In a 3:2 vote, the Arizona Corporation Commission (ACC) instituted a charge of $0.70 per kilowatt for future customers of Arizona Public Service (APS) who install solar PV and participate in the net energy metering (NEM) program. The charge will be effective on January 1, 2014, and is estimated to amount to approximately $5 per month for a typical future rooftop solar customer. The charge is intended to help pay for NEM customers' use of the electricity grid. The new policy will be in effect until the next APS rate case, which the ACC directed the company to file in 2015. The commission also directed APS to provide quarterly reports on the pace of rooftop solar adoption to assist the ACC in considering further increases.
Net energy metering is an arrangement that gives solar customers a credit for the surplus electricity their solar systems send back to the grid. For most of this year, APS has battled with solar advocates to lower the amount it credits its solar customers for surplus electricity.
According to the utility, solar customers receive too much credit for their electricity surplus, which they say results in higher grid maintenance costs for non-solar customers.
The latest battle between APS and solar advocates on NEM became a full-blown campaign that includes a manufactured "grassroots campaign," expensive TV ads, and some of the best lobbyists, researchers, and consultants money can buy. APS recently admitted that it contributed money to two nonprofits that helped manufacture an elaborate controversy around solar.
According to Vote Solar, "Despite millions of dollars on spent on a misleading campaign by the utility and its proxies, public outcry against the APS proposal was overwhelming. A poll conducted last week found that, even after months of being blanketed by utility ads, a whopping 81% reject APS’s solar fee and 77% would be less likely to vote for a candidate who ends solar savings. Over the course of this long campaign, more than 30,000 Arizonans emailed the ACC in support of rooftop solar."
In making its decision, the ACC determined that the current NEM program does create some cost shift, which leads to non-solar utility customers paying higher rates to cover the costs of maintaining the electrical grid. ACC professional staff and the state’s Residential Utility Consumer Office (RUCO) agreed that a cost shift exists.
Arizona Public Service said the fixed charge does not increase the utility’s revenue, but instead will modestly reduce the impact of the cost shift on non-solar customers. The ACC acknowledged that the new charge addresses only a portion of the cost shift.
The estimated $5 monthly increase is considerably less than the $50 to $100 additional monthly charge that APS proposed. A fee that high would have wiped out any savings solar customers currently receive from their solar investment, thereby killing Arizona's rooftop solar. However, the $5 monthly increase is still more than no charge, which the solar industry lobbied for.
In an article on AZ Central, Ryan Randazzo commented: “The 3-2 vote was a blow to the industry, which says it will make solar less affordable for people, and a disappointment to Arizona Public Service Co., which had sought higher fees to prevent non-solar customers from subsidizing solar users.”
“But both sides also found small victories in the vote, which capped a months-long debate watched with intense interest nationally. The solar industry said it was a victory that the utility got only a fraction of its request. APS said it was a victory that regulators acknowledged that solar customers shift power costs to non-solar customers, which many utilities nationwide are seeking to prove,” Randazzo added.
According to another article on AZ Central, solar advocates shouldn’t “get too comfortable. This was only the beginning.… The compromise is enough to maintain some balance between solar and non-solar customers, without killing the rooftop industry. It buys time until APS’ next rate case, when the issue can more fully be vetted. This was just a warmup for what’s to come, a skirmish before the real battle in a couple of years. It also was a preview of tradeoffs the commission will increasingly confront.”
The nearly 20,000 current APS solar customers and those who submit an application and a sign a contract with a solar installer to APS by December 31, 2013, are not subject to the new fixed charge.