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Utility oversight office proposes solar compromise

Dem Corporation Commission candidates question Republicans’ commitment to solar energy

Arizona’s Residential Utility Consumer Office on Oct. 30 recommended Arizona’s utility regulators to reduce solar “net metering” incentives by a fraction of what the state’s largest utility has sought in recent months.

Instead of cutting the monthly savings of solar net metering customers in half, or by around $75 each month, as Arizona Public Service has asked the state’s energy regulators to allow, RUCO suggested a more modest savings reduction of about $7 per new solar panel user each month.

APS executives say the current “net metering” system unfairly increases electric grid infrastructure costs for non-solar customers. As more people adopt solar panel use, they say, the company will see a growing cost distortion that threatens infrastructure investment ability.

RUCO’s analysis concludes that net metering in fact causes a “value gap,” as APS contends, that leaves non-solar customers responsible for some infrastructure costs avoided by solar net metering customers.

But to address the gap, RUCO recommends introducing a savings reduction as a monthly “market-based fee,” that would increase from $1/kW of solar energy production capacity, or about $7 a month for the average solar user, as solar panel adoption continues to increase as well. As the solar rooftop production capacity across the system grows, the fee would incrementally increase to $3/kW production capacity, or about $20 per new solar customer each month.

At just $1/kW, the fee would mean reducing the savings for solar users from about 67 percent annually to about 64 percent annually. At the $3/kW fee, solar customers would see a savings of only about

57 percent.

Lon Huber, a technical consultant who worked on the RUCO report, said if the current solar panel adoption rate continues, the final $3/kW fee would be reached in roughly two years.

The RUCO report explicitly says the fee should be used to reduce any cost shift to non-solar customers, and not to increase overall revenues for APS.

RUCO’s report recommends including the current net metering value gap issue as part of a “much larger debate about the implications and benefits of new technology, the value of the electric grid, and rate design,” that should be taken up during a future rate case, where projected costs and revenues are carefully evaluated and multi-year price structures are approved by state energy regulators. Their report’s recommendation is intended to be an interim solution until then.

RUCO’s recommendation that the utility provider wait until their next rate case to address broader implications of solar panel use echoes a similar suggestion made in the Corporation Commission’s staff report, which was released in early October.

Solar panel companies have rallied to fight APS’ proposal, saying such a move would kneecap the industry in Arizona. They’ve also accused APS of using the issue as a way to increase profits for Pinnacle West Capital Corporation, APS’ publicly-traded parent company.

Arizona Corporation Commission Chairman Bob Stump said the RUCO report is a final piece of input the commissioners need to see before officially beginning hearings on the issue in mid-November.

The RUCO report claims to give each stakeholder in the debate a piece of the compromise pie. The solar industry would be given an incremental incentive change that allows their business model to adapt. It addresses the costs of solar panel use for the utility, it shields non-solar customers from excessive costs shifts and it gives regulatory certainty to solar panel users, the report concludes.

A spokesman from APS said while the company hasn’t had a chance to fully review RUCO’s proposal, the company will continue to “work diligently with the (corporation) commissioners, commission staff, RUCO and other stakeholders on developing a fair, equitable solution” for their customers.

IB Rate Bill before solar w/tax Bill with solar Savings % Savings
Current NM Program Summer $275.22 $92.64 $182.58 66.30%
Winer $115.91 $30.65 $85.26 73.60%
Annual $195.57 $61.65 $133.92 68.50%
APS Proposed Option – ECT-2 Rate Summer $275.22 $156.78 $118.44 43.00%
Winter $115.91 $82.95 $32.96 28.40%
Annual $195.57 $119.87 $75.70 38.70%
Proposed Option – Bill Credit Summer $275.22 $235.22 $40.00 14.50%
Winter $115.91 $85.91 $30.00 25.90%
Annual $195.57 $160.57 $35.00 17.90%
ACC STAFF Proposed Option – LFCR Flat Charge Summer $275.22 $95.47 $179.75 65.30%
Winter $115.91 $31.90 $84.01 72.50%
Annual $195.57 $63.69 $131.88 67.40%
Proposed Option – Standby Cap. Charge Summer $275.22 $108.64 $166.57 60.50%
Winter $115.91 $46.65 $69.26 59.80%
Annual $195.57 $77.65 $117.92 60.30%
RUCO Proposed Option – $1/kW initial capacity fee Summer $275.22 $99.04 $176.18 64.01%
Winer $115.91 $37.05 $78.86 68.04%
Annual $195.57 $68.05 $127.52 65.20%
Proposed Option – $3/kW final capacity fee Summer $275.22 $111.84 $163.38 59.36%
Winer $115.91 $49.85 $66.06 56.99%
Annual $195.57 $80.85 $114.72 58.66%
Figures based on 1,600 kWh summer use, 900 kWh winter use, averaging 1,192 kWh monthly use, and a presumed 6.4 kW rooftop solar panel system.
TOU E Rate Bill before solar w/tax Bill with solar Savings % Savings
Current NM Program Summer $224.63 $72.19 $152.44 67.90%
Winer $115.13 $40.48 $74.65 64.80%
Annual $169.88 $56.34 $113.55 66.80%
APS Proposed Option – ECT-2 Rate Summer $224.63 $156.78 $67.85 30.20%
Winer $115.13 $82.95 $32.18 28.00%
Annual $169.88 $119.87 $50.02 29.40%
Proposed Option – Bill Credit Summer $224.63 $184.63 $40.00 17.80%
Winer $115.13 $85.13 $30.00 26.10%
Annual $169.88 $134.88 $35.00 20.30%
ACC STAFF Proposed Option – LFCR Flat Charge Summer $224.63 $75.07 $149.56 66.60%
Winer $115.13 $41.72 $73.41 63.80%
Annual $169.88 $58.40 $111.49 65.60%
Proposed Option – Standby Cap. Charge Summer $224.63 $88.19 $136.44 60.70%
Winer $115.13 $56.48 $58.65 50.90%
Annual $169.88 $72.34 $97.55 57.40%
RUCO Proposed Option – $1/kW initial capacity fee Summer $224.63 $78.59 $146.04 65.01%
Winer $115.13 $46.88 $68.25 59.28%
Annual $169.88 $62.74 $107.14 63.07%
Proposed Option – $3/kW final capacity fee Summer $224.63 $91.39 $133.24 59.32%
Winer $115.13 $59.68 $55.45 48.16%
Annual $169.88 $75.54 $94.34 55.53%
Figures based on 1,600 kWh summer use, 900 kWh winter use, averaging 1,192 kWh monthly use, and a presumed 6.4 kW rooftop solar panel system.

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