

But that analogy's flawed. In fact, home solar users have three distinct phases of electricity use: When they use nothing but the utility's juice, when their generation outstrips personal demand and the excess juice is exported to the grid, and when their solar systems take care of their personal demand. Only in the latter phase does the solar system resemble energy efficiency.

The commissioners repeated that they were concerned for the non-solar customers being affected by solar subsidies like net metering.

Brenda Burns told the story of a senior citizen she knows who carries a space heater from room to room in the winter instead of using central air, hoping to save as much on her electric bill as possible. It would be wrong for solar users to drive up costs for that woman, she argued.


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15 comments
shaksign
shaksign

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:

http://solar.solarcity.com/microsite/network/?referrerid=a0p30000008VFPFAA4

Charles-1
Charles-1

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.

jerk_store
jerk_store

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

jerk_store
jerk_store

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. 

marcy
marcy

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.

FUQSRPANDAPS
FUQSRPANDAPS

Ray,

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.

jeanjb
jeanjb

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!

Reggievv
Reggievv

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.

lycwyd
lycwyd

"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. 

james8394
james8394

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.


yourproductsucks2
yourproductsucks2 topcommenter

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

royalphoenix
royalphoenix

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

__McShyster__
__McShyster__

 "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
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.  

harlotsghost
harlotsghost

@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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