State regulators on Wednesday approved an annual renewable-energy plan for Tucson Electric Power Co. that further slashes incentives for residential rooftop solar installations and for now eliminates incentives for commercial renewable-energy installations.

Residential TEP customers who install solar photovoltaic systems will be eligible for incentives of 10 cents per watt, down from incentives last year that stepped down from 75 cents to 10 cents per watt as funding was drawn down.

TEP had proposed a residential incentive level of 50 cents per watt and a flat budget of $5 million for such installations. The plan approved Wednesday cuts the overall residential budget proposed by TEP to about $745,000 for 2013.

Residential customers who install solar hot-water equipment will be eligible for incentive payments of 40 cents per kilowatt hour equivalent, compared with 50 cents sought by TEP.

The overall budget for TEP's 2013 renewable-energy plan - required under a state mandate that regulated utilities to boost their use of renewables to 15 percent by 2025 - was increased to $35.8 million, from about $30 million in 2012, reflecting larger outlays for big, utility-scale projects coming online.

The monthly surcharges ratepayers will pony up to support the renewables program was not available Wednesday. The usage-based surcharge for residential customers was capped at $3.15 last year.

The all-Republican Corporation Commission completely cut incentives for commercial renewable-energy installations, citing the fact that TEP has met its goal for commercial renewable-energy generation for the next several years.

Commissioner Gary Pierce, who as chairman last year tried to zero out the commercial budget, said the cuts were justified amid plunging system costs and needed to protect ratepayers from runaway program costs.

Commissioner Brenda Burns noted that consumers can still take advantage of federal and state tax credits.

But several local solar installers who traveled to Phoenix for Wednesday's meeting said they could survive on an incentive level of 20 cents per watt and predicted a steep drop-off in sales at the 10-cent level.

Kevin Koch of Technicians for Sustainability said even at 20 cents per watt, he would likely see residential system sales drop from about seven systems per week to perhaps one, and orders for commercial will halt, prompting him to deeply cut his 45-member staff.

"We can't make the deals work without some reasonable level of incentive," Koch said.

The commission partly at Pierce's urging approved $550,000 for research and development, including $250,000 for the Arizona Research Institute for Solar Energy (AzRISE), which is studying the effect of solar and other renewable-energy systems on the overall power grid.

However, the utility panel deferred for future hearings a proposal by TEP to allow the utility to count any renewable-energy systems connected to its grid toward its compliance goals, even when a customer did not collect financial incentives.

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


David joined the Star in 1997, after working as a consumer and business reporter in Phoenix for more than a decade. A graduate of Ohio University, he has covered most business beats focusing on technology, defense and utilities. He has won several awards.