BREAKING: Arizona Public Service attempts to weaken net metering – again

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Arizona Public Service (APS) was the first major U.S. utility to successfully impose discriminatory charges on its customers who install solar under net metering in 2013. Since that time dozens of utilities around the United States have attempted to do the same, under allegations that PV system owners are shifting the costs to other customers.

The utility temporarily held off on efforts last fall to introduce further charges for PV system owners, but has not given up. Today APS filed to impose charges and reduce compensation for PV system owners under net metering, as part of a larger rate filing. This filing begins a process under which state regulatory agency Arizona Corporation Commission (ACC) will consider the proposal, which is expected to take around a year.

APS has unveiled details of the new plan on its website, and is asking regulators for permission to impose a new rate structure on residential PV system owners with a US$24 per month basic charge, and demand charges of $11.50-$16.40 per kilowatt-hour.

Currently residential PV system owners can choose from a variety of rate structures, however APS’ basic service charge is $17 per month, and only 10% of APS customers have chosen rate plans that include a demand charge.

"Mandatory demand charges exist nowhere else in the country, and would subject Arizonans to an unpredictable experiment with their family budgets," Energy Freedom Coalition of America (EFCA) Spokesperson and former ACC Chair Kris Mays told pv magazine.

The combination of fixed and demand charges are particularly high for PV system owners. Only one of the utility’s three other proposed residential rate structures has this high of a basic service charge, and the demand charge is nearly double that of the other rate structures. However, basic service charges are going up for all customers.

Per kilowatt-hour energy charges under the R-3 rate for PV system owners are lower than the other plans, however customers with net-metered solar typically attempt to eliminate net electricity usage, so this will be of limited economic benefit.

APS seeks to raise electricity rates 6% overall and 8% for its residential customers, which it says will pay for necessary investments in the electricity system.

The utility also plans to reduce compensation for the electricity generated by customer-owned rooftop solar. The new system will “modify net metering with a retail rate credit for solar customers offsetting their own load, and an export rate that credits all energy delivered to the grid”, according to APS. Generation from PV systems will be counted as export if it exceeds demand on an instantaneous basis.

If there is a silver lining, it is that it these proposed policy changes would not be retroactive. The changes to net metering and rates for PV system owners would go into effect on July 2017, and existing PV systems owners will be "grandfathered" under the old rules for 20 years.

The utility argues that these changes are needed on the basis of an alleged “cost shift” to non-residential customers. This is a difficult claim to evaluate, as the system costs and benefits of rooftop PV are geographically distinct, and as Arizona has one of the highest portions of solar in its electricity mix of any state, with solar meeting over 5% of electricity demand over a 12-month period from 2014-2015. ??Utility studies of net metering inevitably find this cost shift.

However, the overwhelming consensus of studies solicited by regulators and produced by academic institutions and non-profits with a more neutral role have found that net-metered solar provides a net benefit to other customers, and that claims of a “cost shift” result from either not properly assessing the costs of integrating rooftop PV and/or not counting the full benefits that PV provides to the electricity system.

Solar advocates say that the overall impact on the economics of residential solar would destroy the state’s distributed solar market. “There is no doubt what APS is attempting to do here, which is to put an end to solar in Arizona," states Kris Mayes of EFCA.

EFCA says that it will vigorously oppose APS’ new rate proposal. And while Sunrun was not available to comment, opposition from across the solar industry is expected.

Update: This article was modified at 3:30 PM Eastern Time (U.S.) on June 1 to include additional information from APS, and again at 5:00 PM Eastern Time to include comments from Kris Mayes of EFCA.