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Regulators set to referee solar net metering fight

sAfter several months of intense and expensive campaigning, Arizona utility regulators today begin formal hearings on a proposal by Arizona Public Service to drastically cut incentives to install rooftop solar panels.

The Arizona Corporation Commission is devoting two days to the formal deliberations, and the five-member panel is expected to resolve the issue on Thursday.

APS, Arizona’s largest electric company, is arguing that the current rate for buying excess energy that rooftop panels send back to the grid is unfair to non-solar users, who bear the brunt of paying for the cost of maintaining the electric grid.

APS is asking the commission 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 about its bottom line and is threatened by the success of residential solar.

The current arrangement, which is called net metering, allows ratepayers to offset their bills with the electricity generated by their solar rooftop panels. If the panels produce more power than is consumed, the utilities also pay for the excess energy.

Currently, utilities must pay the retail rate for that electricity. APS has argued that it would be more equitable if it could pay the wholesale rate for such energy.

In September, Corporation Commission staff recommended that regulators put off changes to net metering until APS’s next rate case, which is scheduled for 2016. If they wanted to tackle net metering sooner than that, the staff report advised commissioners could make a minor change that would allow APS to recoup more money while still allowing customers to get the benefits of solar on their bill.

 

The hearing is also taking place against the backdrop of accusations that a member of the commission, Gary Pierce, is using his position to gain support for his son, Rep. Justin Pierce, R-Mesa, among businesses that do business before the regulatory agency. Justin Pierce is running for secretary of state, and the allegations emanated from a Republican rival candidate – businessman Wil Cardon.

On Tuesday, a former Democratic commissioner called on Gary Pierce to recuse himself from the net metering vote. Both Pierces have vigorously denied the allegations, and Gary Pierce rejected the call to recuse himself from voting on the net metering issue, calling the insinuations “scurrilous and unwarranted.”

Commissioner Robert Burns said he expects the commission to swiftly tackle non-net metering issues this morning and immediately delve into the net metering debate thereafter.

The hearing, which starts at 9:30 this morning, will recess at noon, after which commissioners will proceed to a staff meeting at 1 p.m. Then the commissioners will resume the deliberations on Thursday.

Burns said he has narrowed down ideas to resolve APS’s proposal, but he told the Arizona Capitol Times he has no idea what other commissioners will offer – or whether they would at all.

“It’s very difficult to anticipate what will happen,” he said.

Burns wouldn’t say how he would vote, but he told our reporter that a proposal by the Residential Utility Consumers Office has some merit.

“They came out with a good concept, I believe,” he said. What he likes about the RUCO proposal, he said, is that it phases in the “correction of the ship.”

RUCO has concluded there is a net cost-shift of about $20 per month per residential solar user in the current net metering scheme, which leaves non-solar customers picking up some of the infrastructure costs that are avoided by solar rooftop users.

RUCO’s interim solution is to reduce savings by only $7 per new solar user each month and to phase in increases to the rate, which is far smaller than what APS is seeking to cut the monthly savings by around $75.

The RUCO plan would apply to solar users who generate up to 7kW while users with a higher capacity would be assessed with a higher rate.

Under the plan, the rates would be locked in for 20 years, and then phased in, so that every 20MW across the system triggers a 50-cent-per-kW increase in charges.

Burns said RUCO’s approach means the commission would have the ability to evaluate the concept as it is implemented.

“That would give us a real picture, I think, of what would be going on out in the market,” he said.

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