Arizona utility rate changes could price solar out of Phoenix

On December 5th, Salt River Project (SRP) released details of its proposed rate changes for customers who generate their own electricity using rooftop solar. While these proposed changes are complex, this may be the most regressive recent move by a utility to kill solar in its service territory, which includes nearly one million customers in metropolitan Phoenix.

Unlike investor-owned utilities, SRP does not need the approval of state regulators to make these changes. Instead, SRP management will submit the proposed rates to its board on December 12th. If approved they will take effect during the April 2015 billing cycle – but will affect all PV system owners who do not present a contract to SRP by December 7th, 2014.

The changes as outlined in preliminary documents have three components. First, PV system owners will pay an additional US$12-25 per month in flat fees, depending on the amp rating of their service. Second, for the electricity which PV system owners use in excess of their generation, they will receive a reduction from retail to wholesale rates, which are currently around $0.04-0.06 depending on time of use.

The final component is likely to be the death sentence for new rooftop PV in the Phoenix metro area. As is typical for commercial customers, PV system owners will pay a monthly per-kilowatt (kW) hour demand charge calculated by their maximum net demand from the grid in a fifteen minute interval. This will start at $6.61 per kW for the first 3 kW and then increase to $12.07 per kW for the next 7 kW.

SRP has noted that customers who reduce their demand through shifting their time-of-day use or move their PV system output closer to peak by installing western-facing modules will pay lower charges. However, solar advocates are very concerned.

“Were this proposal to be approved, it is reasonable to say that the solar industry in SRP territory would be over as of next week,” notes SolarCity Director of Public Affairs Will Craven, who also serves as a spokesperson for the Alliance for Solar Choice (TASC). “It is reasonable to assume that SRP knows that and that is their intention.”

Whether or not this is SRPs intention, the utility states in the preliminary proposal that it intends to collect as much money from solar customers as non-solar customers. "While the Customer Generation price plan better reflects costs, it was designed to be revenue neutral to the E-26 TOU plan for a typical solar customer before the installation of any distributed generation," states SRP in the document.

Not only will the new rates apply to new PV system owners who present their contracts to SRP after December 7th, but it will also apply to existing PV system owners after a 10-year grace period.

SRP has one of the highest rates of rooftop solar adoption in the nation. According to the Solar Electric Power Association, SRP interconnected over 2,600 PV systems in 2013, the eighth-highest number of any U.S. utility.