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.