State utility regulators approved new fees for Arizona Public Service Co. customers with solar-energy systems, in a decision that could ultimately affect solar customers in Tucson.

But the Arizona Corporation Commission, on its split vote Thursday, approved far lower fees than APS requested, and the charges will apply only to customers who have signed up to install solar after Dec. 31.

After two days of often contentious debate, the commission decided on a 3-2 vote to impose a monthly fee of 70 cents for each kilowatt of solar-system capacity a customer owns, or about $5 a month for a typical 7-kilowatt home solar system.

The charges are to be reviewed and may be changed based on more detailed data in APS’ next rate case.

APS had asked for changes to its so-called net metering rules that could have resulted in charges of $50 to $100 a month for the typical home solar customer. The utility contends that the charges are needed to assure that solar customers are bearing their fair share of fixed utility costs such as transmission.

But solar advocates argued that the extra charges could kill off the state’s solar industry, and that APS’ argument fails to recognize the value of solar to the utility grid.

Tucson Electric Power Co. filed comments in the APS case, agreeing with the concept of recovering more fixed costs from solar customers. But TEP has not yet filed any request to impose new solar fees.

Forty-four states allow some form of net metering, which allows customers to offset their bills with solar power and sell excess power to their local utilities.

Corporation Commission Chairman Bob Stump and Commissioners Susan Bitter-Smith and Bob Burns voted for the fee; Brenda Burns and Gary Pierce voted no.

In the past year the elected, all-Republican utility panel has voted to drastically reduce upfront solar incentives, citing the declining cost of solar panels and the desire to curb the burden of subsidies paid by ratepayers.

The measure approved Thursday was a compromise proposed by the state Residential Utility Consumer Office, solar industry representatives and other parties.

APS opposed the compromise, arguing that the new charge was not enough to offset its lost fixed costs and that non-solar customers would bear an increasing burden as more fixed costs are shifted to them.

Officials of solar-system leasing companies — which offer installations with no upfront costs but charge monthly leasing fees — said the new charges would cut deeply into their business by eliminating much of the monthly savings for many lease customers, who typically net only $5 to $10 per month in savings after lease costs.

Bitter-Smith noted that the Arizona net-metering case was being watched nationwide. She said the utility panel now recognizes that net metering shifts costs to non-solar customers — an assertion disputed by solar advocates — and that rooftop solar adds value to the power grid.

She said she expects future rate proceedings to help quantify both the costs and value of rooftop solar to guide future decisions on net metering.

“We are trying to do a balancing act here, and we don’t know if we have the right balance,” said Bitter-Smith, a Scottsdale cable-industry executive serving her first term on the commission.

Contact Assistant Business Editor David Wichner at or 573-4181.