SRP approves solar fee and rate hike

Rachel Leingang//February 26, 2015

SRP approves solar fee and rate hike

Rachel Leingang//February 26, 2015

About 50 people protested outside Salt River Project's board meeting to decide on a monthly solar fee Thursday morning. The crowd chanted "Sol not coal" and "Don't rebate and switch" ahead of the board's decision, which would cost the average solar customer an additional $50 per month. (Photo by Rachel Leingang/Arizona Capitol Times)
About 50 people protested outside Salt River Project’s board meeting to decide on a monthly solar fee Thursday morning. The crowd chanted “Sol not coal” and “Don’t rebate and switch” ahead of the board’s decision, which would cost the average solar customer an additional $50 per month. (Photo by Rachel Leingang/Arizona Capitol Times)

Salt River Project’s board of directors approved a rate hike Thursday that would add a solar demand charge of about $50 on average and up to a 3.9 percent increase for all SRP users, ending a three-month process of public meetings and solar industry outcry.

The solar fee has drawn ire from solar companies and users in SRP territory, who say the added cost would kill the solar industry and render meaningless the cost savings solar users sought when they added panels to their roofs.

A rowdy crowd showed up Thursday to oppose SRP’s plan, regularly booing and questioning the utility company’s assertions that the plan won’t kill solar. Outside the meeting room, about 50 protesters gathered with signs comparing SRP’s president to Mr. Burns from “The Simpsons.” Protesters chanted “sol not coal,” “don’t rebate and switch” and “hey hey, ho ho, SRP has got to go.”

At the company’s private country club beside Papago Park in Tempe, dozens testified before the SRP board to oppose the rate, and the solar industry got about 30 minutes to present its case.

Solar advocates contend the board didn’t consider their concerns or give them enough time in public meetings to make presentations. The board never intended to budge in its proposal for solar, critics say.

“The fix has been in on this for a long period of time. … You still have to carry forward a fight, you have to carry forward why they’re wrong, you have to give it your best shot,” said Jason Rose, a consultant for the group Tell Utilities Solar Won’t be Killed.

SRP said the fee is necessary to bring revenues in line with costs of maintaining the electric grid. The board opted for a demand charge instead of a service fee, which would calculate the monthly cost for solar users based on a peak usage. That would incentivize solar customers to conserve, the utility said.

“Currently, rooftop solar customers are not paying an equal share for the fixed cost of enhancing and maintaining the grid – even though they use the grid to both buy and sell electricity,” SRP spokesman Scott Harelson said in an emailed response to questions.

In addition to the solar demand charge, non-solar users will see a 3.9 percent increase in their utility bills by April 2016. The fee will gradually go up from a 3.3 percent increase starting in April 2015 to the full 3.9 percent. Customers who already own or lease solar systems can be grandfathered into the proposal for up to 20 years. The grandfathering will transfer to new owners if a home is sold, after SRP management revised its original proposal that said otherwise.

Over the past two months or so, SRP held public comment sessions on the proposal. At two sessions in January, more than 200 people attended, and the meetings stretched longer than three hours, Harelson said. At a board meeting on Feb. 9 that went more than 10 hours, about 700 people turned out, and the board took comments until everyone had the opportunity to speak, he said.

But solar groups say the board hasn’t shown much willingness to reconsider the full proposal and only made allowances for minor tweaks so far.

“The process has been a joke. They have forbidden us from speaking with their board members. They have refused to answer questions that we’ve asked of them,” said Court Rich, who represents The Alliance for Solar Choice.

Rich said SRP management has misrepresented claims about rooftop solar users to the board as well, including claims that it’s harder to sell a home that has leased solar on it.

“This whole thing is a discriminatory push by SRP designed to kill the solar industry,” Rich said.

One group lined up to support the proposal this week: Prosper Inc. The “dark money” 501(c)(4) nonprofit shelled out more than $1 million to support Arizona Public Service when it sought a solar fee in 2013. The utility originally asked for a fee of about $50 to $100 depending on incentives, but the Arizona Corporation Commission knocked it down to about $5 per month.

Prosper is committed to free markets, restrained government and entrepreneurship, said Thomas Grier, the group’s media contact.

“This shouldn’t come as a surprise that as a free market organization that we’re kind of making another comment on the issue,” Grier said.

But Grier wouldn’t say who donated to Prosper.

“We respect our donors First Amendment right to anonymity. … Whoever our donors are, it doesn’t dictate our policy on any issues.”

Grier said non-solar utility users subsidize solar users’ grid usage, which doesn’t fit in with free market economics. “It’s a matter of picking winners and losers. It’s a matter of fairness,” he said.

Prosper’s involvement could signal that APS will follow suit if SRP approves a large solar charge. But APS has a much different process – the Corporation Commission oversees its rates, and the Residential Utility Consumer Office is usually involved as well. SRP, as a nonprofit municipal utility, does not answer to the commission, but to a board elected by property owners in its territory.

APS responded to the SRP board’s approval, saying the board recognized there was an issue to be addressed in making solar usage good for both users and utilities as the industry continues to grow. APS also reiterated its support for more solar in the state, the emailed statement from the company says.

“Arizona needs a modern, reliable grid that enables more renewable energy and more innovation, and a fair pricing model that reflects the different way customers use the grid today,” APS’s statement says.

Sandy Bahr, director of the Sierra Club-Grand Canyon Chapter, said at the very least, the SRP solar fee process has shown its customers how the utility’s elected board operates, with little government oversight or accountability. She said the SRP probably alienated some of its customers.

“People like solar. They see this on the face of it and see that it’s unfair. They see it for what it is: another big utility trying to harm people ability to have solar on their rooftops,” Bahr said.

SRP says the solar fee doesn’t speak to the company’s support for solar. The company has an agreement to build a 45-megawatt solar power plant, Harelson said, and it also has two community solar projects.

“We are not reducing our commitment to solar, in fact we are helping to grow the solar industry,” Harelson said.

Solar companies aren’t convinced. Last week, SolarCity CEO Lyndon Rive said the company is ready to sue SRP if the board approves the proposal. A letter from Rive to SRP president David Rousseau says SolarCity believes SRP would be “violating the state and federal antitrust laws.”

The company has an attorney on retainer and made preparations to sue if needed, the letter says. “We cannot and will not stand idly by while SRP entrenches its monopoly by unjustifiably penalizing solar customers and shuttering the solar industry in one of the sunniest places in the United States,” Rive wrote.

Solar installations have stalled since the proposal’s announcement in December, Rich said. According to numbers provided by SRP, 66 people have signed up for solar in SRP territory since Dec. 8.

Rich said that number was about 500 per month previously, and it’s a sign of things to come.

“We can see the future. We can see the result of what they’re proposing,” Rich said.