The battle between utilities and solar companies over net metering ended in a ceasefire this year, with both sides agreeing to sit down with a mediator and try to hammer out a compromise instead of fighting it out on the ballot.
There’s a lot of history for both sides to overcome – years of attacks in the media and skirmishes at the Arizona Corporation Commission – before they can arrive at some sort of consensus.
And the two sides still have a major gulf in their views on solar and how it should be addressed in ratemaking. Solar companies like SolarCity believe solar provides a net benefit to the electrical grid. Utilities like Arizona Public Service say solar customers aren’t paying their fair share to maintain the grid and that shifts costs to non-solar customers.
Yes on AZ Solar, backed by millions from SolarCity, filed a ballot initiative on April 15 that would have preserved net metering and prohibited utilities from instituting demand charges or increasing solar fees, all tactics that utilities in the state have used to address solar.
Utilities and utility-friendly lawmakers immediately starting working to counteract the solar initiative. Sen. Debbie Lesko, R-Peoria, said she worked with utilities to craft a ballot referral that would have required the Corporation Commission to establish rules that would maximize solar usage without impacting affordable or reliable electricity. Sen. Don Shooter, R-Yuma, introduced another ballot referral that would have regulated solar companies as public service corporations, the same way utilities are regulated statewide.
But instead of spending millions on both sides to sway voters in November, SolarCity and Arizona Public Service agreed to drop all ballot measures and start meeting in earnest to hear each other out.
Jeff Guldner, APS’s senior vice president for public policy, said sending all the measures to the ballot wasn’t the best way to address major policy challenges.
The two sides agreed on a professional mediator, who will help try to bridge some of the policy differences. The meetings will begin on June 1, the same day APS is set to file a rate case.
Both sides want to move forward, but the challenge will be finding compromise since the two sides see things so differently, Guldner said. Since the solar discussion at the commission has been hot for years, it was time to bring in an outside party and try something new, he said.
“The gulf is so large right now that it does require something different. … We have to find a sustainable path forward on this,” he said.
Any decisions on policy by APS or SolarCity would ultimately need to be approved by the Corporation Commission. And, if the negotiations fall apart, APS would continue on with its rate case, which will include major changes to rate design.
“This is an opportunity to move down a different path, an alternative path in the debate. If we don’t get anywhere on that path, then we go back to the path that we’re on,” which is the rate case, Guldner said.
Commission Chairman Doug Little said he’s encouraged to see willingness on both sides to talk. He points to a change at SolarCity as a key element: The company recently hired Jon Wellinghoff, a former chairman of the Federal Energy Regulatory Commission, as its chief policy officer. Little praised Wellinghoff’s ability to reach across the aisle at the federal agency and said he would bring a “voice of reason” to the solar company.
The conversations between APS and SolarCity are coming at an important time at the Corporation Commission, with numerous rate cases that could be affected by the talks, Little said.
“I hope we’re going to see a reduction in the hyperbole and the noise level, and we’ll actually start to see a conversation on the merits,” he said.
Kris Mayes, a former member of the Corporation Commission and head of Yes on AZ Solar, said the ceasefire is a hopeful sign after years of contention.
“This is a real chance for us to come up with a solution that works for both solar and the utilities. At the end of the day, we think that’s possible,” Mayes said.
If both sides can find an agreement, it could mean saving thousands of solar jobs and giving more Arizona consumers the option to go solar, she said.
Mayes isn’t willing to consider what would happen if the two sides can’t find a compromise.
“We’re not even thinking about that. We’re trying to keep the mindset that this is going to work, and we have a great opportunity here to forge a solution that benefits both sides and ultimately all Arizonans,” she said.
Little welcomed progress on the solar issue and said he’s always thought there was a solution available that would work for both sides, and now it’s up to APS and SolarCity to figure out what a solution could be. He said he has already seen the general tone of the debate change significantly over the past month or so.
“If it doesn’t work and it falls apart, then we’re really not in any worse shape than we are right now, are we?” he said.