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Letters scolded entire solar industry

Two Lighthouse Solar employees install microcrystalline PV modules on top of a Colorado townhome in December 2011. (Photo courtesy Dennis Schroeder, National Renewable Energy Laboratory)

Two Lighthouse Solar employees install microcrystalline PV modules on top of a Colorado townhome in December 2011. (Photo courtesy Dennis Schroeder, National Renewable Energy Laboratory)

As someone who has spent the past several years defending Arizona businesses from charges of dishonesty, greed and self-serving, the June 21 letters by APS vice president of operations Mark Schiavoni and Arizona Investment Council’s Gary Yaquinto going after the solar industry caught my attention.

What I read was not so much a fair criticism of three successful businesses I thought were APS’ business partners, but a public scolding of an entire industry. An industry that, by the way, opened new Arizona factories, created thousands of new Arizona jobs, kept Arizona’s construction and electrical businesses alive, capitalizes on Arizona’s only energy competitive advantage and paid millions of dollars in Arizona taxes, not counting the benefits to Arizona system owners and Arizona ratepayers.

Schiavoni and Yaquinto’s complaint seems to be that anyone with a solar array on their home or business is somehow ripping off other ratepayers and cheating the utility of resources needed to maintain the system. That doesn’t make sense and here’s why.

At a recent Arizona Residential Utility Consumer Office net metering workshop, APS’ pricing manager Chuck Miessner described how utility costs are recovered. All APS residential customers (including solar) pay the basic service charge. That charge covers “metering and billing costs and distribution infrastructure costs. . . regardless of usage or maximum draw.” Even with net metering, APS customers cannot avoid paying this charge every month.

Any power purchased by residential or commercial customers is paid through the energy charge, which, according to Miessner, covers “operating costs such as fuel and O&M” (operations and maintenance). Since the sun sets daily and it occasionally gets cloudy, it’s fair to say every array owner purchases the power they draw down every night and during inclement weather.

Business customers (including solar array owners) pay a demand charge that Miessner says covers “infrastructure costs for power plants and transmission and distribution lines.” These costs are recovered from residential customers partially in the basic service charge, but mostly in the energy charge.

So, according to APS’ own pricing manager, all residential and commercial solar array owners pay all of the charges everyone else pays that cover infrastructure, distribution and transmission, billing, O&M, and generation costs every single month. Even if a system generates more than the owner uses, they still pay for fixed costs each month, including an environmental surcharge. If that’s true, then what are Schiavoni and Yaquinto really complaining about?

If fairness and cost recovery are so critical, then why isn’t APS going after other customers who use substantially less power in some months than others? There are 350,000 snowbirds whose homes, condos and apartments remain empty and connected to the grid in the summer. What about the seasonal tourist attractions that are closed in the winter, like water parks? They’re still connected to the grid. Is anyone questioning whether they’re paying their way? Is there an effort to charge them a fee to support fixed costs? No, but maybe they’re next.

Is the motivation the threat that a healthy solar industry poses to the utility business model? Most businesses adapt to market pressures and innovation or disappear. This doesn’t apply to monopolies, however. They just ask government to redesign the market in their favor.

Common strategies for defeating those who have opposing views with traction is to misinform, change the subject or shoot the messenger. These letters and the net metering discussion are prime examples and it highlights why Arizona needs to have this debate in a different forum — one where a fair review of Arizona’s energy strengths, weaknesses, opportunities and threats can occur. One where people aren’t scolded or called names because of who they are, what they do, or the type of energy they support. One where the time allotted to each side to make their case is equal. It worked for immigration policy and it could work for energy policy. The sooner we start, the better.

— Todd Landfried is executive director of Arizona Employers for Immigration Reform.

6 comments

  1. I appreciate the fact that Mr. Landfried has a different opinion than mine on the issue of net metering for rooftop solar. However, Mr. Landfried is mistaken in his assertion that all fixed costs of the grid are covered in the basic service charge that is applied to all customers, including those with rooftop solar. A major portion of fixed costs are actually recovered through the volumetric charge on a kwh basis, which solar customers avoid through their self generation. This is the problem that APS is attempting to solve with its proposals to the ACC.

  2. Dear Gary Yaquinto,

    I believe what you and APS are upset with is your customers responded to your request to install solar and we responded. One of the incentives for doing so was to have some control of our power costs for the next 20 years. You at APS proposed this and now that you have had such great response, you want to take our incentive away from us, AFTER we have already installed solar at our expense.

    I have not heard you mention that APS does not buy our excess power back for the same price you charge us! You are making a great deal of money from everyone that currently has solar. You should charge us the same rate and you do not.
    Mr. Landfried, just what is APS doing with all our surcharge energy money?
    I personally would like to know and I’m sure your other customers would too!
    Joy Ziegler

  3. Dear Mr. Yaquinto,

    Telling the truth about the issues regarding solar would be a great start.
    How do you look your kids in the eye when you get home?

