The Arizona Corporation Commission (ACC) will vote Wednesday, October 11, to reconsider its Value of Solar decision and determine whether homeowners and businesses with rooftop solar should be paid less for the power they send back to the grid. The ACC is also considering removing the grandfather protections for customers who already have rooftop solar.
Changing compensation for customers who generate electricity and sell excess power to the grid would destroy the investment expectations of the roughly 270,000 Arizona homeowners who installed rooftop solar systems in the past.
“After years of fighting about solar, no state has ever torpedoed solar owners’ investment backed expectations by refusing to grandfather them on the export rates the government promised to them when they made their solar investments. Tomorrow AZ will consider being the first,” Court Rich, an attorney representing solar companies, posted on social media.
The Value of Solar decision determined that those who installed rooftop solar systems before 2018 were grandfathered into net metering rates for 20 years. Homeowners and businesses that installed rooftop solar after 2018 receive an export rate set by the state.
All new Arizona solar customers served by monopoly utilities such as Arizona Public Service (APS) and Tucson Electric Power (TEP) are credited under the export rate program at a lower amount than was offered through net metering. New solar customers with Salt River Project (SRP) can choose from different solar plans, including one which does offer net metering but is paired with a costly monthly demand charge. The current export compensation rates are:
Arizona Public Service: 8.46 cents per kWh
Tucson Electric Power: 7.81 cents per kWh
Salt River Project: 2.81 cents per kWh
Arizona’s investor-owned utilities are currently allowed to reduce the export rate by up to 10 percent annually. The ACC is now re-evaluating that annual reduction rate with some commissioners suggesting it drop to the avoided cost rate – which are typically substantially less than the retail price utilities charge customers for electricity.
“If the ACC reopens the value of solar decision, the biggest winners will be our state's government protected monopoly utilities that have long sought to deprive customers of any viable alternatives like rooftop solar,” Rich posted. "The entire anti-rooftop solar and anti-customer technology campaign from utilities has always been and will forever be about utilities trying to protect their bottom line from utility customers that are looking to take greater control of their own energy destiny."
The ACC could drop the export rate by as much as 50 percent to as low as 5 cents in APS territory and 3 cents in TEP territory. At a time when utility bills are skyrocketing and Arizona families are struggling to keep up with inflation, gutting compensation for rooftop solar owners will make self-generation uneconomically for many households. The average payback period for solar panels in Arizona is currently 6 to 10 years, but that period would be extended by several years if ACC drops the export rate.
“The stability provided by the RCP is the fundamental reason solar has continued to thrive in Arizona. Stable, predictable rates give solar companies and consumers certainty about the future and the confidence to invest in their homes and businesses,” Kate Bowman, interior west regulatory director for Vote Solar, told PV Magazine in August.
Vote Solar said Arizona’s ratemaking for export rates has been anything but transparent or in the best interest of customers. The monopoly utilities have not filed transparent, publicly available data to support their ratemaking calculations.
“Arizonans were promised a certain amount for their excess solar production. They made economic investments based on the ACC’s previous decision. Any changes to the value of solar the Commission makes now could undermine the private investments made by more than 200,000 Arizonans in an effort to lower their monthly energy bills. Ratepayers rely on their utility’s regulator to make decisions on their behalf that maintain stability and certainty. Reopening the value of solar docket does neither,” said Adrian Keller of Solar United Neighbors in a press release.
The ACC has argued that cuts to solar compensation rates are justified because non-solar customers are effectively subsidizing rooftop solar customers because of higher utility system costs. Numerous studies have debunked those claims, however. Lawrence Berkeley National Laboratory found that any cost shift is negligible at current levels of rooftop solar adoption.
The investor-owned utility model is clearly broken and has been for decades. The incentives built into the existing regulatory system result in anti-consumer behavior by the monopoly utilities. The monopolists aren’t going to change until the incentives are changed by restructuring electricity markets to allow full competition with the private sector.
“The entire anti-rooftop solar and anti-customer technology campaign from utilities has always been and will forever be about utilities trying to protect their bottom line from utility customers that are looking to take greater control of their own energy destiny,” Rich recently told Mother Jones. “Utilities like to misdirect and set up counter-narratives to try to plausibly argue they are not fighting their own customers just to protect utility profits, but … it’s all about the money for the utilities.”
The ACC docket number is 14-0023.