Fairness At All Levels Necessary In Solar Energy Debate

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by Jim Arwood, communications director, Arizona Solar Center

The net metering issue before the Arizona Corporation Commission (ACC) is being framed as an issue of “fairness.” This policy, adopted in 2006 by the ACC as part of the state’s Renewable Energy Standard, was devised to encourage Arizonans to spend large amounts of money out-of-pocket to inject clean electrons into our electrical system — benefiting the grid, the economy, our air, our health.

APS, the state’s largest utility, wants to change this policy and slash the rate it pays for excess rooftop solar generated electricity — which APS in turn sells — with a “net” of zero to the solar homeowner.

Only a year ago in its Renewable Energy Standard prospectus for 2013-2017, APS itself touted this policy as highly successful, and minus any upfront incentives the main catalyst in making “solar installations feasible” in Arizona.

But APS has pivoted 180 degrees. Today, APS labels this policy unfair and has taken to the airwaves to advocate for drastic changes. APS’s spokesman and its CEO have both said this is a battle the company doesn’t want to fight, but is obligated to fight out of fairness.

But fairness for whom?

“APS is suggesting that its solar customers are unsavory people who are taking unfair advantage of APS and others,” Charles F. McErlean, Jr., a rooftop solar homeowner from Goodyear protested in an October letter to the Corporation Commission.

The simple truth is this: Solar customers and the industry bought into a program designed by elected officials and agreed to by all the Arizona utilities. Rooftop solar emerged as such a popular alternative that APS and other utilities have suddenly realized that their old business models are unsustainable.

But should the solar incentive program be faulted, or does the problem lie with the utility business model, which in Arizona leans overwhelmingly on electricity from nuclear and coal generation?

The answer probably lies somewhere in between. Sadly, no middle-ground discussion is occurring as the Corporation Commission prepares to consider the utilities’ net metering proposal, which could drive a stake through the heart of the state’s burgeoning alternative energy sector and set an unfortunate precedent that could be copied by utilities in other states.

Distractions cloud the issues. Newspaper stories have called APS’s integrity and probity into question. A sampling of headlines:

“Two utilities’ cash went to 3 ACC campaigns”

“APS: $9 million spent on net metering, energy deregulation PR”

“APS lobbyist pitched plan to alter panel” (the Corporation Commission)

“APS Under Fire for Efforts to Stymie Rooftop Solar”

“Utility Admits To Funding Nonprofits’ Campaign Ads”

APS’s behavior begs some questions:

Is it fair for a public monopoly utility to spend huge sums on a dark-money political/PR campaign designed to prop up an unsustainable business model?

Is it fair to penalize homeowners who responded to APS’s own sales pitch to install solar with the aim of cutting their own energy bills while providing clean power to the grid?

APS’s political and financial actions have been exposed by some good reporting, but the power company has adhered doggedly to the “fairness” mantra, telling you in no uncertain terms that your neighbor with solar is ripping you off. And with a 10-to-1 spending ratio in PR expenditures, APS is winning this battle.

APS and its allies have defined a narrow and limited context of what is fair — and for whom. They grouse that residential solar customers are not paying their fair share, and are in fact benefiting from a cost-shift that places more burden upon those that don’t have solar. (The ACC staff and the Residential Utility Consumer Office agree that this issue needs further exploration during APS’s next rate case in 2015.)

Yet, APS submitted a proposal in July to the ACC that would immediately create a new class of residential customers, with new rates. New solar customers will be taxed through a surcharge on their bill for all their solar generation — even the energy they generate on-site and use on-site.

APS’s own staff estimates 80 percent of the energy generated by a rooftop solar system is used directly by the homeowner and never goes back onto the precious grid. Yet it would all be taxed.

Is this fair?

An alternative proposal from APS would force new solar customers to sell all output from their rooftop solar to the utility. The proposal establishes a new rate/price for the rooftop solar electron based on the marginal costs to the utility without any consideration for the solar customer’s considerable investment. The utility is guaranteed a fair return on its investment, but this guarantee does not extend to the solar customer.

Is this fair?

A truly fair program would treat a customer using solar panels no differently than a customer who turns off the lights or raises their thermostat. Customers who generate their own electricity and use it onsite should absolutely have a right to purchase less power from a regulated utility without financial penalty.

If the APS fairness argument seems hypocritical, it’s because it is. It doesn’t apply to the snowbird that disconnects his power during the summer, thereby freeing them from propping up the maintenance of the grid.

The neighbor versus neighbor concept also extends to the rural customer, whose grid costs are massively subsidized by the urban customer, and have been for years.

The list goes on from commercial to residential, programs for low-income customers, etc.

Where’s the fairness?

Subsidization occurs throughout the electric utility customer service industry. Minus a hearing to determine the benefits solar provides to the grid it appears APS wants to impose a penalty before it is determined whether a problem exists or to what extent.

That is exactly what the professional staff at the ACC and RUCO have recommended — to address the issue during the next rate case where the world of solutions are much bigger. That is the fair way to determine the costs and the benefits associated with rooftop solar.

If fairness is the standard that APS is touting, then fairness at all levels is necessary.

Jim Arwood served six Arizona governors in various capacities managing federal energy programs, culminating in his appointment by then-governor Janet Napolitano, as director of the State Energy Office in 2006. After nearly 25 years serving the state of Arizona, Mr. Arwood retired from government service in 2010 and today consults for a variety of energy-related organizations. He also serves as director of communications for the Arizona Solar Center.

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