    Your infrastructure is antiquated and struggling. APS ASKED their customers to install solar! We responded. One of the benefits of these expensive solar systems is that YOU told us that we had a guarantee of our rates for 20 years. That is a selling incentive to offer when selling your home. (OR it was) Now you have taken that away AFTER we have installed solar. Rooftop solar HELPS take some of the demand off your infrastructure. IF enough people install SOLAR maybe we can let go of some of your NUCLEAR POWER!

    You charge us regular rates when we do need your power and then you pay us pennies on the dollar for what you ‘buy back’ from us. Where is all that money going?

  4. Dear Mr. Yaquinto,

    You mention a difference of opinion, but why not discuss FACTS? The APS pricing manager, Chuck Miessner, is the one that talked about how the basic service charge pays for the infrastructure. What it seems is actually payed for through volumetric pricing is the guaranteed 10% profits of shareholders. Perhaps if solar incentives are reduced, then APS profits should be set at 5% and the other 5% can go towards building renewable infrastructure.

    Sincerely,

    Stephen Etrinoch

  5. Without net-metering, APS solar customers will have no alternative but to go completely OFF-GRID for solar power to make sense, economically.

    I did an analysis. It may certainly be within the reach of many affluent Arizona homeowners to leave the APS grid. However, an energy storage system is necessary and it will double the cost of a complete solar system.

    A winter day’s worth of my electric power use requires a 20 kWh battery for storage (40 kWh for summer) and is about the same capacity as the Nissan Leaf’s electric-car battery (24.5 kWh).

    Inexpensive, modern 4-6 kW inverters (SMA “Sunny Island”) with built-in 200-500% short-term overload capability can easily handle air conditioner startup and use. However, electric clothes dryer, water heater, and cooking range use may double the size of the needed inverter system.

    I could easily make it through the Arizona summer with only a 20 kWh battery, running just the air conditioner with the solar array in a legal “generator backup” mode with no connection to the APS grid.

    Eliminating the current “net-metering” arrangement and a future drop in the price of Lithium-ion (safe LFI) batteries might eventually increase the number of homeowners who would consider completely abandoning the APS grid when the economics make sense. (A 8.8 kW STC solar system costs about $20,000 – add a 20 kWh battery and inverters for about another $20,000.)

    See: http://bosch-solar-storage.com/

  6. The new EPR-7 rate proposed by APS to the Arizona Corporation Commission requires residential solar-system customers pay the difference between the peak-demand APS retail rate of $0.26 per kWh or more, and the wholesale rate of $0.04 per kWh, JUST TO USE the electricity that they generate from their OWN solar panels, when connected to the APS grid.

    Once again, under this rate, residential solar distributed-generation (DG) customers will be required to sell ALL of their generation to APS at the WHOLESALE rate and then pay the RETAIL rate for ANY electricity they use. I kid you not! They will pay $0.21 per kWh to APS on-peak JUST to use electricity they generate themselves.

    Without the current EPR-6 net-metering rate, future APS solar customers will have no alternative but to go completely OFF-GRID for photovoltaic (PV) generated power to make sense, economically. These customers WILL NOT pay for any future APS utility grid construction or maintenance.

    A winter day’s worth of my electric power use requires a 20 kWh battery for storage (40 kWh for summer) and is about the same capacity as the Nissan Leaf’s electric-car battery (24.5 kWh).

    Lead acid batteries of all types (FLA, AGM, HuP) have so many disadvantages (size, weight, maintenance, power loss when charging/discharging, limited charging cycles, limited depth of discharge, etc.) they cannot economically be used. Lithium-ion (safe LiFePO4) are the batteries of choice.

    Inexpensive, modern 4-6 kW inverters (SMA “Sunny Island”) with built-in 200-500% short-term overload capability can easily handle air conditioner startup and use. However, electric clothes dryer, water heater, and cooking range use may double the size of the needed inverter system.

    I could easily survive the Arizona summer with only a 20 kWh battery while running only my air conditioner with a solar array and battery in a legal “generator backup” mode with NO CONNECTION to the APS grid.

    Eliminating the current EPR-6 “net-metering” arrangement and a future drop in the price of Lithium-ion (LiFePO4) batteries could eventually increase the number of homeowners who would consider completely abandoning the APS grid when the economics make sense. (A 8.8 kW STC solar system costs about $20,000 – add a 20 kWh battery and two additional inverters for about another $20,000.)

    At my residence, I pay around $0.26 per kWh (independent of any taxes, fees, service charges, or assessments) for on-peak electricity in summer. I used about 232 kWh on-peak in June 2013, which amounts to $60.32 (before taxes), over half of the the charge of $110.02 total I paid for all electricity (on-peak and off-peak) before any taxes, assessments, or fees for “Customer account charge”, “Metering”, “Meter Reading”, and “Billing”. (My home is fairly energy efficient.)

    Generating my own electricity during on-peak hours would save me perhaps $600 annually. Generating ALL my own electricity would save at least $1,300 annually, if I go completely off-grid.

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