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Major battle likely to heat up over solar energy initiative

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A constitutional ballot initiative that would preserve the status quo for solar energy for the next six years already has major funding. But utilities and some public officials are lining up against it, setting up a big election battle.

The Arizona Solar Energy Freedom Act, filed last week by former Arizona Corporation Commissioner Kris Mayes, takes aim at several tactics used by utilities related to solar energy.

Many of the initiative’s provisions would expire in 2023.

SolarCity, a major solar company based in California, gave $3 million to Energy Choice for America, a committee headed by Mayes to support the ballot initiative. The money could also be used to support pro-solar candidates and elected officials, the group said.

But the state’s largest utility, Arizona Public Service, called the ballot initiative “ridiculous.”

“This is a ridiculous attempt by California billionaires to get richer by forcing higher energy costs on Arizona consumers. It works against Arizona families and is detrimental to sustainable solar in Arizona,” the utility’s spokesman, Jim McDonald, said in a statement.

And the chairman of the Arizona Corporation Commission said the initiative would tie the commission’s hands and hinder conversations between utilities and solar companies regarding net metering.

“This is kind of like doing eye surgery with a chainsaw. It’s really ham-handed,” Commission Chairman Doug Little said.

Mayes, an attorney and professor at Arizona State University, said the proposal would settle the battle over solar energy that’s been simmering at the commission for the past few years.

“What we’re saying is it’s time to let the people of Arizona decide this issue. Solar energy is a part of who we are as Arizonans, and the Arizona Solar Energy Freedom Act will enshrine that fact in the Constitution. It will tell utilities that Arizonans want and deserve the right to go solar.”

The initiative would preserve net metering, allowing solar customers to get paid the full retail rate for excess energy produced by their systems. It would also prohibit utilities from instituting mandatory demand charges for solar and increasing fees for fixed charges associated with solar.

The initiative would need to gather 225,963 valid signatures of registered voters by July 7 to be placed on the November ballot.

Ads on Craiglist calling for signature gatherers for the initiative say people would get $5 per valid signature collected.

Competing initiative

Sen. Debbie Lesko, R-Peoria, told the Arizona Capitol Times she’s working with Arizona Public Service to craft a referendum to compete with a solar ballot initiative.

Lesko was the sponsor of a solar consumer protection law, first passed last year then updated this year, that called for changes to solar marketing pitches and contracts.

She was sitting at her computer when she saw the notification from the Secretary of State’s Office announcing new political committees and ballot initiatives – among them, an initiative pushed by rooftop solar companies.

“I clicked on it, looked at it, and I said, ‘This is a terrible initiative, we have to do something about it.’ So I started calling few people and said maybe we should do a referendum ourselves,” Lesko said April 20.

She’s now working with APS, Legislative Council and Marc Osborn of Arizona Prosperity Alliance, who wrote Lesko’s solar consumer protection bill, on a striker amendment to a referendum in response, she said. “It’s important to embrace solar, but I don’t think it should be at the expense of all the other ratepayers, which are the majority of ratepayers that don’t have solar. So it’s good to support renewable energy, but I’m afraid that the initiative that has been filed on Friday would increase the cost to the majority of the ratepayers by guaranteeing that rooftop solar companies get retail rates, and also that they’re subsidized, and the rest of the people would have to cover the cost for it,” Lesko said.

She said she’s “still working out the details” on what exactly the referendum would do.

A crucial time for solar

The initiative comes amid several ongoing and upcoming utility rate cases that would affect solar. The first case, filed by UniSource Energy Services, is moving through the Arizona Corporation Commission and would move all residential customers, including solar, to demand rates.

Demand rates assess charges based on the peak energy used during a set time period each month instead of volumetric usage. APS has indicated its support for demand charges and is heavily engaged in the UniSource rate case.

The initiative would prevent utilities from instituting demand charges unless customers voluntarily decide to opt in.  It would require all utilities regulated by the commission to preserve net metering at the full retail rate. Solar customers have to pay the retail rate for energy from utilities, so they should be compensated at the same rate for energy they produce, the initiative says.

Retail rates vary for each utility. Several utilities have proposed changing net metering to pay solar customers the wholesale rate for excess energy. Depending on the utility and solar array, the change could mean a drastic reduction in solar savings.

In addition to the net metering provisions, the initiative would prohibit increases to fixed charges for solar customers. Arizona Public Service is the only utility in the state with a solar fee, which averages $5 per customer per month.

The initiative would also require that existing solar customers be grandfathered into changes to solar. It would also require utilities to interconnect solar systems to the grid within 45 days unless they show good cause. APS has about a 90-day backlog on interconnections, according to The Arizona Republic.

The interconnection requirement is “amazing in its lack of regard for safety and reliability,” McDonald told the Arizona Capitol Times, adding that it doesn’t consider the size or complexity of systems.

