For two years, Arizona Public Service wore the black hat in our state’s shoot-em-up at the solar corral.
Now all of Southern Arizona’s utilities are riding into the fight wearing hats in various dark shades.
Trico Electric Cooperative, Sulphur Springs Valley Electric Cooperative and Tucson Electric Power have all taken steps to increase the costs of power for people who install new rooftop solar systems. Their moves come after APS and the Salt River Project — the Phoenix area’s largest electric utilities — succeeded at raising the cost of rooftop solar for homeowners and businesses, drastically driving down the number of people installing solar panels in the Salt River Project’s service area.
The TEP argument was on display Tuesday at the Pima County Board of Supervisors meeting. The supervisors were considering a deal under which Solon Corp., a Tucson business, would build solar panels atop parking lots at 11 sites along the East Ajo Way corridor, creating covered parking there. The county agreed to buy $22 million worth of electricity from Solon over 20 years, and Solon would be able to sell any excess to TEP.
But first, Larry Lucero, TEP’s government-relations man, told the board that if the county enters into the deal, it means shifting costs to other customers.
“It will cause us to recalculate some of what we do in terms of the entire rate structure,” Lucero told supervisors.
This is also TEP’s argument in the application it filed March 25 to change the “net metering” system that went into effect in 2009 and led to the boom in rooftop solar in Arizona. Under that existing system, owners of homes with rooftop solar panels may create more energy than they are consuming at times, and that energy goes back into the grid for sale by TEP to other customers. The amount of excess energy produced by these solar customers is then credited to them on their next month’s bill.
This — TEP, APS and the other utilities argue — ignores key fixed costs. The cost of operating power plants, maintaining transformers, keeping up underground and above-ground lines along with all the other parts of the electric grid must be borne by the customers largely through the cost of their energy purchases, TEP says. The current net metering system forces non-solar customers to bear more of those costs, because solar customers aren’t buying as much electricity.
Suffice it to say that many people disagree with this analysis, which has been offered up now by all the top utilities in Arizona and is also available in a publication produced by the American Legislative Exchange Council. Yes, the notorious ALEC, with its connections to the fossil-fuel industry, wants the states to stop giving such good incentives to install solar panels.
But let’s say for a minute that TEP is right — what are the costs that TEP’s non-solar customers are incurring? TEP says that in 2014, it was about $7 million. That’s out of total retail electric sales of about $612 million last year — so, while $7 million sounds like a lot, spread out among hundreds of thousands of customers spending hundreds of millions of dollars, it isn’t that much.
Then comes the question of whether they’re even right. An entire industry, the solar industry, says they’re wrong.
“They might be making $7 million less, but that doesn’t mean anyone else is paying for it. Rates don’t work that way,” said Court Rich, an attorney who represents the Alliance for Solar Choice, a trade group.
“You’ve got a situation where they’ve identified rooftop solar customers as their competition,” he said. “They’re singling out the rooftop solar user because they believe it’s a growing industry and eroding their revenues.”
TEP’s proposed method of recovering some costs — they say it’s less than the total — is to pay customers a credit of 5.8 cents per kilowatt hour, the same amount TEP pays solar farms for their power. That price would be reset every year under the utility’s proposal, an uncertainty that could discourage people from taking the risk of installing solar panels.
By contrast, Pima County will be making 12.8 cents per kilowatt hour for excess energy that it puts back on the grid, County Administrator Chuck Huckelberry said Tuesday.
Bruce Plenk, an attorney who was the city of Tucson’s solar coordinator until 2013, told me TEP has been more friendly to solar than other utilities, and even its current request is better than what other utilities have pursued. But he’s still disappointed in the change.
“I think it’s a terrible policy that will make solar less attractive in the state of Arizona,” he said.
Plenk, Rich and others argue that the Arizona Corporation Commission should not let TEP make this change outside of a broader rate case. Administrative Law Judge Jane Rodda will consider that question starting next month, before the commission itself decides how to proceed.
I hope they do take a more global approach, because the current dislocated discussions seem to be ignoring the key reasons for trying to spur the spread of renewable energy in the first place. Most important, in the case of coal-heavy TEP, is that the more solar power we use, the less coal we burn, the less carbon dioxide is released, and the less water we use in producing electricity.
“Whether you think global warming is human caused or not, coal certainly is a pollutant,” Rich said. “It gives off toxic fumes and harms visibility and air quality.”
These are the big reasons for encouraging the use of solar power in the first place. If that costs customers like me who don’t have rooftop solar, we may think the cost is worthwhile. But in any case, we ought to see the costs spelled out in detail and balanced against the real benefits.