Arizona’s mental wrestling match with how to encourage fair solar policies seems to be coming to a conclusion. An end to the back-and-forth will be welcome but only if the Arizona Corporation Commission can navigate through the rhetoric and get to the economic facts that should be the basis for any good public policy decision.
Right now, anyone in the country who cares about solar energy policy (I’m proud to say I’m one) is watching what will happen in Arizona because it will be precedent-setting. Regulators across the country are in a tough position because they are supposed to “regulate” and aren’t used to making policy. But, in the case of rooftop solar, many are in the position of having to balance regulation that requires regulators to ensure that customers receive reliable utility service at fair, just, and reasonable rates, while interpreting and implementing public policies that promote solar technologies. The Arizona Corporation Commissioners have probably studied these issues in greater depth than any other public utility commission in the country, which is why what they decide will be significant.
Current net metering policies provide financial subsidies to solar customers, while non-solar customers – many of whom are not financially able to afford or qualify for leased solar – are forced to pay more expensive energy bills to pay for these subsidies. In a marketplace where consumers are also at risk for scams enacted by some unethical solar installation companies, we cannot let unfair business models place an additional burden on energy consumers, whether they make the choice to consume personal rooftop energy or prefer universal energy consumption.
As a former state commissioner, I share a concern for the cost shift taking place and feel a duty to advocate for rate design changes alongside many other consumer advocates. The National Association of Regulatory Utility Commissioners (NARUC) shares a similar view. Last month at its annual meeting, regulators and stakeholders came together to collaborate and share ideas in order to enact energy policies that prioritize public interest. Of note, at this year’s event, NARUC approved and issued a manual for states to use as a reference guide to adopt more modern rate designs when it comes to rooftop solar. Much like Arizona, the manual has the potential to set a precedent with its policies in the energy space, as it is capable of setting a trend to reduce cost shift and hold all energy users accountable for their use of the grid.
At the center of the debate in Arizona is a phrase that has launched multi-million dollar media and political campaigns. “The Value of Solar” is about assigning economic value to the energy produced by the sun. Usually, energy rates are based on the cost of producing the energy, not on values that aren’t based on economics. Everyone values electricity for what it does to power our modern way of life – but at the core is that electricity is very much a human necessity. Energy must remain affordable. Regulators have the tough job of delving into the technical world of economics and rate constructs that appropriately ensure that what is both paid and bought is fair. Does someone who sells solar to the grid not have to pay for the highway – aka the electric wires – that allows them to sell it? What’s the value of the grid – or the electric network- that transmits your electricity? These are all questions that have to be considered.
At the end of the day, it is the responsibility of regulators to make the final decision on how to compensate rooftop solar. The rapid growth of solar is a very positive trend and accomplishment, but we need to ensure that solar is valued properly – that means fairly for all customers – in order to ensure a positive sustainable future.
Monica Martinez is a former Michigan Public Service Commissioner and founder and CEO of Ruben Strategy Group LLC.