APS believes solar customers shift costs to non-solar customers since they don’t pay their fair share for the electrical grid. Solar is an intermittent resource and still requires the grid when the panels don’t produce power, so solar customers should pay for the grid, the utility contends.

While formal subsidies from utilities have basically gone away, utilities say net metering is a subsidy, since they can get cheaper power from other sources but are required to pay the full retail rate for excess rooftop solar.

“(The initiative is) just simply embedding today’s subsidies for the life of this initiative. It’s embedding net metering in the Arizona Constitution,” McDonald said.

There’s also a provision in the initiative that would allow existing solar customers to keep their current rates for as long as the solar system “remains in use.” While it’s commonly accepted that solar arrays last about 20 years, the provision could allow people to game the system and change out panels to be grandfathered for longer than the system’s lifespan, McDonald said.

Many of the provisions in the initiative would only be in place until 2023, though the grandfathering provisions would not expire. Mayes said the time limits are because technology changes quickly, and that trend is expected to continue in coming years.

Little said the initiative “enshrines the business model” for rooftop solar leasing companies like SolarCity and Sunrun without regard for non-solar customers.

“To me, to actually preserve a company’s business model in the Constitution of the state of Arizona is absolutely unprecedented. … This is not about solar, it’s not about green, it’s not about anything like that. What this is about, is the solar companies in California protecting their business model,” he said.

If new technologies develop over the next six years, before the provisions expire, the commission, utilities and solar companies would be stuck with the one model and couldn’t evolve to new technology, Little said.

Aiming for a compromise

Little and Commissioner Tom Forese both met with SolarCity CEO Lyndon Rive and were trying to get APS and SolarCity to meet and start working toward a solar compromise. Little and Forese recently pulled out of the meetings because of ex parte rules, but Rive and APS CEO Don Brandt did meet, APS confirmed. The filing of the initiative hampers those conversations, Little said.

“It’s disappointing. I thought we had started a good dialogue to be able to start to have a meaningful conversation with the solar folks and the utility folks. … Then this happens. And make no mistake, SolarCity is funding this.”

With several ongoing and upcoming rate cases involving net metering and demand charges, utilities wouldn’t have an incentive to negotiate with solar companies, given the ballot initiative, he said.

“The ballot initiative has essentially said, we’re going to put this gun to your head. And if it passes, we own you. That’s pretty much what it says. … I think it sends the complete wrong message,” Little said.

Commissioners Andy Tobin and Bob Burns both said they were staying neutral on the initiative because of the ongoing rate cases. Forese and Commissioner Bob Stump have not yet responded to requests for comment on the initiative.

Pat Quinn, a former Residential Utility Consumer Office director who now heads the Arizona Utility Ratepayers Alliance, said he has two points of view on the ballot initiative: He generally opposes putting things in the Constitution, because they’re hard to change. But he understands that solar companies are looking for an alternative to what’s happening to them at the commission, so an initiative is “another tool in your toolbox.”

It may make negotiated settlements in rate cases difficult, he said, noting that so far, there have been no discussions toward a settlement in the UniSource case that’s moving now.

But, in future rate cases, “I would hope the negotiation is still an avenue for everyone to approach, and I would hope that works better for everybody,” he said.

Because the solar and net metering fight has been going on for several years now, all sides are pretty entrenched in their positions, so it’s tough to find compromise, he said.

“Hopefully, we can get into a room someplace and try to make sense out of this,” Quinn said.

Mayes said it’s time for the voters to weigh in on solar in the state, and she believes they will side with her initiative.

“We believe that the people of Arizona are going to send a resounding message that they deserve the right to go solar, and that the utilities need to stop throwing roadblocks in the way of that,” she said.

Solar initiative infobox

One comment

  1. So the proposed Arizona Solar Energy Freedom Act will essentially tell 98% of power company customers that they have to subsidize the remaining 2% of customers? Just so Solar City and the other solar industry giants can retain their revenue and profit growth which has been propped up by taxpayer-funded tax breaks, artificial rate programs, politically-inspired regulations and customer-funded subsidies? Did someone just mention Solyndra? And SunEdison? Doesn’t this tell us something?

    The issue for solar and “clean energy” is NOT how to preserve or expand artificial incentives such as net metering at retail rates, but how to become truly cost competitive (or better) than traditional energy generation technologies. The solar industry in particular has had more than enough time to be able to become cost competitive and compete on a level playing field – but they have learned that life with taxpayer-funded subsidies has been too good, and they don’t want to kill the golden goose.

    This current initiative is simply a distraction fabricated by the solar industry (paid for by solar customers as well as those of us who can’t afford it). To the industry and its political supporters, please stop dreaming up these unproductive “feel-good” initiatives that essentially do us no good in the longer term and concentrate the industry’s brainpower on controlling its costs and providing an efficient alternative to traditional technologies.

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