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Commissioners appear to favor compromise on rooftop solar incentives

Arizona Corporation Commission Chairman Bob Stump listens during comments from the public on the proposal to change the state's solar net metering system. (Photo by Evan Wyloge/Arizona Capitol Times)

Arizona Corporation Commission Chairman Bob Stump listens during comments from the public on the proposal to change the state’s solar net metering system. (Photo by Evan Wyloge/Arizona Capitol Times)

Arizona’s energy regulators appear to be much closer to a compromise than either wholesale approval or rejection of a proposal to reduce by half a key rooftop solar panel incentive, based on proposals they submitted to resolve the issue.

All but one of the five Republicans who make up the Arizona Corporation Commission explicitly agree that the current solar net metering system shifts the costs of maintaining the state’s electricity infrastructure to non-solar ratepayers. The fifth commissioner simply recommends revisiting the issue in about 18 months, offering no comment on the issue of a cost shift.

The commissioners appear to be looking for a compromise as a temporary solution to the solar subsidy debate that has been the focus of an intensive and expensive, months-long campaign waged by Arizona Public Service.

The regulatory agency, which derives its authority to set rates from the state Constitution, on Wednesday began its formal deliberation of the proposal by APS to cut the savings of rooftop solar users essentially by half.

In response, a coalition of solar rooftop companies and their allies have painted APS as a monopolistic behemoth that only is only concerned with its bottom line and that it’s threatened by the success of residential solar.

The commission is expected to deliver a verdict tomorrow.

Commissioners Brenda Burns, Robert Burns and Bob Stump have proposed to adopt a modified version of alternative recommendations offered by the Residential Utility Consumers Office and the commission’s staffers.

The regulators’ suggestions, however, still vary in scope and in timing.

Commissioner Susan Bitter Smith alone prefers that the issue be resolved in the next rate case and suggested the debate be revisited in June 2015.

Of the four other commissioners, Gary Pierce’s proposal hews more closely to what APS is seeking.

Pierce seeks to offset the reduction in savings by having APS offer upfront incentives as a way of cultivating residential solar.

Under Pierce’s plan, solar rooftop users would be charged with $7.14 per kilowatt for accessing the grid. If adopted, that comes out to about $50 per month for a 7 kilowatt solar panel system.

To offset some of the costs, Pierce’s plan would require APS to offer an upfront incentive of $0.62 per watt, which translates to roughly $4,000 to help install a solar system. Depending on its size and location, such a system typically costs $18,000 to $40,000.

In his proposal, Pierce also noted that earlier this month, APS has calculated the cost shifts as a result of net metering to be roughly $8.89 per kilowatt hour.

APS officials have expressed their interest in offering such upfront incentives.

Stump agrees with the conclusion of the commission’s staff that net metering shifts the costs to no-solar users at $3.42 per KW.

But instead of adopting that figure, he is proposing a monthly charge of $1.09 per kilowatt for solar rooftop users, because he believes the larger figure could be disruptive to the state’s efforts to reach mandated renewable energy requirements, his proposal explains.

He also shies away from the idea of automatically increasing those rates using RUCO’s phased-in approach, preferring to deliberate any increase in APS’s next rate case.

Robert Burns proposes a monthly charge of $1 per kilowatt – to be increased by $0.50 cents per kilowatt for every increase of 20 megawatts of installed solar capacity, which is nearly identical to RUCO’s offer.

Finally, Brenda Burns suggests adopting the staff’s alternative proposal of $3.42 per kilowatt at a cost of roughly $21.88 per month.

Both Brenda and Bob Burns prefer the new rates to apply starting next year.

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