Tucson Electric Power has proposed a new rate structure for those who install rooftop solar in the future that would cut credits for excess solar production.

Ron Medvescek / Arizona Daily Star 2014

Tucson Electric Power Co. has proposed a new rate structure for future customers with rooftop solar that would cut credits for excess solar production and mandate time-of-use rates with new monthly charges.

TEP filed its solar proposal recently in the second phase of a rate case decided in February, which resulted in an $8.50 increase to the average home customer’s monthly bill.

Last December, after years of legal wrangling, the Arizona Corporation Commission set a new solar policy phasing out net metering, which reimburses customers for excess energy production at the full retail price.

The utility panel ordered TEP and other utilities to create new solar export rates, initially based on what the utilities pay for power from utility-scale solar farms and eventually, based on detailed cost studies.

In its recent filing, TEP proposed a solar export rate of 9.7 cents per kilowatt-hour to reimburse future solar customers for excess energy production — compared with current reimbursement of about 11.5 cents.

The utility propose new grid-access and demand charges and a $4 meter-reading charge for solar customers.

TEP has proposed a similar rate structure for customers on its small-business rate that install solar, and it has combined filings for its sister rural utility, UNS Electric.

None of the proposed changes would apply to current solar customers.

TEP and other utilities say the rate changes are needed because, by avoiding using grid energy, solar customers don’t pay their fair share for the fixed costs of generation and transmission.

TEP also has proposed expanding its company-owned solar programs, including community-based projects and a pilot program of utility-owned rooftop systems.

“Our proposals would allow customers to realize significant savings by going solar while helping us increase our investments in larger, more cost-effective renewable energy resources that generate benefits for our entire community,” TEP spokesman Joe Barrios said.

But solar-energy advocates say the changes are unfair and don’t take into account all the benefits of solar.

Court Rich, a Phoenix lawyer and vice president of the Arizona Solar Energy Industries Association, called TEP’s proposal “the most aggressively anti-consumer proposal that we’ve seen.”

“Solar customers are investing their own money to do something that benefits everybody, so it doesn’t make sense to go out of our way to charge them exorbitant fees,” Rich said.

TIME-OF-USE
AND DEMAND RATES

When the new rates become effective, new solar customers will no longer be able to use a standard rate, with a basic charge and charges based on usage.

Instead, they’ll be prompted to choose either a two-part time-of-use rate under which usage rates go up during hours of peak demand, or a three-part time-of-use rate that includes a usage-based demand charge based on a period of highest hourly usage during the month.

Those who choose the two-part time-of-use rate won’t face a demand charge, but they will have to pay a monthly grid-access charge of $3.50 per kilowatt, based on the size of the customer’s system.

That would translate to a grid-access fee of about $25 monthly for a home system rated at 7 kW, a typical size, or about $18 per month for a 5-kW system.

A solar customer with medium usage would still save about $73 a month off standard rates under the two-part time-of-use rate and about $70 on the demand rate, TEP said in its pre-filed expert testimony. That analysis does not include any credits for surplus generation.

SOLAR EXPORT RATE

TEP proposed a solar export rate of 9.7 cents per kWh for both TEP and UNS. TEP rooftop solar customers now get a full retail credit of about 11.5 cents.

Based on a statewide policy adopted by the Corporation Commission in December, TEP’s proposed export rate is based on a proxy of the five-year, weighted average cost of power from a group of utility-scale solar projects that TEP owns or from which the utility buys.

The proxy rate may be updated annually, and as part of TEP’s next general rate case it will be reset based on detailed cost studies.

The export rate would be locked in for each customer for 10 years from when their systems were connected, and subject to future rates thereafter.

The Corporation Commission’s utilities staff has argued that the export rate should be higher and be set separately for TEP and UNS, which serves Santa Cruz and Mohave counties.

In its own filed testimony, the staff is recommending an initial export rate of 10.5 cents per kWh for TEP and 12.8 cents per kWh for UNS.

In a proposed settlement of APS’s pending rate case, future solar customers would get an initial export rate of 12.9 per kWh, from a current retail rate of 13 to 14 cents. The rate would be subject to reduction of up to 10 percent annually based on the rolling average cost of utility-scale solar and other factors.

APS also proposes to require future solar customers to go on one of four time-of-use or demand rates, and it has proposed a lower rate of about 12 cents for power “self-consumed” by solar customers, including a grid-access fee.

METER FEES

TEP also proposes charging future solar customers a monthly meter charge of $4.32, up from $2.05 now, though it says even the higher charge doesn’t cover the actual cost of meter service. Small businesses would pay a meter fee of $5.62 per month, up from 35 cents.

Customers without solar on TEP’s current standard home rates pay for meter reading as part of their basic monthly charge, which for the standard rate was raised to $13 from $10 in the February rate ruling.

TEP says the charges are needed to offset the cost of solar meters. TEP typically installs a second production meter on solar customers’ sites to measure the amount of excess energy sent to the utility grid.

Other intervenors in the TEP case have until Friday to file written testimony. Hearings before a Corporation Commission administrative judge are expected to start June 29 with a public-comment session and last up to two weeks.

The judge will then make a recommendation to the full commission, which would likely decide the matter at an open meeting by late summer.

Contact senior reporter David Wichner at dwichner@tucson.com or 573-4181. On Twitter: @dwichner