Solar

Tucson Electric Power has proposed lowering the credits rooftop-solar customers receive for excess production.

The Arizona Corporation Commission on Tuesday put off final consideration of new rates for customers of Tucson Electric Power Co. and UNS Electric who install rooftop solar systems, after a commissioner said he needed more time to sort out the matter.

After about two hours of testimony, Commissioner Andy Tobin withdrew a catch-all amendment to an administrative judge's proposed order that would have further cut credits for excess solar production and impose new fees on customers who install rooftop solar systems.

Guided by a commission policy decision in late 2016 to end net metering in Arizona, the utility panel is considering new "solar export rates" to credit TEP and UNS customers who install solar panels for their excess power production, along with new rate plans featuring new fees on solar customers.

After hearings last fall, a commission administrative law judge issued a recommended order that would set initial export rates at 9.64 cents per kilowatt hour for TEP and 11.5 cents for UNS, locked in for 10 years for each customer and decreasing up to 10 percent annually.

Under net metering, current TEP customers are credited for excess solar production on a month-to-month basis at the full retail rate of about 11 cents per kWh.

The changes would not affect current solar customers and would apply only to customers who file to interconnect solar systems after the commission's eventual rate decision.

But the judge rejected new, time-of-use solar rate plans proposed by the utilities and recommended by the commission's staff, that would impose new "grid access fees" of $2.50 per kilowatt of system capacity, saying the plans were based on flawed cost studies.

At Tuesday's open meeting in Phoenix, Tobin introduced an amendment to the judge's proposed order that would have cut the initial solar export rate to 9.1 cents for TEP and 7.5 cents for UNS, which serves Santa Cruz and Mohave counties.

His amendment also accepted the utilities cost studies and adopt their rate designs, including a $2.50 grid-access fee and a residential meter fee of $2.33 per month.

But a parade of solar advocates and industry representatives warned that Tobin's proposal would make solar panels uneconomical for many ratepayers, potentially causing the collapse of the local industry.

Just the rate lock-in period of 10 years is too short to support leased and financed rooftop solar installations, said local solar installed Kevin Koch, a formal intervenor in the rate case.

Koch and other solar advocates said the combination of lower solar export credits and higher charges would cause rooftop solar adoption to slow to a trickle. The proposed grid-access fee of $2.50 per month would be the highest in the nation, they noted.

Several solar advocates said an initial solar export rate of 12.9 cents per kWh approved last year for Arizona Public Service Co. or a rate in the 10.5 to 11 cent would be an acceptable starting point for TEP, whose retail rates are lower than APS.

Tobin said he intended his measure as a compromise that would allow the utilities to recover more costs from solar customers while preserving the local solar industry.

The commission's next regular open meeting date is July 19, but the utility panel could call a special open meeting to consider the issue before then.